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Scam of Rs 3200 Crore in has been unearthed by the Income Tax (IT) Department wherein 447 companies had deducted the tax from their employees salaries but instead of submitting the same with government has diverted it into the business for furthering the business interest.
Prosecution has been initiated against these companies by the TDS wing of the IT Department and to some, even warrants have been issued. The prosecution has been initiated under section 276B of the Income Tax Act and the section provides for the minimum punishment of the rigorous punishment of three months which may extend upto seven years with fine.
Further, the IT department is thinking of adding charges of cheating and criminal breach of trust under Indian Penal Code as the offence committed by the companies involve duping its employees. The offenders majorly include builders and among one of them has converted Rs 100 crore by way of diversion from employees into business practice.
Other offenders include movie production houses, infrastructure companies, startups and fly by night operators. Rs 14 crore has been diverted by an IT company as a part of port development and Rs 11 crore TDS has not been submitted by an MNC which provides IT solutions.
An IT official in the statement has said that in the period from April 2017 to March 2018 it has been found that in about 447 companies TDS of Rs 3200 crore has been deducted but not submitted to the government. The companies are under legal obligation to deduct and submit the TDS within a prescribed time frame to the government. Failure on their part to do so has attracted the prosecution against them and the IT department also intend to arrest some of these companies.
For the purpose of recovery from these companies the bank accounts, movable and immovable assets are being attached by the IT department. The amount so diverted has been invested into the working capital. While some offenders apologize and promise to pay the deducted amount, others say that because of adverse market conditions they were unable to pay. It has been noted that in some of the cases 50% of the amount deducted from the employees salary was submitted to the government and the rest 50% was wrongly diverted by the employer.