Income Tax Notices issued due to errors and wrong details found in many ITR

income tax notices issued

Income Tax Notices: The income tax department has issued Income tax notices to many people due to numerous errors discovered in their tax returns of last Financial year. Fraudulently claiming tax refunds by misreporting income or showing false losses which reduce taxable income can attract heavy penalties. Section 270 of the Income Tax Act was amended post demonetization to ensure that misreporting and under-reporting of income was heavily penalised.

The income tax department has recently claimed to have busted a racket of fraudulent claim of tax refunds by employees of well known companies. Reportedly, the employees had falsely claimed loss under the head income from house property in order to file fraudulent tax refund claims.

Income Tax Notices

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If you are not familiar with Income Tax, it is best to seek advice from a qualified expert rather than filing your ITR on your own or relying on an unprofessional individual offering low-cost services. Filing an income tax return with mistakes or errors, especially when done by someone lacking proper knowledge or expertise, can have serious consequences resulting in Income Tax Notices.

One of the recent case came from Andhra Pradesh where a large number of government and tech company employees in Andhra Pradesh have claimed incorrect tax deductions and exemptions, the Income Tax department said. However, erring tax payers have been given a chance to file the correct returns. As part of their investigation, the tax officials conducted field inquiries and came to know that gullible employees were lured to claim wrongful refunds by intermediaries and peers.

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“Many of the assesees work in government departments, PSUs and prestigious IT companies. It is also noticed that a large number of such taxpayers work with companies based outside Andhra Pradesh and Telangana but have PAN based in Andhra Pradesh/Telangana,” said a statement issued by Income Tax Department.

The Income Tax department’s surveys on consultants and intermediaries revealed incriminating evidence on these fraudulent practices. Many of them have admitted to claiming bogus deductions and getting substantial refunds for their clients (employees and others) for commission, the statement added.

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A good number of these claims have amounted to tax refunds as high as 75 per cent to 90 per cent of the Tax Deducted at Source (TDS) by the employer. According to the Income Tax Act, 1961, misreporting income and claiming wrongful deductions will attract stringent actions such as a penalty of 200 per cent, prosecution which can also lead to imprisonment and others.

The tax officials have seized the records containing the names of the employees and clients who indulged in these malpractices.

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The department has given a lifeline to file updated returns under Section 139 (8A) for the assessment years (AY) 2021-22 and 2022-23 to pay the taxes due under Section 140 B, including allowing revised returns filing for AY 2023-24 in case original return has already been filed.

Considering the gravity of the matter, the department urged all tax payers in the state to reconsider their claims and expeditiously file the correct revised returns, the statement said.