Income Tax Dept Cracks Down on CA-Run ITR Refund Scam Promising Inflated Returns

The Income Tax Department has launched a major crackdown on a growing racket involving chartered accountants (CAs) and intermediaries who have been fraudulently filing inflated Income Tax Returns (ITRs) to claim higher refunds for clients in exchange for a cut. The operation, revealed through ongoing investigations, has exposed widespread misuse of ITR filing mechanisms and unethical practices within professional circles.

According to a report by The Financial Express, several CAs and tax consultants across cities are under the scanner for promising unrealistically high tax refunds to salaried individuals and small taxpayers by falsely claiming deductions, exemptions, or business losses. These rackets allegedly filed ITRs using manipulated data without informing or fully educating their clients, thereby attracting undue refunds from the Income Tax Department.

Modus Operandi: Fake Deductions, Real Trouble

Sources say the fraudulent ITR filings include:

False claims under sections 80C, 80D, and 80G

Bogus business expenses for salaried individuals

Incorrect HRA and home loan interest claims

In many cases, the clients—some of whom were unaware of the scale of manipulation—are now facing notices and penalties for excess refunds they received.

Department Action and Warning to Taxpayers

The department has identified several such CA-run networks, and action is being taken under the Income Tax Act and relevant sections of the IPC. Taxpayers have been urged to review their ITR filings carefully, especially when third parties file on their behalf.

“No one should trust agents or professionals who promise abnormally high refunds. The department is equipped with AI-based tools to detect mismatches and will take strict action,” a senior tax official said.

What Should Taxpayers Do?

Cross-check all claims made in your ITR

Use the official income tax portal (www.incometax.gov.in) to file or verify filings

Respond promptly to notices and clarify discrepancies

The Income Tax Department has also warned that both the filer and the assessee can be held accountable for false claims under law.