Intervention of CS sought; coercive action warned
Nishikant Khajuria
JAMMU, Mar 19: Income Tax Department has detected fraud by several Government employees of various departments in Jammu and Kashmir who allegedly claimed excessive refund of the Income Tax returns without actually being eligible for the same.
Taking cognizance of the fraud, Principal Commissioner of Income Tax, Srinagar, is learnt to have apprised the Chief Secretary, J&K Union Territory about the matter in detail and sought his intervention for necessary direction to all such employees to update their Income Tax Return (ITR-U) along with penalty by March 31, 2023 or face coercive actions.
A copy of the official communiqué to the Chief Secretary in this regard is in possession of the Excelsior, according to which, the Income Tax Department has complete details of all such erring employees, who belong to Education, Health, PDD, PHE, Cooperatives, Sports, Tourism, Industry, PWD, Police and other departments of J&K Government.
Such cases of bogus refund may lead to scrutiny and recoveries of demand besides levy of penalty under Section 270A of the Income Tax Act, which is 200 percent of the tax levied. Further, the case of such employees may also be taken up for prosecution under Section 276C of IT Act.
The matter came to light during analysis of the refunds issued in the Financial Year 2021-22 and 2022-23 in respect of Income Tax Returns filed by the tax payers of Jammu and Kashmir for Assessment Years 2020-21, 2021-22 and 2022-23.
The analysis of data revealed that large number of individual taxpayers, particularly those who derive income from salaries, have claimed excessive deductions under various Sections of the Income Tax Act viz. 80C, 80D, 80DD, 80DDB, 80EB, 80E, 80EE, 80G, 80GGC etc without actually being eligible for such deductions. This way they have claimed the refunds of Tax Deducted at Source (TDS) made by their DDOs, either substantially or fully.
Pertinent to mention that the salaried employees file their returns in ITR-1 online either personally or through some tax practitioners. In order to ease the compliance for tax payers, the Income Tax Department does not ask them to upload documents evidencing the deductions under various Sections of the Act as the department trusts the taxpayers. The Central Processing Unit (CPU) processes the returns of income and issue refunds without asking any questions/details.
However, the data of every individual tax payer is analyzed by the Director General of Income Tax (Systems) and later on the cases of fraudulent claims/bogus refunds are selected for scrutiny. And in that eventuality, the taxpayer has to pay heavy price for the breach of trust done by him by making fraudulent claims of deductions under the IT Act.
According to the official communiqué, sent by M P Singh, Principal Commissioner of Income Tax, Srinagar to Arun Kumar Mehta, Chief Secretary, J&K UT, the Income Tax Department has complete details of all persons who have claimed excessive/bogus deductions to claim huge refunds of TDS made by their DDOs. “It is a matter of grave concern that large number of employees belonging to various departments of UT of Jammu and Kashmir viz Education, Health, PDD, PHE, Cooperatives, Sports, Tourism, Industry, PWD, Police and other departments have indulged in such malpractice,” read the official communiqué, number PR CIT/SGR/REFUNDS/2022-23, dated 17-03-2023.
Besides apprising about the matter, the Principal Commissioner of Income Tax has sought intervention of the Chief Secretary to sensitize all the Heads of Departments (HoDs), Secretaries and DDOs of the UT of Jammu & Kashmir to direct all the employees under their charge to update Income Tax Returns on or before March 31, 2023, if they have claimed any bogus deductions.
“Failing which (updating IT Returns) the department shall be constrained to initiate coercive actions against such erring employees,” read the official communiqué and elaborates that the Income Tax Act provides a limited window in the shape of ITR-U under Section 139(8A) which provides that the taxpayers can update their returns of income by paying their actual due tax along with penalty which is @50 percent of additional tax plus interest for Financial year 2019-20 (Assessment Year 2020-21) and @ 25 percent for Financial Year 2020-21 (Assessment Year 2021-22), if the updated Income Tax Returns are filed before March 31, 2023.
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