The IT Department’s preliminary findings suggest that this could be one of the largest CSR-related financial frauds in India, exposing deep loopholes in monitoring and transparency of corporate charitable spending.
AGRA (India CSR): In one of the largest financial scams unearthed in recent years, the Income Tax (IT) Department has exposed a massive Rs. 20,000 crore money laundering racket operating through 170 shell companies. Investigators revealed that Corporate Social Responsibility (CSR) funds, meant for social welfare, were diverted abroad under the guise of charitable activities and later used to finance diamond smuggling, Dainik Jagran reported.
The Scam: CSR Funds Diverted Abroad
According to officials, funds earmarked for CSR projects by leading Indian companies were deposited into accounts of multiple trusts, including Jan Jagriti Seva Sansthan (Mathura), Ragini Ben Vidhik Chandra Seva Kary (Ahmedabad), and Dr. Brajmohan Sapoot Kala Sanskriti Seva Sansthan Trust (Bhilwara). Instead of being used for community development, the money was transferred to foreign accounts in China, Hong Kong, Singapore, Malaysia, and Dubai, the report said.
The report revealed that the funds were routed to jewelry traders for purchasing diamonds, which were then smuggled into India. Once sold in Gujarat and Maharashtra, the proceeds were circulated through the hawala network to various corners of the country, effectively laundering the illicit money back to the originating companies.
Operation Across Multiple Cities
The IT Department’s operation began after a detailed audit of Jan Jagriti Seva Sansthan’s accounts, conducted by Chartered Accountant Ashutosh Agrawal in Mathura. As evidence surfaced, searches expanded to Mumbai, Kolkata, Ahmedabad, Surat, Bengaluru, Bhilwara, Mathura, and Indore.
Investigators discovered that the scam was operational since FY 2021–22, with shell companies being floated under the names of poor laborers and villagers by misusing their Aadhaar identities. These shell firms became conduits for large-scale fund transfers.
Evidence of Hawala Transactions
During the 110-hour-long search operation, officials found conclusive evidence of hawala dealings. Diamonds worth hundreds of crores were smuggled into India in at least five instances, with their sale generating large amounts of unaccounted cash.
“Initial findings confirm misuse of CSR funds on a massive scale. The possibility of business revenues being illegally routed abroad cannot be ruled out,” a senior IT official said, adding that further investigations will now trace other sources of money movement linked to the scam.
Nationwide Search and Leadership Oversight
The crackdown involved over 200 officers, led by Principal Director of Income Tax (Investigation), Kanpur, Ajay Kumar Sharma, and supervised by Additional Director Piyush Kothari and Deputy Director Hardik Agrawal. The searches were conducted across more than 50 premises connected to the accused trusts and individuals.
The IT Department’s preliminary findings suggest that this could be one of the largest CSR-related financial frauds in India, exposing deep loopholes in monitoring and transparency of corporate charitable spending.
Broader Implications
The revelations have raised serious questions on the governance of CSR funds in India, which are mandated by law to support welfare initiatives. Experts suggest that stringent auditing mechanisms and real-time CSR monitoring frameworks are urgently needed to prevent such large-scale misuse.
The probe is ongoing, and more disclosures are expected in the coming weeks as authorities scrutinize the network of companies and trusts linked to the scam, the report said.
(India CSR)
