Income Tax Department conducts searches on two real estate groups of Bengaluru and Hyderabad
New Delhi, July 12, 2022
Income tax officials seized undisclosed cash of Rs 3.50 crore and gold and silver jewellery worth Rs 18.50 crore during raids conducted on two leading real estate groups of Bengaluru and Hyderabad.
The groups are engaged in the business of construction, sale and leasing of commercial and residential space, and in educational and hospitality services.
The search action covered more than 40 premises located in Bengaluru, Hyderabad and Chennai, a press release from the Ministry of Finance said.
"During the course of the search operations, several incriminating documents and digital evidences have been seized. The preliminary analysis of seized evidences has revealed that the land owners had entered into Joint Development Agreement (JDA) with a Bengaluru-based developer. They have received super built-up area from developer in lieu of the land given to the developer for the development of various projects.
"However, the land owners failed to declare the capital gains accruing from the transaction, though completion certificates for the projects have been obtained. The amount of such undisclosed capital gains is estimated at more than Rs. 400 crore," the release said.
According to it, the initial analysis of the seized documents has also revealed that these groups have suppressed income to the tune of Rs. 90 crore in respect of the revenue recognizable from the sale of units in real estate.
"Further, both the groups have indulged in tax evasion by inflation of expenses in the construction and development business to the tune of Rs. 28 crore, having claimed bogus purchases and resorted to over-invoicing of the construction materials," it said.
The release said that it was also found during the search operations that interest-bearing borrowed funds had been diverted to related entities and parties for non-business purposes by the main entities of both the groups.
"Instances of the transactions involving advances and loans between the group companies have also been found, which partake the character of deemed dividend and hence liable to be taxed as income," it said.
"In the case of a trust covered in the search action, it has been found that the trust has failed to utilize, within the specified permissible time limit, the accumulated amount of Rs. 40 crore for the specified purpose as per the objects of the registered trust deed," the release added.