IT Dept Sleuths into Fish Processing Industries in DK/Udupi
Mangaluru/Udupi: The Investigation wing of Income Tax Department conducted searches in three major groups of Fish Processing Industries, located in Mangalore and Udupi. Along with these groups, some Agents who support them in procuring the raw fish were also searched. Verifications were conducted with some of the end users of the processed food.
For these operations, nearly 150 Officers and officials were mobilised not only from Mangalore and Udupi but also from places like Bangalore, Mysuru, Hubli, Belgaum and Panaji.
In total, searches were conducted in 20 premises, surveys were conducted in 23 premises, spread across 5 states.
The Department conducted discrete enquiries for more than three months and identified the modus operandi of various fish processing units. They identified the whole chain, from raw fish suppliers to the end users and swung into action on early hours of 8th February 2018.
During the searches, it was found that the processing units are, with the help of agents, showing huge bogus creditors in the name of fishermen. It was also found that huge cash was paid to the agents in the name of fishermen, violating the provisions of the Income Tax Act. It was also noticed that various Benami entities were floated in the name of relatives and employees to make unaccounted investments, in violation of Prohibition of Benami Property Transaction Act, 1988.
The searches also brought forward some of the other malpractices:
The lab reports are managed for the quality report on the fish food.
The Fish Oil is adulterated in a few instances with other lower grade oils.
The diesel subsidy is misused by procuring the boats on various Benami names, as law regulates only one boat eligible per person for such subsidy
During the searches, it was also found that there are instances of Customs Act violation. The processing units were importing fishmeal and the same was re-exported for making a false claim of duty drawback. The plant & machinery imported was under invoiced, causing loss of customs duty.
In some instances, it was noticed that commission is being paid by the Chinese company to the Indian middleman, outside India, and same was routed in hawala channels to countries like Dubai, Oman, Mauritania, Middle East and African counties. During the searches, the foreign account details and foreign investments, in violation of Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, were also found.
It was also noticed that these processing units maintain posh guest houses to extend hospitality to the persons with whom they deal with.
During the searches, it was noticed that many agents and processing units are splitting their income in the name of relatives, employees and fictitious entities, which is in violation of the Income Tax Act.
It was also noticed that some of the fishermen are under impression that their income is exempt, like agriculture income, which is not correct.
The above searches have resulted in unearthing of nearly Rs 195 crores undisclosed income so far. Unaccounted cash of Rs 88 Lakhs was also seized. This is likely to go up further as Department plans to investigate all related parties & concerns, the bank transactions in India and abroad, and about investments made abroad.
The same or similar modus is believed to be followed by many entities and individuals connected with the fishing industry. All such persons may like to come forward and pay due taxes on their own.
