The Income Tax Department on Saturday alleged that the Dainik Bhaskar media group evaded tax on Rs 700 crore of income over six years. The tax department had carried out raids at several offices of the media group across the country on Thursday, drawing heavy criticism from press organisations and Opposition leaders.

Dainik Bhaskar had widely reported on the devastating effects of the second wave of Covid-19 in India. The newspaper had criticised the Centre’s claims on vaccination figures, reported on the undercounting of deaths, floating bodies in Ganga river and deaths due to oxygen shortages. The media house said the government was scared of its journalism.

In a statement on Saturday, the Income Tax Department alleged that the media group was operating several companies in the names of its employees, “which have been used for booking bogus expenses and routing of funds”.

The tax department added:

“During the search, several of the employees, whose names were used as shareholders and directors, have admitted that they were not aware of such companies and had given their Aadhaar card and digital signature to the employer in good faith.

Some were found to be relatives, who had willingly and knowingly signed the papers but had no knowledge or control of the business activities of the companies, in which they were supposed to be directors and shareholders.”

— Income Tax Department

The IT department claimed that the companies in the name of employees were also used to siphon-off profits from the listed ones. “For example, the nature of such bogus expenditures booked, vary from supply of manpower, transport, logistics and civil works and fictitious trade payables,” the department said.

It added: “The quantum of income escapement using this modus operandi, detected so far, amounts to Rs 700 crore spread over a period of 6 years. However, the quantum may be more as the group has used multiple layers and investigations are being carried out to unravel the entire money trail.”

The IT department also claimed to have found that the group was violating the Securities and Exchange Board of India’s rules for listed companies. “Application of Benami Transaction Prohibition Act will also be examined,” the department added.

“Cyclical trading and transfer of funds among group companies engaged in unrelated businesses to the tune of Rs 2,200 crore has been found,” it said. “The enquiries have confirmed that these have been fictitious transactions without any actual movement or delivery of goods. The tax effect and violation of other laws is being examined.”