For 62-year-old tailor Rekhraj Thada, who earns barely ₹15,000 a month by operating a sewing machine from morning till evening and supports his family, a circular from the Income Tax Department came as the biggest shock of his life. The elderly man, who has never even set foot on the soil of Gujarat, has been shown as a director of a bogus company in Surat and directly slapped with a tax recovery notice of ₹975 crore. The fraudsters misused the poor tailor’s documents to carry out hawala transactions worth ₹2500 crore on paper.
When a Bhaskar reporter reached the registered address of this bogus company to ascertain the facts, it turned out to be not a diamond company, but a common workshop that repairs zari and ice gola machines.
‘The family has been living here for generations, never heard the name of a diamond company’ Upon investigation at the registered address, it was found that the family of Dipakbhai Hasmukhbhai Kletwala resides there. House owner Dipakbhai stated that his family has been living here since the construction in 1997 and has been running ‘Shriram Engineering Workshop’ since his father’s time, where repair work for zari machines and equipment for making ice golas is done. No bank or income tax officials have ever come here for verification. They do not even know Roop Rajat Diamond Company or any person associated with it.
Investigation revealed name as director in one more company After receiving this notice, the family, with the help of a known Chartered Accountant (CA), checked the official records of the Ministry of Corporate Affairs. During the investigation, it was revealed that Rekhraj is not only registered as a director in Roop Rajat Diamond but also in ‘Jai Baberi Diam Private Limited’, another company based in Surat. Prima facie, it has come to light that some fraudster misused his PAN card and other identity proofs to set up these bogus shell companies since 2011.
Registration of a bogus company without physical verification According to official company records, this company was registered on March 24, 2011. A major flaw in the company registration process is that no physical verification is done by visiting the site. Any cunning person creates a shell company on the MCA portal by uploading another person’s documents, PAN card or identity card, and a bogus electricity bill or fake rental agreement. In this case too, it is clear that this bogus diamond company was set up at a wrong address by misusing Darji Rekhraj’s documents.
Replied via e-mail In the notice received from the Income Tax Department, Rekhraj was asked to appear in person in Surat by August 20 to provide an explanation, in response to which he sent his written reply via e-mail. Along with this, he filed a complaint at Pisangan Police Station regarding the misuse of his documents and fraud, where the police registered a complaint. Thereafter, he personally presented his case before Additional SP (Rural) Lalchand Kayal at the Ajmer SP office and demanded justice, following which the officials assured a proper investigation, registered the complaint, and initiated further legal action.
Tax demand of 975 crore arose on transactions worth 2500 crore According to CA’s analysis, this notice has been issued under Section-179 of the Income Tax Act to recover the outstanding tax of a private limited company from its directors. This case pertains to Assessment Year 2013-14 (Financial Year 2012-13). In the company’s bank account, an assessment has been made considering an estimated turnover or bogus transaction of 2250 to 2500 crore rupees, in which a demand of 975 crore rupees has been raised, comprising approximately 750 crore in tax and 225 crore in penalty.
Despite being innocent, legal proceedings will take place. In this case, despite the director being from a very ordinary poor class and having zero worth, they cannot be acquitted merely by verbally claiming to be innocent. An FIR will have to be lodged with Cyber Crime for the misuse of the identity card, and a representation will have to be made before the ROC. If relief is not granted by the department, the victim will have to file a writ petition in the High Court and obtain a stay, only then can the court release them from this responsibility.
