Hyderabad, February 19: What began as a routine scrutiny of popular biryani chains in Hyderabad has snowballed into a nationwide tax investigation, exposing suspected restaurant billing manipulation amounting to nearly INR 70,000 crore.

According to a report by The Times of India, the Hyderabad investigation unit of the Income Tax Department uncovered large-scale sales suppression dating back to the 2019 to 2020 financial year. The probe, powered by advanced forensic data analytics and artificial intelligence tools, analysed nearly 60 terabytes of billing data sourced from a point-of-sale system covering more than 1.7 lakh restaurant IDs across India.

How Restaurants Allegedly Manipulated Billing Systems

Investigators found that while restaurants typically record all transactions including card, UPI and cash payments to prevent internal fraud, some establishments allegedly tampered with backend records. Online Investment Scam Busted: Jammu and Kashmir Police Cracks Transnational Multi-Crore Online Fraud, MBBS Doctor Among 9 Arrested.

One key pattern flagged was the selective deletion of cash invoices. In multiple cases, restaurants reportedly retained partial cash entries while deleting others to reduce both income tax and GST liabilities. Delhi Online Investment Scam Busted: Police Arrests 4 in INR 45.25 Lakh Stock Market Fraud Using Fake Trading App.

Another alarming practice involved bulk deletions of billing data. Officials detected instances where entire date ranges, sometimes up to 30 days of invoices, were wiped clean before tax returns were filed. The returns reflected only a fraction of the actual sales.

27 Percent Sales Suppression Estimated

Based on a sample analysis, officials estimate that nearly 27 percent of total sales were suppressed. Some businesses reportedly did not even delete records from their systems but under-reported revenues in income tax filings.

The probe initially began with searches in Hyderabad, Visakhapatnam and other towns in Telangana and Andhra Pradesh, where authorities first identified evidence of software-based sales suppression. The Central Board of Direct Taxes later expanded the investigation nationwide.

Forensic Audit Across Platforms

Investigators accessed data from the billing software provider’s data centre in Ahmedabad and conducted detailed forensic analysis at the department’s digital forensic and analytics lab at Ayakar Bhavan in Hyderabad.

Officials believe the current findings may only be the tip of the iceberg, noting that multiple billing platforms operate in the restaurant industry. Similar backend audits across other POS systems could reveal further undisclosed revenue.

The ongoing investigation highlights how technology-driven tax enforcement is reshaping compliance in India’s food and hospitality sector, with authorities increasingly relying on AI-led analytics to track financial irregularities.

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