More than 28,000 government employees working in Jammu and Kashmir, including 8,000 police and paramilitary force personnel, are under the scanner of the Income-tax department for allegedly claiming bogus refunds worth a few crores of rupees while filing their ITRs, official sources said.
The taxman has found that this purported fraud took place during the Income Tax Returns (ITRs) filing seasons in 2020-21 and 2021-22 even as the department has registered two criminal FIRs against a Chartered Accountant (CA) and 404 other people, with the J-K Police crime branch after a similar fraud was detected for the last few fiscals.
The alleged irregularities came to light sometime back after the Tax Deducted at Source (TDS) wing of the department located in Srinagar found that a number of people who are assessed in the Union Territory of J-K had claimed "excessive and ineligible deductions" under various heads leading to claim of bogus refunds, the sources said.
Documents accessed by PTI show that the Principal Director of I-T (J-K and Ladakh) M P Singh sanctioned filing of police FIRs against the CA and 404 other people that includes some dubious tax advisors and filers for "entering into a conspiracy and defrauding the exchequer of a sum of Rs 16.72 crore between the financial years 2017-18, 2018-19 and 2019-20." The department found that many among these people had filed incorrect or false ITRs and had identically claimed around Rs 4 lakh in refunds, they said.
The department, as part of the complaints that resulted into two FIRs filed on May 25, has shared with the police the names, addresses, PAN and bank accounts of these 405 people after which the crime branch froze these bank deposits, the sources said.
The police has booked these people under various sections of the IPC like 420 (cheating), 468 (forgery), 471 (using a forged document as genuine), 120B (criminal conspiracy) and section 66D of the Information Technology Act (cheating by impersonation).
The department has also written to the Institute of Chartered Accountants of India (ICAI) seeking cancellation of the accused CA's licence, who runs a consultancy firm in Rajbagh area here and whom it considers the "prime accused" in the case, the sources said.
Alarmed by this development, the department ran a fresh check in November last year for the ITRs filed by salaried employees working in J-K and found similar instances of bogus claims of deduction made by them to seek refunds.
The employees, as per the sources, belong to the power development, health, tourism, education, bank, universities apart from personnel of the police and the Central Armed Police Forces (CAPFs) that are deployed in the UT for law and order and counter-terrorism duties.
The I-T Principal Commissioner wrote to the heads of these organisations in March informing them that there is a provision to correct or update such returns by filing an ITR-U and avoid getting into legal trouble.
Over 9,000 employees filed their ITR-U in J-K by this March end and the department collected additional tax of more than Rs 56 crore, the sources said.
An ITR-U enables a taxpayer to update their returns (ITRs) using the e-filing portal anytime within two years from the end of the relevant assessment year. However, many employees did not avail this opportunity of filing ITR-U and now they will be issued penalty notices and in some cases police FIRs will be filed like the one filed against the 405 people, the sources said.
According to an estimate, over 28,000 government employees have fraudulently claimed refunds for 2020-21 and 2021-22 and the department will soon initiate action against them after sending them notices for scrutiny of their ITRs, the sources said.
According to the law, if a person evades tax or mis-declares their income in the ITR they can be prosecuted and charge sheeted by the tax department under section 276C of the I-T Act that entails a rigorous imprisonment ranging from six months to seven years on a case-to-case basis.
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