Hero Motors: Over 1000 crore Bogus expense, share tanks 8%
The income tax department conducted a search and seizure operation in multiple Delhi NCR Hero Motor Corp locations from March 23 to March 26, 2022. An anonymous member reported that the IT department noticed multiple probes and mismatches from the information shared by the Central Board of Indirect Taxes and Customs. The issues and evidence from the intelligence were vital that the IT department went in straight for a search and seizure operation and not a survey.
The operation covered over 25 locations and the results sunk the stocks up to 8% in a single day.
In 2019, the I-T department and the GSTN reached an agreement to make data interchange easier. This was done to allow the Internal Revenue Service (IRS) to compare information provided by firms in their income tax returns (ITRs) to data reported in annual GST filings.
The information exchange between the two revenue department officials aims to get hold of tax defaulters and evaders. Businesses must disclose their sales and input tax credit details to the GSTN through a consolidated return filing system.
These shared pieces of evidence and documents revealed that the group had made fictitious transactions, large unexplained cash expenditures, and got lodging entries totaling over Rs 1,000 crore.
The Department also discovered evidence of over Rs 100 crore in cash transactions in the purchase of a farmhouse on the outskirts of Delhi.
According to sources, Munjal bought a property in Chhattarpur where the market price was altered to minimize tax and utilized black money to pay cash above Rs 100 crore, a breach of section 269 SS of the IT Act.
If the seller accepts an amount of Rs 20,000 or more in cash from the buyer, the seller will face a 100% penalty under Section 269SS of the Income Tax Act when selling Immovable Property.
With the drop on March 28 after the IT announcement, the company reached its long-term support band. Further communication from the company will determine the movement of the stock further.
