New Delhi, Dec 15 : In a major crackdown on tax evasion by asset reconstruction companies (ARCs) the Income Tax (I-T) department has carried out search and seizure operations on four such firms covering 60 premises across various cities including Delhi and Mumbai.
The department said that its search action has revealed that the ARCs had adopted various unfair and fraudulent trade practices in acquiring the Non-Performing Assets (NPAs) from the lender banks.

In order to game the system, they created a maze of shell companies and acquired NPAs at far less than the real value of the collateral securities covering those stressed assets.
It has also been found that ARCs allegedly made the minimum cash payout to lender banks usually using the funds of the borrower group. Such funds were routed through several layers of dummy companies controlled by the borrower group or through hawala channels.
“It has also been found that the ARCs have been following non-transparent methods in disposal of assets that were acquired by them from the banks. 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 I-T department said in a statement.
The ARCs are suspected 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, the statement said.
During the investigation, it was found that one of the ARCs maintained a parallel set of accounts on Tally accounting software, in a pen drive, recovered from the custody of the trusted employees of the promoter.
This parallel set of accounts contained cash transactions aggregating to more than Rs 850 crore.
“Handwritten diaries have also been found during the search, containing detailed entries substantiating the deliberate act of layering of transactions by the promoter group and use of a network of middlemen for the same. There are also evidences of routing of funds through offshore structures to acquire the assets,” the I-T department said.
The Tax department has seized cash of Rs 4 crore during the search operation carried out on December 8.(UNI)