The Income Tax Department has found an ‘unholy nexus’ between four Asset Reconstruction Companies (ARCs) and borrower groups after they were raided on Dec 8, the Central Board of Direct Taxes (CBDT) stated. The ARCs are based in Mumbai but their premises in Ahmedabad, Gujarat are also under I-T radar. Sources said that companies under the income tax scanner include: CFM Asset Reconstruction Pvt Ltd, Omkara Assets Reconstruction Pvt Ltd, Rare Asset Reconstruction Pvt Ltd and Invent ARC Pvt Ltd. Out of these four companies, two have their premises in Ahmedabad.
Rare Asset Reconstruction Pvt Ltd
Location: Ellisbridge, Ahmedabad
The first company that is likely under I-T radar is Ellisbridge-based asset reconstruction firm: Rare Asset Reconstruction Pvt Ltd. It includes Anil Bhandari, Sandeep Vrat, Deepak Narang, Ramaswamy V. Iyer, Shikha Bhandari as its board of directors.
CFM Asset Reconstruction Pvt Ltd
Location: Prahladnagar, Ahmedabad
CFM Asset Reconstruction Pvt. Ltd. is a company sponsored by Chartered Finance Management Limited (CFML) and has secured a license from the Reserve Bank of India (RBI) on 3 August 2016. It is the first Gujarat-based ARC in India. The registered office is located in Ahmedabad with pan India operations.
Rs 75,000 crore international scam
CBDT confirmed that transactions estimated to be worth more than Rs 75,000 crore allegedly executed by four asset reconstruction companies (ARCs) are under the scanner of the income tax department, people with knowledge of its investigation said.
There is evidence of routing of funds through offshore structures to acquire the assets. Cash of Rs. 4 crore has been seized during the search operation. Large volumes of documentary and digital evidence seized are being further analysed for detection of violations under the Income Tax and allied Acts.
60 premises
The I-T department carried out search and seizure operations on Dec 8, 2021. Total of 60 premises spread over Mumbai, Ahmedabad, Delhi and others have been covered.
Cash transactions of Rs 850 crore
One of the ARCs was found to be maintaining 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.
Use of dummy companies
There was an unholy nexus between the borrower groups and ARCs and in the process, a maze of shell or dummy concerns were used. The amount at which the NPA has been acquired by the ARC has been found to be far less than the real value of the collateral securities covering the said asset/NPA. The minimum cash payout made out by the ARCs to lender bank(s) for acquiring the stressed assets/NPAs have usually been using the funds of the borrower group. Such funds have been routed through several layers of dummy companies controlled by the borrower group or through hawala channels.
