Bogus income tax refund claims includes those claims which are made by individuals or entities submitting false or inflated claims to receive refunds they are not entitled to.
It means one who is asking for an income tax refund you’re not actually eligible for. This can happen when someone shows fake deductions, inflated expenses, or false losses to lower their tax and get extra money back.
It’s like tricking the tax department into paying you more than you deserve.
In this article, we will understand all about bogus ITR refunds step-by-step.
Why do some people file false refund claims?
Some people do it to get quick money from the government, thinking they won’t get caught. Others may follow bad advice from agents or tax preparers who promise big refunds.
The main reason is greed or lack of awareness about the serious risks involved.
But remember, a fake claim today can lead to big trouble tomorrow.
How does the IT Department catch the fake claims?
Department using the smart AI Enabled Software to track all the return data.
They uses data matching AI tools and PAN-based tracking to spot fake refunds. They compare your ITR with Form 26AS, AIS, and bank transactions.
Even after filing ITR if you claim more than 50% TDS refund or high amount of TDS refund then they will send you Risk management Email for the confirmation.
What happens if you’re caught?
If the tax department finds out your refund claim is false, they’ll cancel the refund and may also demand the money back with interest. You might also get the notice to be called for questioning.
In short, one fake claim can lead to lots of stress and legal trouble.
Penalties and Fines Involved
A penalty of up to 200% of the tax due may be imposed. In addition, prosecution under Section 276CC can lead to imprisonment.
Additional Penalty
If you do not respond within 10 days, a penalty of Rs 500 per day will be levied.
Note – if the false claim is seen as intentional fraud, you can face criminal charges. Jail time can be from 3 months to 7 years, depending on how serious the case is.
Are tax consultants also responsible?
Yes, if your tax consultant or agent helped file a false refund claim knowingly, they can also face penalties and legal action. The tax department can hold them equally responsible for the fraud. So, choose your tax helper carefully and make sure everything is truthful.
What if you claimed by mistake?
If you honestly made a mistake in your refund claim, you should correct it as soon as possible by filing a revised return or informing the tax department. Being upfront can help avoid heavy penalties or legal trouble.
Option to File ITR-U
If you do not have proof, you can file an updated return (ITR-U) to correct your income and details. You will be required to pay any additional tax, interest, or penalty, and submit your response to the notice under Section 133(6).
Mistakes happen but fixing them early means a lot.
Can you fix a wrong claim later?
Yes, you can file a revised income tax return within the allowed time to correct wrong claims. This helps you avoid penalties and shows you’re co-operating with the tax department.
It’s always better to fix errors than ignore them.
Conclusion and Key Takeaways
Claiming bogus ITR refunds can lead to serious financial and legal trouble. To stay safe:
- Always file truthful and accurate returns to avoid penalties.
- If you make a mistake, correct it quickly by filing a revised return.
- Be careful when choosing a tax consultant – only trust honest helpers.
- Remember, fake refund claims can result in fines, interest, or even jail time.
Playing safe with your tax returns saves you from big headaches later!
FAQs
Usually no, if corrected promptly and not done with intent to cheat.
Yes, the taxpayer is ultimately responsible for the accuracy of the return filed.
Yes, it raises scrutiny and can lead to detailed investigations in future years.
