It appears that the practice of filing income tax returns with fraudulent information, such as fake rent receipts, false claims on home loans, and fictitious donations, was prevalent in the past. However, the use of sophisticated software by the revenue department has made it more challenging for people to escape scrutiny. As a result, individuals who engaged in such dodgy practices may now face consequences as their returns are red-flagged.
The Income Tax department is taking action by sending notices to individuals who have claimed exemptions under various sections of the Income Tax Act, including house rent allowance (section 10(13A)), allowances for hiring a helper (section 10(14)), and deductions for home loan interest (section 24(b)). These notices are being issued for assessment years 2022-23 under section 133(6) of the Income Tax Act, which empowers tax assessing officers to request information about specific transactions during a particular year.
This crackdown is likely to affect salaried individuals who may have been misled by certain tax practitioners promising to lower their tax burden and increase their refunds through these questionable practices. Now, with the use of advanced software, the tax department can easily identify discrepancies and demand documentary proof for the claimed exemptions.
It is essential for individuals to be honest and accurate when filing their income tax returns and to maintain proper documentation for all claims made. Engaging in fraudulent practices can lead to penalties, fines, and legal consequences. It is always advisable to seek professional and legitimate advice from authorized tax practitioners to ensure compliance with tax laws and avoid any future complications.
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