Solar Power Developer Hindustan Powerprojects Caught Evading Tax of Over Rs 1350 Cr

During search and seizure operations conducted against Hindustan Powerprojects, a company owned by the nephew of Madhya Pradesh chief minister Kamal Nath, the Income Tax department detected tax evasion of more than Rs 1,350 crore.

The Central Board of Direct Taxes (CBDT) has revealed that the raids were conducted earlier this month at offices of the solar power group at several locations in NCR, Bhopal, Indore and Goa by the Delhi unit of the Directorate General of Income-tax (Investigation) based on “credible information” of large scale collection, possession and movement of unaccounted assets.

According to sources, the raids were conducted at Nath’s nephew Ratul Puri’s company, Hindustan Powerprojects Pvt Ltd on April 7, 2019. Puri was also questioned by the Enforcement Directorate in Delhi earlier in connection with a probe into the controversial Rs 3,600 Agusta Westland helicopters deal.

According to the details provided by the CBDT, the group was operating through a maze of shell companies and indulged in bogus billings, over-invoicing of imports and round-tripping of funds. During the search operation, a maze of shell companies was found being used as conduits for providing entries to the group and ‘accommodation entries’ in the garb of bogus unsecured loans/share application money to the tune of Rs 370 crore was detected.

Officials also found evidence of inflating expenses through bogus billing of Rs 330 crore in the case of a power plant of the group and the money so siphoned off was collected in US Dollar through hawala operators. A handwritten diary containing records of ‘out of books’ cash receipts worth Rs 240 crore was seized from the office.

With regard to over-invoicing of imports and round-tripping of Rs 252 crore, the CBDT said “during the search, evidence was found indicating that the group grossly over-invoiced its imports from original manufacturers by re-invoicing it through a shell company of a person who is an accused in a major defence scam. The surplus so created was ploughed back in the books as FDI through another shell company of the same person.”

“The search action was undertaken on the basis of credible information and has led to the detection of large scale tax evasion of more than Rs 1,350 crore,” the CBDT issued in a statement.