IT Department finds incriminating evidence of large scale tax evasion in cross LoC trade

The Income tax department on Wednesday carried out raids on three Kashmir based traders after finding incriminating evidence of large scale tax evasion in cross LoC trade with Pakistan which was suspended last year. “These operations have, prima facie, led to the detection of huge amount of undisclosed income, seizure of unaccounted assets and incriminating evidence and involvement in benami transactions by these three groups,” the Central Board of Direct Taxes (CBDT) said said in a statement.

While the statement did not name anyone, a PTI report suggest that traders under scanner are Hilal Ahmed, Ghulam Rasool Magray and Ishfaque Dar.

Incriminating documents related to the LoC (line of control) trade have been seized from the custodian of cross-LoC trade, indicating large-scale tax evasion, it said.

“The search action revealed that the key person of one of the groups, although engaged in cross-LoC trade until the suspension of trade by the government in April 2019, has not filed his I-T returns.” “He was also found to be having two active permanent account number (PAN) cards,” the CBDT statement said.

“His proprietary concern has made exports of over Rs 25 crore in the last few years but no income tax has been paid at all,” it alleged. “There is also evidence of unexplained expenditure on the education of his daughter in Pakistan,” it said. In another case, the raided businessman and his brother were engaged in trade and they “had made total exports of Rs 3 crore in the last two years, he (the main businessman) had filed his income tax return for only one year and that too showing meagre receipts,” statement added.

“The passport of the assessee reveals that he travelled to Pakistan for 20-25 days every calendar year since 2017 and the source of expenditure on this account is prima facie unexplained,” it noted.

“In this case, unaccounted cash of Rs 15 lakh has been seized. The group is having multiple concerns. However, transactions of these concerns have not been reflected in their I-T returns,” it said. In the case of a person related to this group, who is a non-filer, documents pertaining to unaccounted business transactions of about Rs 10 crore have been seized, the statement said.

In another case of a firm, it said, one of the partners in the firm has admitted that his name was only being used and he was not involved in any activity of the firm. “The matter is being examined from the angle of benami transactions. A locker has also been found which is yet to be searched and has been placed under restraint,” the statement said.

The Union Home Ministry suspended cross LoC trade in April last year acting on reports that it was being “misused” by elements from across the border to smuggle weapons, narcotics and fake currency. It used to take place from Salamabad of Baramulla in the Kashmir region, and Chakkan-da-Bagh of Poonch district in the Jammu region.