Citing discrepancies in earnings reported by Huawei Telecommunications India for at least two financial years, the department said the company has repatriated £750 million “even as its earnings fell drastically”.

The IRS froze the company’s bank accounts in February after it searched its premises and accused it of tax evasion.

The Delhi High Court in April stayed the attachment of the accounts on Huawei’s plea and asked for a response from the department. The department detailed the allegations against the company in its response filed earlier this week, which ET viewed.

Huawei had denied any wrongdoing, claiming in its petition to the court that the seizure of the accounts without notice had impacted its business.

IT: Have ‘incriminating material’ against Co

In its affidavit justifying the attachment, the IRS described Huawei’s petition as “a ploy raised for frivolous reasons, only to hamper the department’s procedures and avoid subsequent tax payment.” The department also claimed to be in possession of “incriminating material” against the company.

Huawei is one of the Chinese companies whose activities in India are under severe scrutiny. Companies like smartphone makers Vivo and Xiaomi and some of their affiliates are also under the lens of Indian investigators, including the Enforcement Directorate, which investigates money laundering.

The tax department said the Huawei entity has not submitted its accounting books “to date,” making it “impossible to establish the accuracy of the company’s declared earnings.”

Instead, it merely provided a dump of “transaction-level details as downloaded from their ERP accounting system,” which “cannot be said to be the company’s books.” Even those reportedly didn’t match the company’s final financial numbers for 2016-17 and 2017-18.

The department said Huawei India did not give it access to the email from Yang Yi, the chief financial officer, who was the decision-making authority on transfer pricing issues. It is imperative to examine the communications to understand the full meaning of the financial transactions and the reasons behind them, it said. However, the request was denied on the grounds that the email could contain data unrelated to the company, it said.

The affidavit said key financial data such as the sale/purchase registers and inventory were not filed until after the department conducted the search operation in February.

Efforts to obtain “significant details” about the accounts of various key individuals were also “blocked” by the company “to thwart legitimate investigations,” it said. Executives told officers the search for relevant details would take “up to six weeks,” she added.