Ludhiana: The income-tax department has come across shady deals involving city businessmen, wherein they have allegedly adopted a ‘jugaad’ system to convert their black money into white and evade crores of rupees in taxes.Department sources said under the modus operandi, businessmen first identify city residents having high value shares after which they enter into a deal with them to buy their shares at 10-12% premium of their market value but on a condition to execute the purchase in back dated contracts when the value of such shares was 50-100 times lower than the market value.The entire payment is done in black money (cash), except for the amount shown in the contract which was paid by cheques and RTGS, sources added.Sources said after completing the documentary and payment process, the alleged tax evaders then get these shares transferred into their demat accounts and sell the same. To dodge the I-T department, the industrialists show their black money as the proceeds from the sale of shares whose value multiplied drastically, they added.In the entire process, they also evade long-term capital gain tax by showing the transactions done after the mandatory period of holding the shares required to take this benefit, sources said.Department sources said about 10-12 such cases have been reported this year which involve black money to the tune of Rs 25-30 crore.Sources also revealed that the department has issued notice in all the cases. Half of these cases are with the investigation wing of the department while remaining are with the the assessment wing.Sources said same kind of back dated contracts with similar wording have been used in all the cases and same pattern of settling the dues.Besides the businessmen, original sellers of these shares too are on I-T radar as they too have evaded tax by accepting proceeds of sale of shares in cash and concealing the exact amount of profit earned by them, sources added.How this worksThe bizmen in question have allegedly showed fudged up entries in their balance sheets and forged contracts to show backdated purchase of shares whose value multiplied over the span of one to two years. I-T sources decode step-by-step procedure followed in such dealsMr A is holder of 1,000 shares of ‘X’ company and value of each share is Rs 1200 on February 10, 2018 (Total market value Rs 12lakh)Mr B (tax evader) who wants to convert his black money of about Rs 10lakh into white approaches A and enters into a deal with him after agreeing commission to be charged by A for this entry.Both of them make a forged contract of sale and purchase of 1000 shares of X company for January 5, 2016 when market value of each share of ‘X’ was only Rs 200. Therefore the total transaction amount shown in the contract will be Rs 2lakh for which B will issue a cheque to A. The remaining amount of Rs 10lakh and agreed commission will be paid by B by cash.As there is no provision in the share exchanges to transfer the shares in back date, the sale proceed between A and B will take place on current dates (let’s say February 10, 2018) and B will sell the shares on current market value. But in his balance sheet of up to March 31, 2018, he will show that he purchased these shares on January 5, 2016 for Rs 2,00,000 and sold them for Rs 12Lakh on February 10, 2018 and made a tax free profit of Rs 10lakh which is exempted from income tax as it is long-term capital gain‘Rs 25 crore to Rs 30 crore involved’Sources in the income tax department said, “In the past three years, about Rs 25 crore to Rs 30 crore of black money was turned into white by city businessmen using this technique.”I-T actionAs per the provisions of the Income Tax Act, businessmen who indulged in this malpractice will be penalised and made to pay 100% tax equivalent to the amount of black money they showed in their balance-sheets as white. Besides, the original share owners too will be penalised with the same amount of tax as he too concealed his actual income

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