The Enforcement Directorate (ED) has arrested the fifth accused in the Rs263 crore Income Tax TDS refund fraud case. Officials allege that Purshottam Chavan, the arrested accused, played a pivotal role in the fraudulent scheme, possessing a portion of the proceeds of crime (POC).
Chavan was arrested on Monday under provisions of the Prevention of Money Laundering Act (PMLA), 2002, and was produced before the Special PMLA Court, which sent him to ED custody till May 27.
The investigation gained momentum following the recent arrest of businessman Rajesh Brijlal Batreja. During interrogation, Batreja revealed Chavan’s involvement as an associated accused. The probe agency uncovered evidence suggesting that Batreja and Chavan maintained regular communication, exchanging incriminating messages related to hawala transactions and the diversion of POC.
The ED found a link between Purshottam and Batreja in diverting Rs55.5 crore of POC outside India and round-tripping part of these funds into two Indian entities under the guise of investment from Dubai. The amount was diverted to three shell companies to convert it into cash for sending outside India through hawala channels.
Based on the investigation, the ED conducted searches on the residential premises of Chavan on Sunday, where various property documents, foreign currency, and mobile phones were recovered and seized. It was also found that Chavan tried to hamper the investigation by destroying evidence that could further lead to tracing the POC. Consequently, Chavan was arrested for his alleged involvement in dealing with POC under the provisions of the PMLA, 2002.
In a money laundering case connected to a Rs263 crore IT fraud, the ED arrested IT inspector Tanaji Adhikari, businessman Bhushan Patil, and Rajesh Shetty last year, who are currently in judicial custody. The agency had already filed a prosecution complaint against the three accused last year and had attached immovable and movable properties worth Rs168 crore.
Adhikari, the key accused handling the refund of tax deducted at source claims, was found to be the main culprit in the Rs264 crore TDS fraud. He used the login IDs and passwords of his senior officers in the I-T Department to clear bogus refund claims into the account of another arrested accused. From November 2019 to November 2020, Adhikari cleared 12 fraudulent TDS refunds amounting to Rs264 crore. The ED alleged that the entire proceeds of crime were routed to another accused’s firm’s bank account and then diverted to other accounts.
Batreja, along with Chavan, was found to be involved in money laundering and fund diversion. Batreja is said to have aided Adhikari in concealing proceeds of crime and later in the placement and layering of the siphoned funds by incorporating firms in Dubai to project the money as untainted. Batreja was also found to have invested a part of the siphoned funds in two Indian companies based in Mumbai and Gurugram under the guise of share investment via cross-border remittance.
