Tax Fraud Alert: Penalties & Jail Await for Wrong Refund Claims!

• Income Tax Department uncovered a pan-India network of agents facilitating fraudulent tax refund claims through incorrect deductions and exemptions.
• These networks used inflated/fabricated deductions, often linked to donations to Registered Unrecognised Political Parties (RUPPs) and charities, charging a commission.
• Tax authorities use sophisticated data and AI-based profiling tools, along with third-party data (banking, AIS/Form 26AS), to detect abnormal deduction patterns.
• Enforcement actions include searches/surveys under Sections 132 and 133A to gather evidence of bogus receipts and routed funds.
• Penalties range from rejection of claims, tax demands with interest, up to 200% penalty (Section 270A), 78% tax on unexplained money (Section 69A), and criminal prosecution with imprisonment for willful evasion.

Why It Matters: Filing wrong tax refund claims can lead to severe penalties, high taxes, and even criminal action.