UP Registry SFT Scam: High-Value Property Deals Under Tax Evasion Cloud

Aligarh Surprise Inspection Exposes Manipulated SFT Reporting

A major financial scam has been exposed in Uttar Pradesh’s registry department, where key officials are suspected of manipulating Statement of Financial Transaction (SFT) filings to help parties evade income tax. The irregularities came to light after a surprise inspection by the Income Tax Department at the Aligarh First Sub-Registrar office, focused on registry transactions exceeding ₹30 lakh. :contentReference[oaicite:0]{index=0}

According to investigation details, over 1,000 SFTs were prepared at this office over the years for high-value property deals. However, only around one-fourth of these were actually uploaded and submitted to the Income Tax Department. Even among the submitted reports, officials reportedly found incorrect, incomplete and suspicious entries, indicating a systematic effort to under-report or distort large property transactions. :contentReference[oaicite:1]{index=1}

While the exact revenue loss is still being quantified, officials believe the manipulation has caused losses running into several crores of rupees in potential tax collections and has undermined the integrity of high-value registry reporting for years. :contentReference[oaicite:2]{index=2}

Senior Officials Absent, Alleged Attempts to Dampen the Probe

The conduct of senior officers during the inspection has itself become a flashpoint. According to sources, when the Income Tax team arrived at the Aligarh office, senior officials excused themselves, citing an urgent meeting in Lucknow, and left the responsibility of dealing with the inspectors to junior staff. :contentReference[oaicite:3]{index=3}

The move sparked resentment among employees and raised suspicions that the absence was a deliberate attempt to avoid direct questioning. Following the exposure, concerned officials reportedly assured that all pending SFTs would be “correctly filed” within the next 15–20 days, effectively seeking time to regularise years of under-reporting. :contentReference[oaicite:4]{index=4}

Investigation sources have also claimed that substantial sums were offered informally in an apparent bid to suppress or soften the matter—an allegation that, if proven, could convert an administrative irregularity into a full-fledged corruption case.

Probe Widens: Agra, Meerut, Prayagraj and Kanpur on the Radar

Once the Aligarh pattern emerged, the Income Tax Department extended surprise inspections to other major districts, starting with Agra and Meerut. These inspections reportedly revealed similar irregularities in SFT filings, including data mismatches, incomplete entries and flagged reports that did not match the underlying registry records. :contentReference[oaicite:5]{index=5}

Following these findings, registry offices in Prayagraj, Kanpur and other districts have also come under scrutiny. Continuous inspection drives have created a sense of unease across the registry department, with employees demanding a high-level, impartial investigation and clear accountability for those responsible. :contentReference[oaicite:6]{index=6}

Officials believe that Aligarh may be just the starting point and that similar practices could have been adopted across multiple registry offices to help buyers and sellers of high-value properties avoid the tax net.

What Is SFT and Why It Matters for High-Value Property Deals

The Statement of Financial Transaction (SFT) is a critical information-reporting tool under India’s income-tax framework. It is designed to capture details of specified high-value financial transactions so that the Income Tax Department can cross-verify declarations, flag unusual activity and identify possible tax evasion. :contentReference[oaicite:7]{index=7}

For registry offices, SFT reporting is mandatory for, among others:

• Property transactions exceeding ₹30 lakh,
• High-value transfers that could indicate unreported income,
• Suspicious or unusual patterns in registry activity.

When registry officials under-report or manipulate SFT filings, it directly weakens the tax department’s ability to detect unaccounted wealth in real-estate transactions. The current scam suggests that, instead of being a compliance safeguard, SFT was allegedly turned into a tool that could be selectively used—or misused—to help certain parties keep large transactions invisible to tax analytics.

How the Alleged Scheme Worked: From Preparation to Partial Upload

Based on information emerging from the inspection, the alleged modus operandi at the Aligarh First Sub-Registrar office can be summarised as follows: :contentReference[oaicite:8]{index=8}

• For high-value property transactions, staff prepared SFTs as required—resulting in more than 1,000 reports over a multi-year period.
• Only about 25% of these were uploaded to the Income Tax Department systems; the remaining SFTs were left unreported, effectively keeping numerous large deals outside official scrutiny.
• Among the SFTs that were uploaded, many were incomplete or inaccurate—with missing fields, distorted values or suspiciously vague details about the parties and properties involved.
• This combination of non-filing and mis-filing allowed some high-value transactions to remain practically invisible to automated risk engines that depend on SFT data.

The pattern points towards a deliberate, organised scheme rather than isolated clerical errors, especially given that the behaviour appears to have persisted for several years.

Governance Concerns: Internal Controls and Digital Trail Gaps

The case has raised serious questions about internal controls within registry offices and the extent to which key processes are auditable. While SFT filing is digital, its initiation and accuracy still depend heavily on human inputs at the sub-registrar level.

Weaknesses highlighted by this episode include:

• Lack of real-time reconciliation between registry records and SFT uploads,
• Insufficient role-based access controls and audit trails for who prepared, edited or deleted SFTs,
• Absence of automated red-flag alerts when large registries do not generate SFTs proportionately,
• Limited periodic independent audits by tax or finance departments on SFT compliance quality.

For a state with high real-estate activity, such gaps can create sustained opportunities for revenue leakage and collusion between private parties and public officials.

Employees Demand Clean Investigation, Strong Action

Within the department, the unfolding scandal has generated visible tension. Staff associations and employees in affected districts are reported to be demanding a transparent, high-level probe to ensure that blame is not shifted onto junior staff alone, while decision-making officials escape scrutiny. :contentReference[oaicite:9]{index=9}

There is also a push for clearer standard operating procedures on SFT handling, formal training, and stricter monitoring to prevent individual officers from informally “deciding” which transactions should be reported completely and which should be diluted or omitted.

Shunyatax Global Insight: Strengthening SFT Compliance and Tax Governance

At Shunyatax Global, we see the UP registry SFT scam as a warning signal for both governments and market participants. When SFT-based reporting is compromised at source, the impact travels directly into tax analytics, risk assessment and public revenue.

For state and central authorities, strengthening this layer requires:

• End-to-end digital integration of registry data with SFT systems,
• Automated cross-checks between transaction value, stamp duty and SFT filings,
• Randomised, forensic-style audits of SFT quality at high-risk offices,
• Clear accountability frameworks for officers who wilfully mis-report or under-report transactions.

For businesses, investors and high-net-worth individuals engaged in property transactions, it is equally important to ensure that deals are properly reported and tax-compliant, as future forensic audits can reopen old transactions and lead to interest, penalty and prosecution.

To understand how stronger documentation, tax governance and transaction reporting can protect you or your organisation from similar risks, visit Shunyatax Global Services. Our advisory capabilities span tax compliance, forensic readiness and regulatory risk management for complex financial and real-estate transactions.