Top 10 Biggest Income Tax Raid in India

Income tax raids have been a crucial part of the Indian government's plan to keep the country free from tax evasion. Over the years, several high-profile raids made headlines revealing the extent of undisclosed wealth and tax evasion.

Let us go through this article to get to know the top 10 biggest raids that Indian government performed successfully. We will also highlight the longest income tax raid carried out by the income tax officials who completed their duty to keep financial troublemakers away from harming the tax system of India.

Purpose and Objectives of Income Tax Raids

Income tax raids are carried out with the primary goal of discovering concealed income, unaccounted assets, and ensuring that people and corporations comply with tax regulations. These searches are often conducted when there is credible proof of tax evasion or when authorities suspect large-scale financial irregularities.

Some key purposes of income tax raids are discussed below.

Detecting Tax Evasion

The primary goal of income tax raids is to discover cases where people or corporations have disguised income to avoid paying taxes. This entails scrutinising financial records, transactions, and assets for unreported revenue to tax authorities. Furthermore, tax officials are looking for assets that have not been properly documented or disclosed.

Unearthing Black Money

Income tax evasion is critical in locating black money, which is frequently created through transactions in the informal sector. Authorities help to minimise reliance on unaccounted cash and establish a more transparent financial system by identifying people or firms engaging in such practices.

Ensuring Compliance

Income tax raids are carried out to ensure the correctness of tax returns filed by individuals and businesses. To verify that taxpayers are in compliance with tax regulations, this procedure entails cross-referencing the information presented in tax returns with real financial activities and assets.

List of Biggest Income Tax Raids in India

Now that you know the key purpose of conducting an income tax raid, let us get you through some of the biggest tax raids that have been conducted in history of India. Following is a list of top 10 biggest raids performed by the Indian Income Tax Department:

Seizure of New Notes in Bengaluru

In 2016, an operation conducted by Income Tax department in Bengaluru uncovered a substantial amount of Rs.5.7 crore in cash at the homes of two engineers and two contractors. The seized money consisted entirely of newly issued currency notes, with approximately Rs.90 lakh discovered in demonetized notes.

In addition to the cash findings, the raid also led to the discovery of 7 kilograms of gold and 9 kilograms of jewellery, valued at nearly Rs.5 crores. Notably, a Porsche limousine and a Lamborghini were among the assets seized from the residence of SC Jayachandra, an engineer associated with the Public Works Department.

CBI Raid at Hyderabad Post Offices

CBI officials carried out unanticipated inspections at eight distinct post offices in Hyderabad following the demonetisation initiative in the year 2016. In response to reports of irregularities in accepting old currency notes, a sum of 40 lakh in cash was confiscated from Himayat Nagar Post Office. Subsequently, the CBI probed the post office personnel in response to complaints alleging their involvement in the illicit exchange of old currency notes.

Producer of Bahubali Under IT Scanner

In 2015, "Baahubali: The Beginning" emerged as the top-grossing film of the year. The substantial earnings attracted the attention of Income Tax Department, leading to a thorough investigation. Income Tax officials conducted raids at the residences of the film's producers, Shobhu Yarlagadda and Prasad Devineni, located in Hyderabad. During the raids, a stash of Rs.60 crore in demonetised notes was discovered by the IT officials.

Income Tax Department Raids Private Chennai Engineering College

During a tax raid in Chennai in 2019, authorities discovered Rs.8 crore in undisclosed cash within the bank accounts of staff at a private engineering college. The substantial amount was distributed among 400 bank accounts belonging to college employees. It is reported that private colleges in Tamil Nadu frequently receive significant sums of unreported cash from students securing admission.

Sahara Group Offices Raided by IT Department

The Income Tax Department executed a large raid on the conglomerate run by Subrata Roy in the Sahara Group case in 2014. The operation turned up proof of alleged tax evasion and the hiding of undeclared cash. Subsequent investigations uncovered a complicated web of financial irregularities, including the issue of Optionally Fully Convertible Debentures (OFCDs) to raise cash in violation of regulatory standards. 

The matter eventually resulted in a protracted court struggle, culminating in Subrata Roy's arrest, subsequent release on bond, and final agreement to reimburse investors. This high-profile case highlighted the need for transparency and compliance in business financial transactions.

IT Investigators Discover Rs.20 Lakhs in New Currency Notes from Traders

Officials from IT department, in 2017, discovered an undisclosed amount of Rs.20 lakh in newly issued Rs.2000 and fresh Rs.100 notes at the old cloth market in Ahmedabad. This marks the inaugural instance of IT department investigators closely monitoring traders and markets engaged in the exchange of old currency notes. These traders facilitated the exchange of old notes for new currency, charging commission rates of 30% and 40%.

Tax Raid at Think Tank CPR, Oxfam and Media Foundation

The IT department in September 2022, conducted a raid on different NGOs that included Global NGO Oxfam India and Think Tank Centre for Policy Research (CPR). This raid was a part of a probe related to alleged FCRA contravention funds that these NGOs received. As per the reports the IT department was searching for the balance sheets of these NGOs vis-a-vis receipt of funds received by them via FCRA.

