The Income Tax Department has intensified scrutiny of land and property transactions worth around ₹8,500 crore after identifying deals that were allegedly not reported, undervalued or linked to suspected benami ownership. The examination covers bulk land purchases, agricultural land, farmhouses and other high-value property transactions.
The department is reviewing transactions finalised in FY25 and reported in FY26 income tax returns, along with deals covered under the current return-filing cycle. Officials are also expected to extend the examination to transactions from previous years as the exercise progresses. Of the total value of transactions under scrutiny, around ₹2,000 crore is suspected to involve benami arrangements.
The investigation is focused on establishing whether the person shown as the purchaser or owner of a property is also the individual who funded the transaction and ultimately benefits from it. In suspected benami cases, a property may be registered in one person’s name while the funds used for the purchase come from another person. This can create a mismatch between the recorded ownership of the property and the actual source of funds.
A key part of the exercise involves matching the Permanent Account Number (PAN) used during the purchase, sale or transfer of land and property with the PAN information used by the taxpayer while filing income tax returns. Officials are comparing the investment declared in income tax returns with the value of the property acquired.
The department is particularly examining cases where the income declared by the person associated with the property transaction does not appear sufficient to support the value of the purchase. Such discrepancies could indicate that the full source of funds has not been disclosed or that another person may have financed the transaction.
Underreporting of property values is another area under review. Officials are examining transactions where the consideration recorded in official documents may not reflect the full amount paid by the purchaser. Unreported cash components in property transactions are also being scrutinised as part of the broader examination.
According to officials, bringing together transaction values, PAN information and income tax return data can help identify cases where the movement of funds does not match the ownership trail. This approach enables tax authorities to compare financial disclosures with transaction-level information and identify potential inconsistencies.
Many email intimations have already been sent to taxpayers in connection with such transactions. The exercise also reflects a shift towards greater use of data analysis for tax enforcement. Instead of relying primarily on searches and surveys, the department is increasingly using information from different reporting channels to identify transactions requiring further examination.
Information provided by banks, post offices and other reporting entities has added to the data available for scrutiny. Increased disclosures over the last two years have helped authorities compare property transaction records with income and investment details reported by taxpayers.
The department has also been using its NUDGE campaign to alert taxpayers to discrepancies between their returns and information available with tax authorities. Taxpayers are given an opportunity to correct their returns where mismatches are identified. The model was previously used in relation to undisclosed overseas assets and income.
The ongoing scrutiny of ₹8,500 crore worth of property transactions highlights the department’s focus on transparency in high-value real estate dealings. The review is expected to focus on whether declared income, property ownership, transaction values and the source of funds are consistent with one another.
