A Tough Blow for the Steel Magnate: Income Tax Department Attaches Benami Properties Worth ₹45.1 Crore
Tax authorities seize benami assets worth 45.1 crore Indian rupees belonging to a steel company
In a hard-hitting move, the Income Tax Department has provisionaly frozen assets worth a whopping ₹45.1 crore under the Benami Transactions (Prohibition) Amendment Act, targeting shares and fixed deposits linked to Meraj Yusha, the top honcho of Yazdani Steel and Power Limited.
The investigation unfolded following a public notice issued under section 24(b)(i) of the Act, which sourced the assets from entities like Yazdani Projects & Estates Pvt Ltd, Yazdani International Pvt Ltd, and Yusha's very own steel company. Reportedly, Yusha functions as the beneficial owner of these collectively-dubbed benami assets.
Delving deeper, the probe revealed a shrewd strategy employed by Yusha, where bogus expenses were booked in the Books of account of Sarosh Alizah Mining. These unpaid liabilities were then masked as loans to various entities associated with Sarosh Alizah Mining, serving as benami assets for Yusha.
So far, Yazdani Steel and Power Limited has maintained a poker face, choosing to stay mum over the IT department's action.
The assets confiscated under the Benami Transactions (Prohibition) Amendment Act, 2016, can be held provisionally for 90 days before undergoing adjudication at the nearest adjudication authority. If proven to be benami, these assets will be vested with the government. The Act, primarily designed to combat black money and tax evasion, especially in the real estate sector, carries penalty provisions ranging from rigorous imprisonment of 1 to 7 years and a fine of up to 25% of the property's market value.
The Act targets financial arrangements where property is held by one person, but the consideration (payment) is provided by another, with the goal of concealing the real owner's identity. After the Adjudicating Authority settles the case within a year, a person can appeal to the Appellate Tribunal and later the high court.
Yusha is a partner in Serajuddin and Co, one of the oldest mining companies in Odisha, whose assets were seized by the Enforcement Directorate in 2022 under the Prevention of Money Laundering Act (PMLA) due to illegal extraction of 14.73 lakh tonne of manganese ore from Guruda mines.
The ED investigation found that the company secured the mining lease without adhering to the prescribed conditions and illegally extracted manganese ore during various years. Moreover, the company often produced iron ore beyond the approved quantity by the Indian Bureau of Mines.
As this case unfolds, financial transactions and the role of intermediary companies in hiding ownership are under the microscope.
Sources:1. Income Tax Department2. Enforcement Directorate3. Indian Bureau of Mines
Quick Facts:
- Targeted Personality: Meraj Yusha, the Managing Director of Yazdani Steel and Power Limited.
- Beneficial Owner: Allegedly Meraj Yusha, as it is being claimed that he is the one who benefits from the frozen assets.
- Affected Entities: Yazdani Projects & Estates Pvt Ltd, Yazdani International Pvt Ltd (related to Yusha's company), and Yusha's own steel company.
- Modus Operandi: Bogus expenses in Sarosh Alizah Mining’s books, with the money diverted to alleged benami entities linked to Yusha.
- Penalty Provisions: Up to 7 years of rigorous imprisonment and a fine of up to 25% of the property's market value.
- Precedents: Enforcement Directorate seizure of assets from Serajuddin and Co in 2022 under PMLA, illegal extraction of manganese and iron ore.
- The Income Tax Department has provisionally seized assets worth ₹45.1 crore from Meraj Yusha, the Managing Director of Yazdani Steel and Power Limited, aiming to combat black money and tax evasion, particularly in the real estate sector.
- The investigation has revealed that Yusha is the alleged beneficial owner of several benami assets, with their origin traced back to entities like Yazdani Projects & Estates Pvt Ltd, Yazdani International Pvt Ltd, and Yusha's own steel company.
- To evade detection, Yusha reportedly diverted money from bogus expenses in Sarosh Alizah Mining to various entities associated with Sarosh Alizah Mining, disguising these as loans and creating benami assets.
- The Act also carries penalty provisions, such as rigorous imprisonment of 1 to 7 years and a fine of up to 25% of the property's market value, if these assets are proven to be benami.
- In a related precedent, the Enforcement Directorate seized assets from Serajuddin and Co, a mining company in which Yusha is a partner, in 2022 under the Prevention of Money Laundering Act (PMLA) due to illegal activities.
- The case brings financial transactions and the role of intermediary companies in concealing ownership details under scrutiny, shedding light on the intricate webs of crime and justice in India's general-news landscape.
