IT Raids on TDP Leaders Unearth Rs 2,000 Cr Unaccounted Income

Preliminary estimates suggest siphoning of over Rs 2,000 crore in transactions layered through multiple entities.

Kadapa district TDP president Srinivasa Reddy, whose residence and offices were raided.

(Photo courtesy: The News Minute)

Unaccounted income of more than Rs 2,000 crore was detected in Telangana and Andhra Pradesh during the searches conducted by the Income Tax Department last week, officials said on Thursday, 13 February.

The raids were carried out on 6 February, at firms owned by Telugu Desam Party (TDP) leaders and former Andhra Pradesh Chief Minister Chandrababu Naidu's former Personal Secretary Srinivas Rao. Officials in a statement on Thursday said that they have unearthed a major cash generation racket through bogus sub-contractors, over-invoicing and bogus billing.

Several incriminating documents and loose papers were found and seized during the search, apart from emails, WhatsApp messages and unexplained foreign transactions were also unearthed during the search, said an official release.

Over Rs 2000cr Siphoned Through Bogus Companies

On Thursday, 6 February, IT sleuths carried out simultaneous raids in 40 premises across the country, including places such as Hyderabad, Vijayawada. Kadapa and Vishakapatnam, Delhi and Pune.

The search action included three prominent infrastructure groups based in Andhra Pradesh and Telangana, said Surabhi Ahluwalia, the official spokesperson of the Central Board of Direct Taxes (CBDT).

Kadapa district TDP president Srinivasa Reddy’s residence and offices of infrastructure firms with links to the party at different locations and Naidu’s former personal secretary Srinivas Rao' residence were also raided.

According to IT officials, the infrastructure companies had allegedly subcontracted work to several non-existent/bogus entities.

The press release stated, "Preliminary estimates suggest siphoning of more than Rs 2000 crore through transactions that were layered through multiple entities with the last in the chain being small entities with turnover less than Rs 2 crore to avoid maintenance of books of accounts and tax audits."The IT department found that such entities were either not found at their registered address or were found to be shell entities. Several such sub-contractors were controlled by the principal contractors with all their Income Tax Returns (ITR) filings and other compliances being done from the IP addresses of the main corporate office.

Foreign Direct Investment (FDI) receipts have been found of several crores in the group companies of one of the infrastructure companies suspected to have been round-tripping of its unaccounted funds through foreign countries. Unexplained cash of Rs 85 lakh and jewellery worth Rs 71 lakh was also seized. More than 25 bank lockers have been restrained as part of the raid, the official added.

(This was first published on The News Minute and has been republished with permission)