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How a Bengaluru case turned the Income-Tax Department's gaze on India's salaried class

Salaried employees so far had bothered little about income tax department closing in on the evaders. But not any longer. The scenario has changed.

ET Online|
Updated: Apr 20, 2018, 10.42 AM IST
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Income tax department has warned that tax payers should not fall prey to unscrupulous tax advisors or planners who help them in preparing wrong claims
So far it was only the rich who were afraid of income-tax sleuths. With his tax deducted at source and having little scope to play with the figures, a salaried employee bothered little about tax department closing in on the evaders with latest technological means including robo audits and scanning of social media.

But not any longer. Now even the salaried employees will be under the sharp gaze of the tax sleuths. The income tax department has cautioned salaried taxpayers against using illegal means like under-reporting of income or inflating deductions while filing their returns. The consequences could include criminal prosecution too.

How did the things change so drastically?
A few cases that came to light in January in Bengaluru alerted the income tax department to what seemed a pervasive trend. The department busted a racket of extracting fraudulent tax refunds by employees of several big companies such as IBM, Vodafone and Infosys and Thomson Reuters in alleged connivance with a fake chartered accountant in Bengaluru. The investigation wing of the department conducted searches on the premises of the fake CA and seized bogus claim documents of his various clients along with WhatsApp chat messages.

Investigators said he filed revised returns for his clients, making false or inflated claim of loss from house property — which reduced their tax liability and ensured a refund. Loss from house property refers to the loss suffered by the taxpayer in occupying or renting out the house he owns against interest paid on the housing loan. The CA filed nearly 1,000 false returns, adding up to a loss claim of Rs 18 crore. Some of these employees were also questioned in their respective offices.

Now, the CBI is investigating this revised tax returns fraud. According to the FIR, some I-T officials and a few staffers of Infosys connived with the fake CA — now disowned by the Institute of Chartered Accountants of India (ICAI) — and filed 1,010 revised tax returns using forged documents in the names of 250 taxpayers of various private firms, during three assessment years and claimed refunds illegally.

According to the CBI, in some cases, original returns reflected no income or loss under the head ‘income from house property’ but the revised ones did. And, in some cases, original returns reflected income or loss from self occupied house property and in the revised returns, higher loss was claimed.

Now, income tax department has warned that tax payers should not fall prey to unscrupulous tax advisors or planners who help them in preparing wrong claims to get tax benefits. Calling it a "cautionary advisory" on reports of tax evasion by under-reporting of income or inflating deductions or exemptions by salaried taxpayers, the department said such attempts "aided and abetted by unscrupulous intermediaries have been noted with concern".

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