IT Department detects ‘fictitious transactions’ of Rs 2,200 crore in raids against Dainik Bhaskar, Rs. 700 crore worth tax evasion

The tax department claimed that cyclical trading and transfer of funds among group companies "engaged in unrelated businesses" to the tune of Rs 2200 crore has also been found.

Unpaid taxes on ₹700 crore of income over six years, violation of stock market rules, “fictitious transactions” of Rs 2,200 crore and evidence of profits being siphoned off from listed companies have been found in searches at the Dainik Bhaskar Group, the Income Tax Department alleged on Saturday, two days after the raids on the conglomerate with media outlets critical of the government triggered outrage.

However, it is to be noted that the leading national daily has been quite vocal and critic of the BJP government in recent times, which is why this action by the IT department is also being seen as a countermeasure against the media group.

The multi-city raids were conducted at 20 residential and 12 business premises spread over nine cities including Mumbai, Delhi, Bhopal, Indore, Noida and Ahmedabad, on July 22.

“The quantum of income escapement using this (shell companies and bogus expenditures) modus operandi, detected so far, amounts to Rs 700 crore spread over a period of 6 years. However, the quantum may be more as the group has used multiple layers and investigations are being carried out to unravel the entire money trail,” the CBDT statement said in a statement.

“These involve violation of S.2(76)(vi) of Companies Act and Clause 49 of Listing Agreement prescribed by SEBI for listed companies. Application of Benami Transaction Prohibition Act will also be examined,” it added.

“Cyclical trading and transfer of funds among group companies engaged in unrelated businesses to the tune of ₹ 2,200 crore has been found. The enquiries have confirmed that these have been fictitious transactions without any actual movement or delivery of goods. The tax effect and violation of other laws is being examined,” it said.

Along with the Dainik Bhaskar Group, an Uttar Pradesh-based news channel Bharat Samachar was also raided on Thursday by Income Tax officials who launched searches in their offices across the country around 5:30 am.

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