New Delhi: The Income Tax Department raided the offices of Chinese telecom equipment company ZTE over tax evasion, bogus expenses worth hundreds of crores, illegal share purchases, currency exchange and accounting discrepancies. Raids were conducted at five locations, including the corporate headquarters in Gurugram, the residence of a foreign director, the residence of the company secretary, the accounts person and the cash handler of a foreign subsidiary firm in India. The officials also recovered unaccounted cash of more than 62 lakh and three lockers. The IT Department also questioned company CEO Li Jian Jun and other top executives and confiscated computers and other electronic devices.
The Chinese company is engaged in trading of telecom equipment and installation and servicing of these items for various mobile operators in India.
‘It is thus evident that losses are being booked by the company through bogus expenses in respect of services provided by it. Few such recipients have been identified in whose case, substantial expenses have been booked over the years. These entities have been found to be non-existent at their addresses. Moreover, the said entities also do not file their Income Tax Returns (ITRs). More such dubious entities are being examined. It is expected that bogus expenses would run into hundreds of crores over the years’, said a statement issued by Union Finance Ministry.
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‘It has been found that the company failed to deduct TDS on provisions made by them for expenses. Further, the company also declared only two bank accounts in its Income Tax Returns (ITRs) despite having around 12 operative bank accounts, the statement said.
‘Evidence in the form of electronic data and physical papers, found during the course of the search shows that unaccounted money, running into several crores every year, has been brought back into the books in the form of bogus scrap sales, etc. Incriminating documents found from the electronic data of key persons, including the foreign CFO, show that the employees of the company were engaged in illegal currency exchange from Rupee to RMB. They were also found to be engaged in large scale trade of medicines from India to China’, it added.