Gorakhpur IT Searches Expose Massive Tax Evasion Network

Income Tax Raids in Gorakhpur Expose Suspected ₹500-Crore Evasion Network Across Business Groups

A coordinated, five-day search operation by the Income Tax Department across the Gorakhpur division of Uttar Pradesh has uncovered what officials describe as compelling evidence of large-scale tax evasion involving multiple prominent business groups. Preliminary assessments suggest undisclosed income and financial irregularities approaching ₹500 crore, marking one of the region’s most extensive enforcement actions in recent years.

The operation, which concluded late Saturday, targeted six major business houses operating across sectors such as real estate, edible oil and liquor trading. According to officials familiar with the probe, the searches yielded a significant volume of incriminating material, including nearly ₹1 crore in cash, gold and diamond jewellery worth several crores, and more than 15,000 pages of financial records. Investigators also identified around 15 bank lockers, from which jewellery valued at over ₹10 crore was recovered.

Documents examined so far indicate that the alleged evasion was neither sporadic nor accidental. In the real estate sector, officials say they found evidence of property transactions executed at values far below prevailing market rates, alongside unaccounted cash payments during land purchases and construction activities. Several project records appeared to understate costs and revenues, suggesting deliberate suppression of taxable income.

In trading businesses dealing in edible oil and liquor, investigators flagged discrepancies between actual sales volumes and figures reported in statutory accounts. Invoices and internal ledgers allegedly pointed to inflated expenses and understated revenues, mechanisms commonly used to reduce tax liabilities over extended periods.

A key focus of the investigation is the alleged use of shell entities and benami bank accounts to layer and obscure illicit funds. Tax officials say seized documents show money being routed through individuals acting as name-lenders, often compensated for allowing their identities and accounts to be used. Efforts are now underway to trace the ultimate beneficiaries behind these arrangements.

The department’s use of Artificial Intelligence and advanced data analytics played a central role in the operation. By cross-referencing banking transactions, property registrations, investment trails and digital data recovered from servers, investigators were able to map complex networks of financial activity. Officials said AI-assisted analysis helped detect patterns of systematic undervaluation and recurring mismatches that would have been difficult to identify through manual scrutiny alone.

Investigators also reported finding documents linked to properties located outside India, as well as assets spread across cities such as Gorakhpur, Deoria, Lucknow, Kanpur and Delhi. Authorities are now examining the source of funds used for these acquisitions, with possible action under the Benami Transactions (Prohibition) Act if explanations are found unsatisfactory.

With the search phase complete, the Income Tax Department is preparing to issue show-cause notices to the concerned business groups, seeking detailed explanations for undisclosed income, asset ownership and suspicious transactions. Officials indicated that reassessment proceedings, penalties and prosecution could follow depending on the responses.

Experts note that cases of this scale often reveal how prolonged gaps in reconciliation and oversight allow irregularities to compound over time, reinforcing the importance of independent financial scrutiny and controls of the kind emphasised in professional auditing services in india to identify risks before they escalate into large-scale evasion.

For now, authorities say the investigation remains active, with further action possible as analysis of seized material continues.