One of my clients recently had a case which I am explaining below and if you are stuck in such similar situation, here is what to do.

Note: Due to attorney-client privilege, I cannot disclose complete case details or identify the actual parties involved. However, I am sharing the essential facts and legal approach so that if you find yourself in a similar situation, you can understand the available solutions and legal remedies.

Mr. X approached me regarding a property purchase in City A. The seller, Mr. Y, was demanding Rs. 50 lakhs as unaccounted money over and above the registered sale price. Mr. Y refused to mention this additional amount in any official documentation, creating significant legal and financial risks for Mr. X. This practice, commonly known as “black money” transactions, violates multiple laws including income tax provisions and anti-money laundering regulations. Mr. X was concerned about future legal complications, tax implications, and potential criminal liability. The property in question was a residential bungalow worth approximately Rs. 2 crores, but Mr. Y wanted only Rs. 1.5 crores reflected in official records. Such arrangements expose buyers to serious legal consequences and financial losses.

Advice in Such Cases

Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation to come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think.

Never agree to unaccounted money transactions as they violate tax laws and can lead to penalties, prosecution, and property disputes. Insist on complete transparency in all financial dealings and document every rupee paid. Report suspicious demands to appropriate authorities if necessary. Consider alternative properties where sellers comply with legal requirements.

Applicable Sections of Law

Under the Bharatiya Nyaya Sanhita (BNS), Section 318 deals with cheating and dishonest inducement. Section 61 addresses criminal conspiracy when multiple parties are involved in tax evasion. The Bharatiya Nagarik Suraksha Sanhita (BNSS) provides investigation procedures under Sections 173-180. Income Tax Act provisions regarding benami transactions, Prevention of Money Laundering Act (PMLA) sections on money laundering, and Registration Act requirements for property documentation also apply. These laws impose severe penalties including imprisonment and hefty fines for non-compliance with transparent financial reporting.

If You Are the Complainant

• File complaint with Income Tax Department regarding suspected tax evasion by seller
• Report to Enforcement Directorate if money laundering is suspected
• Lodge police complaint under relevant BNS sections for attempted fraud
• Maintain detailed records of all communications and demands made by seller
• Seek legal injunction to prevent fraudulent property transactions

If You Are the Victim

• Immediately withdraw from any unaccounted money transaction to avoid legal liability
• Document all evidence of seller’s demands for black money payments
• File complaint with local police and income tax authorities
• Seek legal counsel to understand your rights and protection options
• Report the matter to anti-corruption authorities if government officials are involved

How the Police Behave in Such Cases

Police typically treat unaccounted money cases seriously due to their connection with tax evasion and money laundering. They coordinate with income tax authorities and Enforcement Directorate for thorough investigation. Initial response may be slow, but cases gain momentum when higher authorities take notice. Police conduct raids, seize documents, and arrest involved parties. They require substantial evidence before taking action, so proper documentation is crucial.

FAQs People Normally Have

Is paying unaccounted money illegal? Yes, it violates income tax laws and enables tax evasion, making you liable for penalties and prosecution.

Can I get caught later? Absolutely, income tax authorities conduct surveys and investigations that can expose such transactions years later.

What if everyone does it? Widespread practice doesn’t make it legal; you remain personally liable for violations.

Will seller reduce price if I refuse? Genuine sellers often negotiate, but those insisting on black money may be involved in other illegalities.

What Evidence Is Required?

• Written communications or messages demanding unaccounted payments
• Audio or video recordings of conversations about black money
• Witness statements from brokers or intermediaries
• Bank statements showing legitimate payment capacity
• Property valuation reports from approved valuers
• Documentation of seller’s tax evasion attempts
• Records of similar complaints against the same seller

How Long Will the Investigation Take?

Property-related financial crime investigations typically take 6-18 months depending on complexity. Income tax investigations may extend up to 2-3 years. Police investigations conclude within 90 days under BNSS provisions, but complex cases involving multiple agencies take longer. Cooperation with authorities and availability of clear evidence can expedite the process significantly.

Advocate Sudhir Rao, Supreme Court of India