The Central Board of Direct Taxes (CBDT) and official sources revealed on Wednesday that the Income Tax department has uncovered “unaccounted cash sales” amounting to approximately Rs 1,000 crore during a recent raid on the Polycab group, a prominent manufacturer of wires, cables, and electrical items.
The searches, conducted on December 22 last year, resulted in the seizure of unaccounted cash exceeding Rs 4 crore, along with the restraint of over 25 bank lockers, as stated by the CBDT in an official statement. The operation covered a total of 50 premises located in Mumbai, Pune, Aurangabad, Nashik in Maharashtra, Daman, Halol in Gujarat, and Delhi. Authorized distributors associated with the group were also included in the search.
Although the CBDT statement did not explicitly name the group, official sources confirmed it to be Polycab India Limited. In response to reports of “tax evasion” circulating in the media, Polycab India issued a clarification to stock exchanges, dismissing the information as “rumors” and affirming the company’s commitment to compliance and transparency.
During the raids, the CBDT claimed to have seized a substantial amount of “incriminating” evidence in the form of documents and digital data, revealing the alleged “modus operandi of tax evasion” employed by the group in collusion with some authorized distributors.
The CBDT alleged that the flagship company engaged in unaccounted cash sales, cash payments for unrecorded purchases, non-genuine transport and sub-contracting expenses, all aimed at suppressing taxable income. The preliminary analysis suggested unaccounted cash sales of approximately Rs 1,000 crore, which were not reflected in the company’s books.
Additionally, the statement highlighted unaccounted cash payments exceeding Rs 400 crore made by a distributor on behalf of the company for raw material purchases. “Non-genuine” expenses, including sub-contracting expenses, purchases, and transport expenses, totaling around Rs 100 crore, were also identified in the seized evidence.
The search operation uncovered “unexplained” transactions conducted by a distributor, issuing bills without genuine supply of goods, leading to an inflation of purchase accounts by about Rs 500 crore for certain parties. The CBDT concluded that this distributor exclusively sells products of the flagship company.
