Income Tax: Rise in suspicious refund claims ring alarm bells! What I-T department is planning to nail fraudsters

The Income Tax department has initiated scrutiny of as many as 20,874 refund claims for 2018-19 and action will be taken against persons found to be involved in any malpractices. Minister of State for Finance Shiv Pratap Shukla, in a written reply to a question in Rajya Sabha on Tuesday, said that there has been an increase in detection of suspicious refund claims. He stated that suspicious refund claims selected for scrutiny stood at 20,874 in 2018-19, 11,059 in 2017-18 and 9,856 in 2016-17.

"Scrutiny assessments have been initiated against taxpayers claiming high refunds inconsistent with the pattern of income and investments. Wherever after scrutiny the claim of refund was found to be inadmissible, the same was denied and consequential action of penalty and prosecution was taken based on the merits of the case," he said. 

Shukla informed Parliament that the Income Tax department has also come up with certain risk parameters in its system that prevent refunds from being automatically cleared in cases where suspicious refund claims are made in tax returns, especially those which are filed from a single IP address or from a single locality or by a single intermediary. 

"Such cases are then examined for possible selection in scrutiny or for electronic verification from the taxpayer. Swift action is taken by the Department against persons found to be involved in any malpractices related to refunds," he said. The total amount of I-T refunds during 2018-19 (up to February 2, 2019) stood at Rs 1.43 lakh crore, 2017-18 (Rs 1.51 lakh crore), 2016-17 (Rs 1.62 lakh crore) and 2015-16 (Rs 1.22 lakh crore).

In another reply, he said that Income Tax Returns (ITRs) filed in 2018-19 up to January 2019, is 6.36 crore, a rise of over 37 per cent over 4.63 crore ITRs filed during the corresponding period of 2017-18. About 25 crore SMSes and e-mails were sent to taxpayers in 2018-19 reminding them to submit their ITRs in time. In addition, advertisements were also placed in newspapers for timely submission of ITRs.

“A provision for levy of fees of up to Rs 10,000 for late filing of ITRs has also been introduced with effect from 2017-18 to discourage late filing of return,” Shukla said.