IT Dept busts fake deductions racket, unearths Rs 120-cr bogus refund claims in TN

The Income Tax Department has uncovered a massive fraudulent refund racket in Tamil Nadu, with survey and raid operations conducted across 18 locations, including Chennai, Trichy, Coimbatore, Salem, Madurai, Vellore, Erode, Tiruvannamalai, Villupuram, Theni, Sivagangai, Pudukkottai, Virudhunagar, and Tirunelveli.

The raids targeted intermediaries and IT practitioners who facilitated fake deductions under various sections of the Income Tax Act, enabling thousands of taxpayers to claim ₹120 crore in bogus refunds.

According to sources in the department, special teams covered the offices of chartered accountants (CAs), middle-men and brokers who allegedly helped their clients claim tax deductions with bogus bills, documents.

Also read: Thousands of salaried people, CAs ‘involved’ in Rs 500-crore fraud, claims I-T dept

Investigations revealed that these intermediaries, operating through closed WhatsApp and Telegram groups and word-of-mouth networks, aided taxpayers—including government employees and serving and retired defence personnel from Tamil Nadu, Delhi, Jharkhand, Jammu and Kashmir, Assam, and Bihar—in filing incorrect IT returns.

Fraudulent claims

Fraudulent claims were made under sections like 80GGC (political donations), 80D (medical reimbursements), 80C (tuition fees), and 10(13A) (HRA), resulting in defrauding the government of crores of rupees. The racket, valued at ₹550 crore, involved specific email IDs created to file thousands of fraudulent returns.

Nationwide, approximately 40,000 taxpayers have voluntarily updated their returns over the last four months, withdrawing false claims worth ₹1,045 crore.

The IT Department has urged taxpayers involved in such schemes to file updated or revised IT returns to avoid penalties and prosecution. Assistance will be provided to facilitate compliance. The department has also cautioned the public against falling prey to unscrupulous agents promoting fraudulent tax schemes.