New Delhi, July 14 (UNI) The Income Tax Department has initiated a large-scale verification operation across multiple locations in the country, targeting individuals and entities facilitating fraudulent claims of deductions and exemptions in Income Tax Returns (ITRs), an official spokesman said today.
This follows a detailed analysis of the misuse of tax benefits under the Income-tax Act, 1961, often in collusion with professional intermediaries.
Investigations uncovered organized rackets operated by certain ITR preparers and intermediaries who have been filing returns claiming fictitious deductions and exemptions. These fraudulent filings involve the abuse of beneficial provisions with some even submitting false TDS returns to claim excessive refunds.
To identify suspicious patterns, the IT Department leveraged financial data received from third-party sources, ground-level intelligence and advanced artificial intelligence tools. These findings are further substantiated by recent search and seizure operations conducted in Maharashtra, Tamil Nadu, Delhi, Gujarat, Punjab, and Madhya Pradesh, where evidence of fraudulent claims was found to have been used by various groups and entities.
Data analysis reveals misuse of deductions under sections 10(13A), 80GGC, 80E, 80D, 80EE, 80EEB, 80G, 80GGA, and 80DDB. Exemptions have been claimed without valid justification. Employees of MNCs, PSUs, government bodies, academic institutions and entrepreneurs are among those implicated.
Taxpayers are often lured into these fraudulent schemes with promises of inflated refunds in return for a commission.
The spokesman said that despite a fully e-enabled tax administration system, ineffective communication remains a significant hurdle in assisting taxpayers. Such ITR preparers often create temporary email IDs solely for filing bulk returns which are later abandoned, resulting in official notices going unread.
In line with its guiding principle of ‘Trust Taxpayers First’, the IT Department has emphasised voluntary compliance. Over the past year the IT Department carried out extensive outreach efforts, including SMS and email advisories, nudging suspected taxpayers to revise their returns and pay the correct tax.
Physical outreach programs, both on and off campus, have also been conducted. As a result, approximately 40,000 taxpayers have updated their returns in the last four months, voluntarily withdrawing false claims amounting to INR 1,045 crore. However, many remain non-compliant.
The spokesman said the IT Department is now poised to take stern action against continued fraudulent claims, including penalties and prosecution wherever applicable. The ongoing verification exercise across 150 premises is expected to yield crucial evidence, including digital records, that will aid in dismantling the networks behind these schemes and ensure accountability under the law.
Further investigations are on, the spokesman added.
