Polycab India witnessed a significant decline of over 20 per cent in its share on Thursday following disclosures from the income tax department following the discovery of approximately Rs 1,000 crore in 'unaccounted cash sales' during its search of the company's offices on the previous day.
Earlier, the FMEG (Fast Moving Electrical Goods) manufacturer had provided clarification to stock exchanges, dismissing media reports about 'tax evasion by the company' as mere 'rumors.'
However, according to a PTI report, the Central Board of Direct Taxes (CBDT) stated that during the searches initiated against the group on December 22 last year, unaccounted cash exceeding Rs 4 crore was confiscated, and more than 25 bank lockers were restricted.
CBDT further pointed out that a considerable volume of 'incriminating' proof, including documents and digital data, was confiscated during the raids. These materials expose the group's 'modus operandi of tax evasion,' along with certain authorized distributors. The preliminary scrutiny indicated that the company participated in unrecorded cash transactions, made cash payments for undisclosed purchases, engaged in non-authentic transport and subcontracting expenses, etc., all aimed at concealing its taxable income.
The search operation revealed 'unexplained' transactions by the distributor, issuing bills without actual goods supply. These goods were sold in the open market for cash. Eventually, the authorized distributor aided certain parties in 'inflating' their purchase accounts, totaling around Rs 500 crore. This distributor exclusively deals in products from the flagship company, according to the CBDT.