To put an end to the fraudulent act of bogus refunds, including salaries of many employees from different government departments, the Income Tax Department has taken stern actions against defaulters, especially salaried persons. The Department has cracked down on fraudulent claims for refunds by attaching the salary accounts of a lot of workers.
It had been gathered that after meticulously scrutinizing high refund cases, a large number of tax payers working in central as well as state governments exploited this provision-less filing system for their ITRs. These defaulters were found to be claiming excessive deductions under different sections of Income Tax Act not meeting the criteria resulting in undue refunds for TDS. Moreover, some taxpayers had claimed deductions exceeding 80 percent of their Gross Total Income which further raised suspicions regarding frauds being committed.
Almost 60 per cent employees from various government departments in Jammu and Kashmir fell into the trap of this bogus refund scandal.To sort out this problem and stop revenue leakages, the department has worked with other stakeholders such as Chief Secretary of J&K, Director General of J&K Police, MD of J&K Bank who have sensitized them on the consequences of fake refund claims. For those staff who had mistakenly requested refunds, they were told to file ITR-U with amended returns and pay back the tax amount claimed in self-assessment tax (SAT). However, despite these advisories some taxpayers did not rectify their ITRs thereby issuing prosecution notices against them by the department.
The scrutiny cases for Assessment years 2021-22, 2022-23 and 2023-24 are selected wherev in case if defaulters range from 3 months imprisonment up to 7 years or penalty up to 200% of the tax evaded. Furthermore, more than three thousand erring taxpayers have been sent notices under section 133(6) of Income Tax Act asking for documentary evidence in support of deductions claimed. Upon failing to provide satisfactory explanations, a person may be prosecuted under section’s276Cand277oftheAct.
Where by conviction results into rigorous imprisonment and monetary fines are imposed. In order to help taxpayers correct their mistakes promptly and complete filing updated ITRs while paying due taxes timely; the department has offered guidelines on this matter. The timing of adherence to these rules is critical, and it attracts extra fines and scrutiny.
Taxpayers should revisit their ITRs for the last three years, ensuring validity of all documents they use to back up any deductions claimed. Those who cannot provide evidence are advised to make an ITR-U submission while paying the required taxes as a way of avoiding legal trouble. In case taxpayers need more help, they can visit local Income Tax Department offices or contact registered Chartered Accountants/Tax Practitioners.
The matters of fake refund claims must be tackled immediately by the taxpayers in question and such actions need to be avoided in future. Amongst other things, the due date for filing revised ITRs relating to FY 2020-21 and 2021-22 is March 31, 2024 and March 31, 2025 respectively. To escape from penal provisions and legal effects which result from non-compliance with tax laws on time…
