The intelligence wing of the Income Tax Department has detected a large-scale tax fraud during the simultaneous surprise raids organised across Tamil Nadu including the four southern districts.
An official statement said thousands of employees of various Public Sector Undertakings (PSUs) and corporates have made fraudulent claims in their Income Tax Returns (ITRs) and received huge refunds by evading income tax. Multiple rackets comprising of Income Tax Practitioners (ITP), Chartered Accountants (CA), middlemen and employees have been busted in a snoop down by the Investigation Wing of the Income Tax Department, Tamil Nadu and Puducherry.
During the enforcement actions conducted by the income tax sleuths across Tamil Nadu and in the districts bordering the neighbouring states including Tenkasi and Kanniyakumari, it has been found that ITPs and CAs, along with certain intermediaries have facilitated tax frauds by generating bogus donation receipts, claiming false medical expenditure claims, fabricated rental agreements and incorrect exempt allowances.
Several hundreds of employees have claimed bogus deduction under Section 80 GGC through fake receipts in the name of political parties. Donation receipts were edited in the system and used for several PANs. Many employees have claimed deduction amounting to several lakhs of rupees under Section 80 E, which is for interest paid on loan taken for higher education for self or dependents.
It was found during the investigation that these were fraudulent claims. Tax consultants prepared bogus rent receipts in the name of landlords to claim exemption for House Rent Allowance and given to the employees for evading tax. Evidence clearly showing generation of medical certificates and bills in the name of various doctors in the systems of the tax practitioners have been detected by the investigators. Employees have also made bogus claims stating interest payable on loan taken for purchase of electric vehicle under Section 80 EEB.
Bogus receipts from charitable institutions have been claimed under Section 80G. It is alarming to find that these tax consultants helped some of the employees to fraudulently claim more than a dozen deductions such as under Section 80 C, 80 DD, and 80 DDB through fabricated evidences.
PSUs whose employees who have indulged in tax frauds with the connivance of tax practitioners include Bharat Heavy Electricals Ltd (BHEL), Ordnance Factory, Tiruchi, (OFT), Tamil Nadu Electricity Board (TNEB), Tamil Nadu State Transport Corporation (TNSTC), Tirunelveli District Court, Heavy Alloy Penetrator Project (HAPP) and many others.
Tax evasion to the tune of several crores of rupees by thousands of employees have been detected in the above investigations by Income Tax Department, the statement said.
