The Income Tax Department carried out search & seizure operations on 24.02.2021 on a major Pharmaceutical group based out of Hyderabad.  This Pharmaceutical group is engaged in the business of manufacturing of intermediates, Active Pharmaceutical Ingredients (APIs) and formulations.  Majority of the total manufactured products are exported to various countries i.e. USA / Europe.  The search operation was carried out at about 20 locations in 5 States.

Searches have resulted in seizure of cash amounting to ₹ 1.66 crore. During the search action incriminating evidence in the form of digital media, pen drives, documents, etc. have been found and seized. Incriminating digital evidences were gathered from SAP @ ERP software maintained by the assessee group.

During these searches, issues relating to purchases made from bogus and non-existent entities, artificial inflation of certain heads of expenditure, alongwith suppression of receipts relating to by-product sale were detected.  Further, evidence of on-money payment for purchase of lands was also found.  Multiple other legal issues were also identified such as personal expenses being booked in the company’s books and land purchased by related concerns / individuals below govt. SRO value.

The search has led to unearthing of evidence relating to unaccounted income of around ₹ 400 crore out of which the assessee group has admitted an additional income of ₹ 350 crore.

Further investigations are in progress.

Search and seizure operations uncover alleged unaccounted income and accounting irregularities in a pharmaceutical group under tax investigation. Search and seizure operations on a Hyderabad pharmaceutical group produced seizures of cash and digital evidence from the group's ERP, revealing alleged undisclosed transactions and accounting irregularities. Investigations point to purchases from bogus entities, inflated expenses, suppression of by product receipts, on money land payments, booking of personal expenses in company accounts, and related party land acquisitions below official valuation, leading to the unearthing of substantial unaccounted income and a reported admission of a major portion as additional income; inquiries continue.