Government of India

Ministry of Finance

Department of Revenue

Central Board of Direct Taxes

New Delhi, 11th November, 2019

PRESS RELEASE

Income Tax Department conducts search on an Educational Group in Chennai

On 07.11.2019, the Income Tax Department conducted search action under the Income-tax Act, 1961 in the case of a group of trusts that are running educational institutions in and around Chennai for the past thirty years. The institutes run by the group include a number of engineering colleges, polytechnic institutes, dental college, nursing colleges, hospitals & schools. The group has interests in other sectors like fishing harbor, cement, milk, bottled water and iron & steel etc.

There were reports of the group accepting fee/donations in cash, which were largely unaccounted and of the funds of the trust being diverted to other sister concerns. The action began on 7/11/2019 covering 32 premises in and around Chennai. During the search proceedings, evidence of suppression of fee receipts has been found. In addition, one group entity has adopted the modus operandi of showing the actual fees received as ‘advance fee collection’ in the liability side of the balance sheet and advancing the said amounts as payments , mainly, to its sister concerns against certain expenses/purchases, which were found to be inflated/ bogus. Thus, the money of the trusts is found to be diverted outside the trusts for the objects outside the scope of Trust.

Apart from the above, evidences have been found of unexplained cash debits, unrecorded cash expenditure, suppression of sale receipts in fishing harbor, loans advanced in cash, non-disclosure of income from sale of property etc. Cash of approximately ₹ 5 crore and Jewelry of more than about ₹ 3 crore was seized in the said action. The preliminary estimate of the undisclosed income of the group detected so far is more than ₹ 350 crore. The search proceedings have been temporarily concluded and investigations into the findings are in progress.

(Surabhi Ahluwalia)

Commissioner of Income Tax

(Media & Technical Policy)

Official Spokesperson, CBDT.

Search action on educational trusts uncovers alleged diversion of trust funds and suppression of fee income, investigation ongoing. Searches under the Income-tax Act on a group of educational trusts uncovered suppression of fee receipts, unrecorded cash transactions, loans in cash, non-disclosure of property sale receipts, and an alleged scheme where actual fees were recorded as advance liabilities and routed to sister concerns against inflated expenses, resulting in diversion of trust funds; searches produced significant cash and jewellery seizures and a preliminary estimate of substantial undisclosed income, with investigations continuing.