Himachal Pradesh: ITCL Assets To be Auctioned Against Tax Evasion Scam

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On January 18, the State Taxes and Excise Department (STED) will hold a third asset auction as part of an effort to collect unpaid taxes from the Paonta Sahib-based Indian Technomac Company Limited (ITCL), which was involved in an approximately Rs 5,000 crore tax evasion.

The STED had attached the company’s assets in accordance with the HP Land Revenue Act. That resulted in the discovery of multi-crore embezzlement in 2014; in which the ITCL was involved.

ITCL is Accused of Rs 5000 Crores Tax Evasion

The department had experienced tax evasion losses totalling Rs 2,175.51 crore. Whereas the banks have claimed a loss of Rs 2,167 crore. The Income Tax Department had also suffered a loss of Rs. 750 crores.

According to the department’s most recent sale notice, all assets have been valued at Rs 165.117 crore. It is only a small fraction of the tax loss the department actually sustained.

According to the assessment, the value of all movable and immovable assets of ITCL including the value of land has been drastically reduced.

ITCL’s Assets Losing their Value

In 2021, the value of all immovable assets, including machinery and plant, was set at Rs 86.71 crore.  This sum is now only 47.72 crores of rupees. For a fleet of cars owned by the ITCL, a reserve price of Rs 1.21 crore was set for 2021.

It is currently only worth Rs. 97.19 lakh. While a decline in vehicle values is inevitable, it is surprising how landed property such as sheds and buildings, can experience such a decline in value.

ITCL Assets Price Drop

A 76.13 bigha piece of land in Rampur Majri and Bharapur was valued at Rs 30.66 crore in 2021 but is now only worth Rs 18.39 crore.

Both the ITCL’s properties are situated on the national highway connecting Nahan and Paonta Sahib. The structure and outbuildings, which were valued at Rs 41.43 crore in 2021 are now worth Rs 27.14 crore only.

In a year, the cost of other assets had similarly dropped precipitously. Even though the price was determined by Himachal Consultancy Organization (a consulting firm for the HP government), various concerns were voiced regarding the sharp decline in property rates.

Recent Charges Filed in the ITCL Tax Evasion Scam

  • 22 people have been detained in connection with the case including nine company employees, two statutory auditors, two receivers of sold property, and other employees of the excise and taxation departments.
  • In 2016, the CID (crime branch) opened a case. Since 2019, four chargesheets have been submitted.
  • This particular evasion of tax cost the excise department Rs 2,175.51 crore, and there were Rs 2,167 crore in bank defaults. The Income Tax Department has lost Rs. 750 billion in this income tax evasion scam.

What Is Tax Evasion?

Tax evasion, also commonly known as tax avoidance is an illegal practice where a person or business avoids paying income tax. It involves faking or hiding income, inflating deductions without supporting documentation, not disclosing cash transactions, etc.

Tax evasion in India is a serious crime that carries harsh penalties and criminal charges.

The fact that taxes are a significant source of revenue for the government makes advocating for them difficult because most people find it difficult to imagine giving away a portion of their income.

This sum of money is used to fund a number of development initiatives aimed at enhancing the situation of the business or for the accused’s personal benefit. The ITCL case is the perfect example of tax evasion.

However, tax evasion has been a major issue for the nation. The country’s revenue has allegedly suffered as a result of people who should be paying taxes finding ways to avoid doing so. 

What Are The Consequences of Tax Evasion?

In cases resembling ITCL tax evasion, the income tax department may impose a number of penalties on the accused.

Companies that either fail to report and pay their own taxes or fail to deduct taxes at source as required may also be subject to these penalties. A few of the tax evasion and tax avoidance penalties are stated below:

  • 100% to 300% of the tax is collected if income is not disclosed.
  • The assessing officer may impose a penalty amount for failure to pay the required tax, but it cannot be greater than the amount of taxes that are owed.
  • A penalty of Rs. 200 may be assessed for each day that tax statements are not submitted if they are not submitted within the allotted time frame.
  • The penalty can be between 100% and 300% of the amount of taxes owed if someone hides information about their income or any taxable fringe benefits.
  • A fine of Rs. 25,000 may be imposed if an individual or business fails to maintain their accounts as required by section 44AA.
  • A fine of Rs. 1.5 lakhs or 0.5% of the company’s sales turnover, whichever is less, may be evaluated if a company fails to have itself audited or fails to provide a report of that audit.
  • A fine of Rs. 1 lakh may be assessed if an accountant’s report is not provided as required.
  • If a company fails to deduct tax where it is supposed to when making payments, the penalty could be the compensation of the tax due.

The best course of action is to make sure that all taxes are paid on time. These are just a few of the penalties that the Income Tax department may levy, and in some cases, they can be quite expensive.

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