Once Bitten, Twice Shy? Income Tax Department To Rein In Refunds Based On Bogus Investments

Once Bitten, Twice Shy? Income Tax Department To Rein In Refunds Based On Bogus InvestmentsRepresentative image. (Satish Bate/Hindustan Times via Getty Images)

Central Board of Direct Taxes (CBDT) has introduced new steps to put an end to refunds towards unsubstantiated and fraudulent investment claims made in income tax filings, reports the Press Trust of India.

As part of an investigation, CBDT found that certain fraudsters were persuading taxpayers to claim refunds from the tax department from non-existent investments under 80C and towards housing loans.

“When we took that risk parameter and found from one IP address so many refunds are being filed which are of same pattern, so some searches took place. So we have put another risk parameter into our system that if some fraudulent return is being filed then that refund has to be stopped,” said Sushil Chandra, CBDT Chairman.

The Chairman also stated that his department had constituted a 'high-pitched' assessment committee, comprising of three principal commissioners, to look into the cases where tax officers raise unreasonable tax demands.

A ‘high-pitched’ assessment case is one where the addition of income in the returns is made on frivolous grounds, non-observance of principles of natural justice, or non-application of mind and gross negligence by the assessing officer in deciding a case.

“Last year, we have transferred more than 12 assessing officers who were found indulging in high pitched assessments," Mr Chandra added.

Also Read: Filing Income Tax Returns To Become Even Easier: ITR Forms Will Now Be Pre-Filled, Says IT Department