1. Every tax return filing season, a wave of so-called “experts” emerges, claiming they can obtain a 100% refund of the tax deducted by the employer, regardless of income level or deductions.
2. Mr. X, an employee of a Public Sector Undertaking (PSU), never paid attention to the amount of tax deducted by his employer. He was confident that his friend, an ITR preparer known for his “magic,” would somehow ensure a full refund of all the tax deducted, regardless of actual eligibility.
3. Encouraged by such a belief, around 400 employees of that PSU approached the so-called ‘magician’ to file their income tax returns and claim the tax deducted by their employer. Mr. Magician charged hefty fees from all 400 employees, created temporary email IDs exclusively for filing bulk returns, and then disappeared without a trace.
4. These so-called magician-intermediaries have lured thousands of taxpayers, including employees of government organizations and both serving and retired defense personnel, across Delhi, Jharkhand, Tamil Nadu, Jammu & Kashmir, Assam, and Bihar, using private WhatsApp and Telegram groups as well as word-of-mouth networks.
5. Now, the real trouble begins with all these taxpayers. On July 14, 2025, the Income Tax Department launched a nationwide verification drive targeting individuals and entities involved in facilitating fraudulent claims of deductions and exemptions in Income Tax Return (ITR).
6. The department has issued a stern advisory, cautioning taxpayers to furnish accurate details of income, ensure their contact information is valid, and refrain from engaging with unauthorized agents offering undue refunds. It reiterated that ignorance of the law will not be considered a valid excuse
7 Action Required by Taxpayers:
(a) File a Revised Return – If the return is already filed with incorrect or inflated claims, promptly file a revised return with accurate information. In the last four months alone, nearly 40,000 taxpayers have revised their returns, collectively paying ₹1,045 crore to the exchequer after admitting false claims.
(b) Recalculate Tax Liability – Reassess tax liability based on legitimate and lawful claims. If any tax is payable, ensure it is paid along with applicable interest under the provisions of the Income Tax Act.
(c) File Updated Returns. It is advisable for all taxpayers who have filed incorrect returns by claiming fraudulent deductions in the current year or past years to come forward and file updated returns. Income Tax department ensured to assist taxpayers in updating the Return of Income.”
8. Failure to respond to notices or make wrongful claims of deductions may lead to a penalty of up to 200% of the tax liability, in addition to interest as per the provisions of the Income Tax Act.
9 As per Section 276C, if a taxpayer willfully attempts to evade tax or under-report income with the amount exceeding Rs 25 lakh, it invites imprisonment for a term of at least six months up to seven years along with a fine.
10. The responsibility of filing an accurate and timely Income Tax Return rests with the taxpayer. Even if the CA makes a mistake, the taxpayer will still be held responsible for it.
Disclaimer: The article is intended for awareness & informational purposes only.
The author can be approached at caanitabhadra@gmail.com
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