Recent search operation by the Income Tax Department at several locations related to Hero MotoCorp and its senior personnel has brought to light false expense claims to the tune of ₹1,000 crore and cash transactions worth ₹100 crore for purchasing a farmhouse in Delhi’s Chhattarpur locality.

From March 23 to 26, tax sleuths had raided over 40 addresses related to the two-wheeler major, its chairman Pawan Munjal and other senior officials of the company over allegations of tax evasion. The search and seizure operations covered several premises across Delhi-NCR.

The tax department found a large amount of incriminating evidence in the form of hard copy as well as digital documents was seized during this search operation, a news agency reported. These documents showed that the automobile major booked bogus purchases, made huge unaccounted cash expenses and obtained accommodation entries, with the total financial implication of more than ₹1,000 crore, the report further said.

The documents also included evidence of cash transaction worth more than ₹100 crore for purchasing a farmhouse in Chhattarpur. The purchase was made by Munjal, where the price of the property was manipulated to evade taxes and black money was used to pay for it. This is in violation of section 269 SS of the Income-tax Act, the agency further reported.

As per Section 269 SS of the Act, 100% penalty will be levied if the seller accepts an amount of ₹20,000 or more from a buyer for an immovable property.

Following the report, Hero MotoCorp shares dipped more than 7% on Tuesday. The share price hit an intraday low of ₹2,155, before closing at ₹2,208.35, down 168.25 points or 7.08%. Following the downward share movement, both BSE and National Stock Exchange (NSE) had sought clarification from the company over reports of bogus expense claims.

In response, Hero MotoCorp has denied any wrongdoing in the matter, stating that it will inform the exchanges of the findings of the tax department when it receives them.

“The allegations made in the press reports are not borne out of any documents that have been served on us or our internal documents. Therefore, we categorically deny the speculative press reports,” Hero MotoCorp said in its clarification to the bourses.

“We wish to clarify that officials from the Income Tax Department visited our offices in the previous week. The company has provided all support and cooperation, necessary documents and data to the authorities and will continue to do so if required. As and when the tax department concludes its findings and communicates to us, we will inform the exchanges suitably,” it added.

Hero MotoCorp maintained that it is a law-abiding corporate, with robust internal financial controls and its financial statements are duly audited.

“We are conscious of our obligation under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015; we have been discharging the same on a regular basis and shall continue to do the same. As a matter of fact, we do not comment/respond on speculative news,” it further said.

On the first day of the income tax raids, Hero MotoCorp had told Fortune India that the action is part of a routine inquiry.

“Officials from the Income Tax Department visited two of our offices in Delhi and Gurugram and the residence of our Chairman & CEO Pawan Munjal on Wednesday. We have been informed that this is a routine inquiry, which is not uncommon before the end of the financial year,” a company spokesperson had said.

“We reassure all our stakeholders that it continues to be business as usual," the auto major had further stated. "We at Hero MotoCorp are an ethical and law-abiding corporate, and maintain the highest standards of impeccable corporate governance. In keeping with this philosophy, we are extending our full cooperation to the authorities.”

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