A Chartered Accountant (CA) in Bengaluru developed an ingenious plan to dupe the income-tax department.
He induced employees of reputed companies such as IBM, Vodafone, Saplabs, Biocon, Infosys, ICICI Bank, CISCO, Thomson Reuters etc to file revised returns of income and make fraudulent claim for refunds of tax.
The employees falsely claimed that they had suffered loss from house property and were entitled to a refund of the income-tax already paid by them.
Such was the persuasive ability of the CA that he filed nearly 1,000 returns with loss from house property and raised an aggregate loss of Rs 18 crore.
The CA’s fee for the fraudulent claim was 10 per cent of the refund received.
Unfortunately for the CA and his clients, the sleuths of the income-tax department smelt a rat when they saw the large number of refund claims coming in.
After stern interrogation by the investigation wing, the employees confessed that they do not have any “real loss” under ‘income from house property’. They blamed the CA by advising them that he could get refunds for them.
However, the CA turned the tables on his clients. He told the CBDT sleuths that he filed the bogus claims for refunds at the “insistence of his clients“.
The department conducted searches on the premises of the CA and seized bogus claim documents of his clients along with WhatsApp’s chat messages.
Breach of trust
Naturally, the CBDT is upset at the alleged “breach of trust” by the CA and the taxpayers.
It pointed out that Income-tax department now does automated and faceless return processing and issue of refunds by relying on the genuineness of the claims filed by taxpayers.
“The making of claim of refunds by the taxpayer from the department is based on “trust” between the two sides and this should not be breached,” the CBDT said.
It vowed to ensure that the CA and his clients would face the necessary consequences.
“Necessary action as per law will be taken against the CA as well as the persons who have claimed wrong refunds under the provisions of Income Tax Act,” it said
Taxpayers cautioned against falling prey to such fraudulent schemes
“This is a case that is building up. Such a large-scale action in cases of employees seeking false refunds has been undertaken by the tax department for the first time,” a senior official said
The department cautioned taxpayers from indulging or getting influenced by such frauds.
It warned that making bogus and fraudulent claims is not only a betrayal of trust but will also expose the taxpayer to heavy interest, penalty and possible prosecution ending in a jail term.
“All taxpayers are requested to be highly alert to fraudulent schemes like the present one. Such fraudulent schemes will invariably be caught out and will result in penal action on the taxpayer,” the CBDT said.