I-T Dept raids 2 real estate groups of Bengaluru, Hyderabad, seizes Rs 3.50 Cr cash

New Delhi, July 11 (Agency) Income Tax Department carried out search and seizure operations on two leading real estate groups of Bengaluru and Hyderabad, an official statement said on Monday. The department has claimed to have seized cash of Rs 3.50 crore and gold, silver, jewellery worth Rs 18.50 crore, During the search action, which covered more than 40 premises located in Bengaluru, Hyderabad and Chennai, several incriminating documents and digital evidences were seized, the statement said. The preliminary analysis of seized evidences revealed that the land owners had allegedly entered into Joint Development Agreement (JDA) with a Bengaluru-based developer.

‘They received a super built-up area from the 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 were obtained. The amount of such undisclosed capital gains is estimated at more than Rs. 400 crore,’ the statement said. The initial analysis of the seized documents also revealed that these groups had allegedly 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 had allegedly 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 has also been found that interest-bearing borrowed funds have been diverted to related entities/parties for non-business purposes by the main entities of both the groups. Instances of the transactions involving advances/loans between the group companies have also been found, which partake the character of deemed dividend and hence liable to be taxed as income,’ the statement said. In the case of a trust covered in the search action, it was found that the trust had allegedly 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, it added.