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Bollywood actor Sonu Sood under siege

Days after the Income-Tax Department conducted searches on the premises linked to Bollywood actor Sonu Sood, a move criticised by human rights organisations worldwide as the actor had earned praise for his philanthropic work during the Covid pandemic, the agency on Saturday issued a statement, without naming him, claiming it had detected tax evasion of more than ₹20 crore so far.

“The Income-Tax Department conducted a search and seizure operation on various premises of a prominent actor in Mumbai and also a Lucknow-based group of industries engaged in infrastructure development. A total of 28 premises spread over Mumbai, Lucknow, Kanpur, Jaipur, Delhi and Gurugram have been covered in the search operation,” it said.

According to the agency, during the searches on the premises of the actor and his associates, incriminating evidence pertaining to tax evasion was found.

“The main modus operandi followed by the actor had been to route his unaccounted income in the form of bogus unsecured loans from many bogus entities,” said the Department.

“Investigations so far have revealed use of 20 such entries, the providers of which, on examination, have accepted on oath to have given bogus accommodation entries. They accepted to have issued cheques in lieu of cash. There have been instances where professional receipts have been camouflaged as loans in the books of accounts for the purpose of evasion of tax,” it said.

The agency said these “bogus” loans were used for making investments and acquiring properties. The charity foundation incorporated by the actor on July 21, 2020, had collected donations to the tune of ₹18.94 crore from April 1, 2021, till date, of which it spent around ₹1.9 crore towards various relief work and the balance of ₹17 crore was found lying in the foundation’s bank account.

“Funds to the tune of ₹2.1 crore have also been raised by the charity foundation from overseas donors on a crowd-funding platform in violation of FCRA [Foreign Contribution (Regulation) Act] regulations,” said the agency.

The simultaneous searches on the Lucknow-based infrastructure group, in which the actor had entered into a joint venture real estate project and invested substantial funds, resulted in detection of tax evasion and irregularities in the books of account, said the I-T Department.

It was alleged that the group was involved in bogus billing of subcontracting expenses and siphoning off funds. “Evidence of such bogus contracts found so far are to the tune of over ₹65 crore...the said infrastructure group/company has entered into dubious circular transactions to the tune of ₹175 crore with an infrastructure company based in Jaipur,” said the agency.

The I-T Department has seized ₹1.8 crore in cash and put 11 lockers under prohibitory order. “The search operation is still continuing,” it said.

In a statement on Friday, Human Rights Watch accused the Indian authorities of using "politically motivated" allegations of tax evasion and financial irregularities to silence human rights activists, journalists and other critics of the government.

“On September 15, tax authorities searched the premises of Sonu Sood, an actor, in Mumbai, alleging tax evasion over a real estate deal,” said the NGO, stating the raids appeared to be "politically motivated," as the actor had received widespread praise for philanthropic work during the pandemic, especially to address the gaps created due to the government’s lockdown policies and health-care inadequacies.