Income Tax Department conducts searches in a major Telecom Group, Mumbai contractors

The Income Tax Department has conducted search and seizure operations against a multinational company that deals in telecoms software products and services. The allegation against this company was that it made inflated payments to its related company which is outside India.

The Ministry of Finance issued a press statement in this regard in which it said, “The Income Tax Department conducted search & seizure operations on a multinational group, engaged in distribution of telecom products and providing captive software development services, on 15.02.2022. The ultimate shareholding of the group lies with a foreign entity of a neighbouring country. The searches, which were spread across Delhi, Gurugram and Bengaluru covered the main business premises and also the residential premises of the key office bearers.”

It added, “The search action has revealed that the group has made inflated payments against receipt of technical services from its related parties outside India. The assessee company could not justify the genuineness of obtaining of such alleged technical services in lieu of which payment has been made as also the basis of determination of consideration for the same. The expenses debited by the assessee company towards receipt of such services are to the tune of Rs. 129 crore over a period of five years.”

In another case, the Income Tax Department carried out search and seizure operations on certain contractors executing contracts of Brihanmumbai Municipal Corporation (BMC), a prominent person and their close associates.

In all, more than 35 premises in Mumbai have been covered during the search operation. During the course of the search operation, numerous incriminating documents, loose sheets and digital evidences have been found and seized,” the Finance Ministry said.