Builder can plainly adjust cash of Rs 10-15 crore as cash in hand; IT department conducts nationwide survey on Builders: source
After inspecting jewellers, bullion traders and several hawala operators, the income tax department has launched a nationwide survey on builders and their commissioning agents after a reports indicated that few of them were accepting banned Rs 500 and Rs 1,000 notes to sell their properties.
They were also showing such currency cache as ‘cash in hand’ in order to make it appear as if they did not accept Rs 500 and Rs 1,000 notes after they were banned on November 8.
Multiple surveys were conducted on several builders and large broking houses in cities which included Delhi-NCR, Bengaluru, Meerut, Allahabad, Lucknow, Kolkata and few cities in Madhya Pradesh. Stocks and cash in hand of all of these builders were checked to see if any “adjustment’s” were made post-November 8 when the government demonetised old Rs 500 and Rs 1,000 notes.
Reason which led to nationwide survey on Builders
Prior to the demonetisation builders appeared to be struggling to collect funds from different sources, including the private people, to complete their projects running way behind its scheduled date and hand over flats to buyers, a major problem which has led courts to rebuke them and order fines.
However, intelligence reports suggested a dramatic shift in pattern after November 8 with many of cash-strapped builders flooded with funds.
Under the ‘cash in hand’ scheme, a builder keeps the money to meet its immediate expenses which is primarily to carry out construction activities, a provision which can be stated to explain why the money was not deposited in banks.
A close source revealed that in a project of Rs 100 crore, a builder can plainly adjust cash of Rs 10-15 crore as cash in hand.
At the same time, developers can also resort to adjusting cash received from sale of property just before the announcement of the ban as cash in hand.
The survey revealed
In the last three days, IT officials surveyed a leading Noida-based builder after the department’s survery, customers found that the builder was accepting illegal tender for fresh transactions in its group projects.
The Income Tax department was carried out at two other builders in Noida. A similar survey on a Bengaluru-based builder unearthed unaccounted income of Rs 12 crore, according to a top I-T official. During the survey in Bengaluru on Tuesday, the builder disclosed unaccounted income of Rs 12 crore. Officials seized Rs 3.5 crore in cash and Rs 45 lakh worth of bullion from the builder’s premises.
In Madhya Pradesh, I-T teams surveyed 20 jewellers this week and made some cash seizures from builders.
Soon after demonetisation of high denomination notes on November 8, the I-T department began a countrywide survey of jewellers and bullion traders engaged in discounting banned notes with bullion to help some launder their illicit cash.
The Finance Ministry has also engaged the Enforcement Directorate to carry out surveys on hawala dealers found accepting banned notes in exchange for dollars and other foreign currencies.
The crackdown by several revenue intelligence agencies, including the Directorate General of Central Excise Intelligence, is currently on across the country.