this story originally appeared in on apr 12 2013mumbai when officials of the mumbai incometax investigation wing stumbled upon a handful of bank accounts with wild entries they first thought these were typical moneylaundering deals one associates with the seedy underbelly of the financial capital but as they dug deeper into the money flow they could slowly piece together an amazing web of transactions that involved diamond houses construction firms local traders and an army of lackeys who do nothing other than lending their names for small money these disparate players come together in circuitous transactions that are carried out to escape tax as well as funnel unaccounted cash into audited accounts of regular businesses it took us a while to get the complete picturewe have our eyes on some people the investigation is on said a senior official of the incometax department the chain starts with some diamond firms that regularly import rough stones on 36 months credit but the simple trade is done differently the import lands in five consignments on paper only one of these is linked to the diamond housesassistants front for diamantaires diamond houses local traders realtors and petty assistants come together to evade tax the other four consignments are received by four assistants of the diamond firm these assistants who do not have the means and creditworthiness to import act as fronts for the diamantaire once customs formalities are over and the assistants take delivery of the diamonds the stones are handed over to the diamond house which pays them nothing but a small fee for their services the four assistants or the fronts on the other hand do not have physical diamond in their possession but have diamonds on the books of their entities that have acted as importers on behalf of the real diamond company for the diamond house its a ploy to lower turnover and evade tax in future but the chain of transaction does not end herequid pro quo with local traders the next set of players that participates in the transaction is local traders and jewellers who typically use cash to buy diamonds these are people who need purchase bills to formalise their onward sale and regularise the books here the assistants come handy the assistants who took delivery of the imported rough diamond before passing them on to the diamond companies are in a position to provide these traders with bills simply because they are the official importers the deal that takes place at this point involves the local traders giving cheques in favour of the assistants to the assistants and collecting purchase bills from them but these are not genuine trades and no real diamonds have been sold by the assistants against genuine cheques they receive from the traders understandably the traders have to figure out a way to get their money which they have paid in cheques back this is where the third group of players joins the gamethe final leg these are