The Income Tax Department on Monday carried out ‘search and seizure’ operations on two leading real estate companies – one in Bengaluru and the other in Hyderabad. The search action covered more than 40 premises located in Bengaluru, Hyderabad and Chennai, the union finance ministry said in its statement. As of Tuesday morning, the raids recovered ₹3.50 crore in undisclosed cash and jewellery, including gold and silver, worth ₹18.50 crore.
The firms raided – they have not been identified so far – are in the business of construction / sale / leasing of commercial and residential space, and are also involved in the educational and hospitality sectors, the finance ministry said.
Apart from cash and jewellery, the raids also recovered documents and digital devices which may contain incriminating evidence, the ministry also said.
An initial analysis of materials seized revealed land owners signed a JDA, or joint development agreement with a Bengaluru-based developer. Land owners got super built-up area from the developer in lieu of land given for projects.
However, they failed to declare the capital gains accruing from the transaction, although completion certificates for the projects have been obtained.
The amount of such undisclosed capital gains is estimated at more than ₹400 crore, the finance ministry said.
Early analysis of seized documents also showed the real estate groups suppressed ₹90 crore income in respect of revenue recognisable from sales.
Both also evaded tax by inflating construction and development business expenses by ₹28 crore, the ministry added.
Further investigations are ongoing, the finance ministry said.