The contractors were engaged in execution of civil contracts mainly in BMC. (File photo)

The Income Tax (I-T) department on November 6 conducted raids in Mumbai and Surat on civil contractors who work for the Brihanmumbai Municipal Corporation (BMC). The contractors have been engaged in the execution of civil contracts mainly in BMC. Searches were also conducted in Surat, Gujarat.

A total of 37 premises were covered under search action and seven premises were covered under the survey. There were reports that certain contractors had taken entries in the form of loans, etc. from entry providers and also inflated expenses in the books of accounts to suppress income.

So far, detection on account of the above mentioned issues is to the tune of Rs 735 crore and extent of accommodation entries is being quantified.

"There were reports that certain contractors had taken entries in the form of loans among others from entry providers and also inflated expenses in the books of accounts to suppress income. Incriminating evidence showing large scale tax evasion and money laundering have been found," the Central Board of Direct Taxes (CBDT) said on Thursday.

So far, the CBDT said, detection on account of above-mentioned issues is to the tune of Rs 735 crore and extent of accommodation entries is being quantified.

The raids have also led to the detection of the use of bogus companies (floated by the entry providers) for giving entries to businesses in the form of loans or bills for expenses, etc.

"In the case of the entry providers, systematic modus operandi of bank fraud and forgery has been detected whereby the promoters have made investments in immovable properties and shares of group companies by siphoning off the bank loans," it said.

In the case of the contractor groups, several instances about the inflation of expenses by bogus purchases/sub-contracts and taking of loans from entry providers have been identified, the statement claimed.

Investigations are in progress, including identification of the remaining beneficiaries, the CBDT said.