ITAT Mumbai directs AO to share information of money laundering operations with various agencies:
Naresh Manakchand Jain (ITA No. 1945 & 1946/Mum/2023)
Facts:
- Assessee’s Activities: Mr. Naresh Manakchand Jain was engaged in providing accommodation entries, which involved facilitating individuals in converting their unaccounted income into tax-exempt income, such as long-term capital gains, short-term capital gains, and business losses.
- Multiple Beneficiaries: Mr. Jain provided these accommodation entries to numerous beneficiaries, totaling approximately 32,855 individuals or entities and as per ITAT Rs 1680 Cr were laundered.
- Search and Centralization: A search operation was conducted under Section 132 of the Income-tax Act in connection with Ranka Jewellers, during which Mr. Jain’s case was centralized at Pune. Subsequently, the case was retained in Mumbai following a High Court order.
- Additional Search: Another search was conducted on Mr. Jain’s premises by the Mumbai Investigation Wing in March 2019, leading to the issuance of notices under Section 143A of the Income-tax Act.
- Admissions by Assessee: During the investigation, Mr. Jain admitted to manipulating share prices of various companies to provide bogus entries for capital gains. He also revealed the names of individuals and entities involved in this operation, along with the commission rates he charged (2% to 3%).
- Assessment Order: The AO made additions on account of commission income of 3% on ₹1,680 crores as undisclosed income.
ITAT Findings and Directions:
- ITAT reviewed the appeals and upheld the decision to confirm a commission income of 3% on undisclosed income.
- Directed the AO to share information with various authorities and regulators to investigate and take action against all parties involved in the m
- oney laundering operation.
- Emphasized the magnitude and complexity of the operation, involving numerous beneficiaries and violations of multiple economic laws.
- Directed actions against beneficiaries, directors of involved companies, share brokers, and entities facilitating money laundering.
5. Highlighted the need for coordinated action by multiple authorities and regulatory bodies
