Searches at premises linked to 4 ARCs: I-T

The Income Tax Department on Wednesday mentioned it has searched a minimum of 60 premises linked to 4 asset reconstruction firms (ARCs) in Mumbai, Ahmedabad and Delhi for alleged irregularities.
The search carried out on December 8 has discovered that the ARCs adopted “unfair and fraudulent trade practices in acquiring the non-performing assets (NPA) from the lender banks”.
Without naming the ARCs, the tax company mentioned it has discovered “an unholy nexus” between the borrower teams and the ARCs. The tax division has additionally discovered that the ARCs have used “shell/dummy” firms within the course of.
“The amount at which the NPA has been acquired by the ARC has been found to be far less than the real value of the collateral securities covering the said asset/NPA,” mentioned the tax division in a press release.
The I-T search discovered that the minimal money payout made out by the ARCs to lenders for buying the harassed belongings had been made via the funds of the borrower group.
“Such funds have been routed through several layers of dummy companies controlled by the borrower group or through hawala channels,” mentioned the I-T division.
The tax division mentioned it has additionally discovered that the ARCs have disposed the belongings that had been acquired by them from the banks in a non-transparent manner.
“More often than not, the underlying assets had been re-acquired by the same borrower group, albeit at a fraction of their real values. The ARCs are found to have concealed the profits on disposal of the underlying assets by diverting the actual profit to their related concerns, under the garb of consultancy receipts or unsecured loans/investments. Through this method, the ARCs have not only evaded the payment of due taxes but also deprived the lender bank(s) of their share of actual profits,” mentioned the tax authority.
According to the company, one ARC had maintained a parallel set of accounts on Tally accounting software program, in a pendrive. The pen drive was recovered from the custody of the trusted workers of the promoter, mentioned the tax division. This parallel set of accounts has money transactions of over Rs 850 crore, it claimed.
“Handwritten diaries have additionally been discovered in the course of the search, containing detailed entries substantiating the deliberate act of layering of transactions by the promoter group and use of a community of middlemen for a similar.
There are additionally evidences of routing of funds via offshore constructions to accumulate the belongings,” mentioned the I-T.The tax company has additionally seized money of Rs 4 crore throughout its search operation.