Income Tax Department raids on 5 realtors; Rs.400 Crore Tax Evasion detected

Two hundred Income Tax Officials raiding 28 locations in the last five days have discovered alleged tax evasion of Rs.400 crore by five real estate developers, some of whom own hotel chains and schools in the city.

The raids began at 5 a.m. on September 14 and are still ongoing, according to income tax officials on Tuesday. Aside from documents tracing unpaid taxes, the taxmen seized Rs.4 crore in cash and Rs.10 crore in jewellery, sources said.

The raids, which involve IT officials from Gurgaon, Faridabad, Panipat, Karnal, Delhi, Chandigarh, and Srinagar, are being carried out at the developers’ homes, offices, and other establishments.

“We expected Rs.100-150 crore in tax evasion. This is much more. The department has seized related documents,” a senior IT official said.

The developers under investigation are accused of recording large transactions on informal receipts rather than bills, which are not recorded in accounting books.

According to an IT source, one developer who runs a school chain used forged signatures of students’ parents to disguise transactions as donations in order to avoid paying taxes.

The real estate sector came under scrutiny after the IT department discovered that total taxes collected from industry firms were lower than they should have been, particularly in Gurgaon, where construction is a major business.

It was reported earlier this April that Gurgaon was India’s ninth-largest contributor of income tax. In 2022-23, the city of 4.5 lakh taxpayers paid a total of Rs.40,000 crore, one-fourth of which came from the IT industry.

According to data from the IT department, real estate and construction, a thriving sector in NCR, accounted for only 8% of taxes last financial year.

Officials stated that following the raid, the department will scan all seized documents to complete their investigation, and if found guilty, penalties for tax evasion will be imposed. To ensure that the raids do not disrupt, police and 150 CRPF personnel are providing security to the IT teams.