Demonetised Notes Seized by Jharkhand Police

Shailendra Prasad Burnwal, the Superintendent of Police in Dumka, Jharkhand, took possession of Rs.93 lakh in cash following a report that prohibited currency amounting to Rs.1 crore had been swapped at the Dumka Head Post Office just after the demonetisation hit the country.

The police carried out searches at three distinct places, uncovering Rs.45 lakh in old notes at the residence of the Post Office clerk, Rs.16.5 lakh at Sibu Patwarui's residence, and Rs.31.5 lakh in cash at Sunil Patwari's residence.

Bhupinder Singh in Sand Mining Case

The Enforcement Directorate (ED) carried out raids at the properties belonging to Bhupinder Singh Honey, the nephew of former Punjab Chief Minister Charanjit Singh Channi, in connection with an alleged illegal sand mining case. ED arrested Honey on February 3 in Jalandhar. 

During the operation, the agency confiscated over Rs.10 crore in cash, gold valued at more than Rs.21 lakh, and a Rolex watch valued at Rs.12 lakh from Honey's residence. This raid marked one of the significant actions of 2022. Additionally, ED questioned Channi regarding his involvement in the alleged illegal sand mining case.

Raids on Money Changers in Major Cities

The Enforcement Directorate carried out countrywide operations in 2021, confiscating Rs.1 crore in outdated and prohibited currency from currency exchange operators. Additionally, ED officials confiscated foreign currency amounting to Rs.50 lakh.

The currency exchange operators were gathering banned notes from illicit money operators, transforming them into foreign currency, and levying a fee for the exchange. Subsequently, they were depositing the undisclosed cash as legitimate earnings.

India's Longest Income Tax Raid

In a historic turn of events, Sardar Inder Singh, a highly influential Indian politician, faced the country's lengthiest income tax raids in 1981. At 91 years old, Singh, a former MLA from Punjab and a Rajya Sabha MP, woke up to witness over 90 Income Tax officers stationed at his residence. Orchestrated by Alak Kumar Batbyal, then Deputy Director (Intelligence), the raid was a meticulously planned operation involving 90 officers, 200 policemen, and clerks to ensure efficiency.

The raid unfolded simultaneously across various locations connected to Singh's family, including Tilak Nagar, Lajpat Nagar, and Arya Nagar. Singh Engineering Works Pvt Limited's factories in Panki and Fazal Ganj were sealed, and lockers in Kanpur, Mussoorie, and Delhi were opened. The initial day of the raid revealed a staggering Rs.92 lakh in cash from Kanpur alone, along with gold, jewellery, guineas, and fixed deposits.

As the search extended to Delhi, lockers unveiled Rs.72,000 in cash as well as fixed deposit receipts worth Rs.1.1 lakh, contributing to a total collection of Rs.1.3 crore. The subsequent two days brought forth six additional gold bars worth Rs.30 lakh. The Income Tax department officials, led by Deputy Director Batbyal, enlisted the local Reserve Bank of India for an 18-hour-long counting process, ultimately determining a total collection of Rs.1.6 crore.

Punjab National Bank, Allahabad Bank, and Hindustan Commercial Bank lockers linked to Singh's family members were sealed, prompting owners to undergo separate searches. The comprehensive investigation extended to 15 more family members over a month, with notices served to Singh, his wife, four sons, two sons-in-law, and others.

Sardar Inder Singh, a former Congress MP and industrialist, held a prominent position in Kanpur as the owner of the state's largest steel mill until 1981. Elected Mayor of Kanpur twice, Singh's legacy was forever altered by the unprecedented income tax raids, leaving an indelible mark on India's political and economic landscape.

Lessons Learned from the Biggest Income Tax Raids

From the above discussion of the biggest and longest income tax raids performed by income tax officials, there are a few lessons to learn from all. Below are some lessons to learn from these biggest income tax raids in India.

• Importance of Transparency

The raids highlight the crucial role that transparency plays in financial transactions. Individuals and corporations must keep precise and detailed financial records to avoid legal ramifications.

• Political responsibility

The involvement of political individuals and parties in income tax raids highlights the importance of increased political responsibility and openness in campaign finance.

• Need for Stringent Regulations

The scope and frequency of income tax raids underline the need for severe laws to successfully combat tax evasion. Tax regulations need regular updates and effective enforcement procedures must be in place.

• Collaboration between Agencies

Coordination and cooperation among government agencies, such as the Income Tax Department, Enforcement Directorate, and Central Bureau of Investigation, are important for a thorough investigation into financial irregularities.

Final Words

The raids performed by Indian Income Tax Department have helped in exposing the financial discrepancies and tax evasion in the country. These income tax raids have not only helped in bringing out the misuse of power by certain individuals and institutions but also helped the government to make changes in the existing regulations and enforce new rules.

Overall, these raids serve as a reminder that no one is above the law, and a robust and fair taxation system is essential for the economic well-being of the nation.