Income Tax Department Launches Search for Tax Evasion in Haryana Real Estate Group

Ministry of Finance Initiates Income Tax Searches in Haryana

On March 17, 2021, the Income Tax Department executed a search operation targeting a group involved in real estate, housing, hospitality, and retail liquor trade. This operation took place across 12 locations in Samalkha, Gurugram, Rohtak, and Panchkula.

Background of the Search Operation

The search was initiated due to the group's failure to comply with faceless scrutiny assessment notices. These notices, issued through a computerized system under the Faceless Assessment Scheme, were repeatedly ignored by certain assessees despite proper delivery. Data analysis indicated that these individuals were of no or low means, leading to suspicions that they acted as fronts for the actual group members and were identified as benamidars.

Findings During the Search

The search yielded substantial evidence of fraudulent activities, including:

Bogus Real Estate Transactions: The group had registered fictitious bookings of flats in the names of employees, relatives, and unidentified individuals within the affordable housing scheme. Cheques associated with these transactions remain uncashed at the premises. Actual buyers reportedly paid premiums ranging from Rs. 6 lakh to Rs. 10 lakh per flat, with these payments made in cash and unaccounted for in financial records. This misappropriation not only abuses the benefits of the affordable housing scheme but also indicates potential tax evasion estimated to exceed Rs. 36 crore.
Falsified Expense Claims: The group has allegedly declared fictitious expenses for construction materials, including cement and iron bars, totaling around Rs. 100 crore over previous years, contributing to significant tax evasion. Moreover, large sums have been claimed as business promotion expenses, facilitating unaccounted investments into real estate.
Money Laundering Activities: Evidence suggests that the group laundered unreported income amounting to Rs. 70 crore through bogus share capital and unsecured loans via a shell company. This money was utilized to acquire a real estate project from a prominent builder in Gurugram. Documentation substantiating investments in benami properties, both domestically and internationally, was also discovered.
Personal and Operational Cash Expenditures: The search uncovered unaccounted expenditures in cash for personal and office uses amounting to crores. This included costs associated with project approvals and extravagant wedding expenses.
Jewellery Investments: Approximately Rs. 3 crore in unexplained investments in jewellery was found during the operation, along with four bank lockers belonging to the group, which have since been restrained.

Conclusion

The investigations are ongoing, as authorities continue to uncover evidence of tax evasion and financial mismanagement within this group. Further actions will be taken to ensure compliance with tax laws and regulations.