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The Income Tax (I-T) Department has raided about 100 locations of diamond trading and export business intermediaries to check fake purchase and sale of goods.
Confirming the development, an I-T official said the raids were conducted across four major diamond trading hubs---Mumbai, Kolkata, Jaipur and Surat. He, however, didn't divulge the findings, saying the searches were still underway. It has been said the department has found links with other cities, too.
"We came to know about the I-T raids at many premises across the country only a little while ago. We will come to know further details about the raids only by Friday morning," said Vipul Shah, chairman of the Gems & Jewellery Export Promotion Council.
The raids, which started on a limited scale in Mumbai and Kolkata on Wednesday, expanded to Jaipur and Surat by Thursday, primarily covering intermediaries, including bill masters, courier service providers and diamond dealers. Initially, fifty spots were covered; on Thursday, another 50 locations were raided.
"This raid is not on diamond traders, but on bogus diamond traders who issue bogus accommodation entry, false purchase and sale bills to the traders," said a senior IT official. It is expected those caught would help provide leads to people involved in round tripping as well.
Loan against cash given by many of these companies are also being scrutinised by the I-T Department.
Haresh Soni, chairman of All India Gems & Jewellery Trade Federation, said, "Fake billing practices were prevalent in the diamond business a few years ago. Now, it has been reduced substantially. I am not aware of any such practice going on…Hence, the reasons for the raids are unknown. The I-T Department is yet to come out with details. Hence, we are clueless about the reasons for the raids."
In the diamond trading business, bogus bills are generated to avail of loans and, to an extent, evade taxes. Diamond traders paid a small sum to those generating bogus bills, and this became a win-win situation for both sides, said a diamond dealer.
