An agency whose clients include the popular Japanese dancing and singing group EXILE has been found to have failed to declare about 300 million yen ($2.7 million) in income for the four years through March 2017, a source close to the matter said Thursday.

LDH JAPAN has already paid about 60 million yen in back taxes and penalty for understatement, according to the source.

The Tokyo Regional Taxation Bureau is believed to have found that the Tokyo-based show business agency improperly booked as a business expense the cost of wining and dining employees and clients to celebrate the successful conclusion of a concert tour.

There were also accounting errors in reporting expenses to consign some operations to overseas associated firms, but no deliberate income concealment has been found over the four years, according to the source.

"There was a difference in understanding on certain matters between us and the taxation authority, but we have submitted a revised tax return," said LDH JAPAN, which handles the management of about 130 people such as models and singers, including EXILE.