HDIL, the Mumbai-based realty firm currently under the lens of the income tax department, has allegedly admitted to the existence of unreported income of around Rs 350 crore, said people familiar with the information. This, according to sources in the I-T department, is the highest ever admission of unreported income by any company.

The I-T department had carried out a raid on the residential and official premises of HDIL on Thursday, deploying over 100 officials, in what was described as one of the largest such moves in recent times. The unaccounted income, as allegedly admitted by the company, was related to transactions carried out since 2007, said the people connected with the matter.

Under the provisions of the Income-Tax Act, income unearthed during a raid attracts interest and penalty up to 300% of the amount. The law also provides the tax payer the right to appeal before the first appellate authority (Commissioner Appeal) against the demand by the I-T department.

The law also provides for a second appellate forum, Income-tax Appellate Tribunal (ITAT), which is the final fact finding authority on tax matters. Many tax cases end up in the high court and even the Supreme Court.

Twelve premises of the company were raided by I-T officials on Thursday, after a tip-off that the company had allegedly suppressed profit by inflating expenses through fictitious vouchers. This is the second time in two years that the I-T department has carried out such action against HDIL.

The action against HDIL is the latest in a series of raids carried out by the department against builders. Besides suppression of income, many builders have also been found to have claimed tax benefits they are not entitled to, such as deductions for developers of small and medium sized apartments.