The Income Tax Department will implement a systematic process to verify 'high-risk' refund claims filed for the assessment year (AY) 2024-25, which corresponds to the financial year ending March 31, 2024. Following a standard operating procedure (SOP) issued by the directorate of IT systems under the Ministry of Finance, the department aims to identify and investigate fraudulent refund claims that may have been made either individually or as part of an organized effort.
According to officials, the verification process will particularly focus on cases where multiple income tax returns (ITRs) have been filed using the same email address and show a pattern of false claims. Common fraudulent practices include false HRA claims, bogus donations under Section 80G, and inflated expenses. If these patterns are detected, further investigation will be initiated.
The SOP has been disseminated to various authorities, including assessing officers, TDS charge officers and officials from the investigation wing. These guidelines outline procedures for investigating suspicious refund claims, including incidents where taxpayers have wrongly claimed tax deductions or overstated their income or expenses.
A key aspect of the SOP involves identifying the key individual or group behind the common email address used to file these questionable returns. This will be done through internal databases like the Insight portal and the e-filing portal. If identification efforts fail, officials may issue notices under Section 131 (1A) of the Income Tax Act, requiring taxpayers to provide documentation and information to support their claimed deductions and exemptions.
The SOP's primary goal is to ensure the legitimacy of refund claims without causing undue harassment to taxpayers. "If claims are found to be genuine, the investigation will be closed. However, if any false claims are uncovered, the case will move forward for further investigation," a government official clarified.
This initiative underscores the government's commitment to reducing tax fraud and ensuring proper compliance with income tax laws while protecting honest taxpayers from unnecessary scrutiny. Taxpayers are advised to ensure that all claims made in their returns are legitimate and supported by proper documentation to avoid any legal complications.
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