Income Tax Department conducts searches on two real estate groups based in Delhi-NCR

On 17.11.2021, the Income Tax Department conducted a search and seizure operation on two real estate groups situated in Delhi-NCR. These organizations work on commercial and residential construction projects.

Various incriminating evidences in the form of digital and physical data were discovered and seized during the search operation. These groups are receiving part of the sale consideration in cash against the sale of flats, according to preliminary analysis of such data. This cash is not documented in the books of accounts. As a result, there is widespread tax evasion, and no due tax on such revenue has been offered.

The investigation team discovered evidence that unaccounted income is funnelled into the business through nondescript and non-functional shell entities controlled by professional entry providers or group employees/associates acting as directors. One of the groups was also discovered to be employing a network of nonprofit organisations involved in educational activities, ostensibly for tax avoidance and financing its real estate business. Evidence has also been discovered that’reversal of payables,’ ‘diminution of investment,’ and ‘bad debts written-off’ are used to doctor the books of accounts kept and shown before tax authorities. There have also been reports of non-genuine expense claims based on fictitious purchases made by related parties from non-existent suppliers. Cash transfers to various parties for the purpose of obtaining land deals and other contracts, as well as incurring various unexplained real estate charges, have been discovered.

Unaccounted cash of Rs. 10 crore was also discovered during the search. The information gathered thus far suggests that the concealed income could be in the range of Rs. 400 crore.

These cases are still being investigated.