Latest news with #IncomeTaxDepartment
Time of India
2 hours ago
- Business
- Time of India
Taxpayer wins Rs 1.4 lakh penalty case despite claiming false income tax deductions to reduce income by 50%; Know the details
Academy Empower your mind, elevate your skills How did this income tax penalty case for claiming false tax deductions start? FY 2017-18: Patil filed Shinde's ITR declaring taxable income of Rs 4 lakh (407,090) by claiming multiple income tax deductions. Patil filed Shinde's ITR declaring taxable income of Rs 4 lakh (407,090) by claiming multiple income tax deductions. May 28, 2019: Shinde came to know that Patil claimed excess tax refund by claiming many false tax deductions. He immediately paid back the due tax with interest. However, the revised ITR could not be filed voluntarily since the date to file one was over. Shinde came to know that Patil claimed excess tax refund by claiming many false tax deductions. He immediately paid back the due tax with interest. However, the revised ITR could not be filed voluntarily since the date to file one was over. February 2020: The Income Tax Department Assessing Officer (AO), on the basis of information received from the Income Tax Officer, (Investigation), that Shinde has claimed excess deductions, initiated proceeding under Section 147 after obtaining approval from the authorities and accordingly, a notice under Section 148 was issued. The Income Tax Department Assessing Officer (AO), on the basis of information received from the Income Tax Officer, (Investigation), that Shinde has claimed excess deductions, initiated proceeding under Section 147 after obtaining approval from the authorities and accordingly, a notice under Section 148 was issued. March 11, 2020: Shinde filed an ITR in response to notice under Section 148, declaring taxable income of Rs 8 lakh (8,32,990). Shinde filed an ITR in response to notice under Section 148, declaring taxable income of Rs 8 lakh (8,32,990). March 2, 2021: The Income Tax Department completed the assessment of Shinde's ITR under Section 147 by accepting it. The Income Tax Department completed the assessment of Shinde's ITR under Section 147 by accepting it. September 12, 2021: The Income Tax Department Assessing Officer (AO) imposed a penalty of Rs 1.4 lakh (1,46,760) under Section 270A(8) for under-reporting of income in consequence of misreporting. Shinde filed an appeal in CIT (A) against this penalty order. The Income Tax Department Assessing Officer (AO) imposed a penalty of Rs 1.4 lakh (1,46,760) under Section 270A(8) for under-reporting of income in consequence of misreporting. Shinde filed an appeal in CIT (A) against this penalty order. September 27, 2024: CIT (Appeals) dismissed Shinde's appeal and confirmed the penalty of Rs 1.4 lakh (1,46,760) imposed u/s 270A(8). It is this order of CIT (Appeals) against which Shinde filed an appeal before ITAT (Pune). ITAT Pune's investigation found that Shinde was cheated by Patil to conduct this tax fraud 'We find that the assessee (Shinde) is a salaried employee & belongs to a technical background. The return (ITR) of most of the employees of CEAT LTD, Bosch Company, HAL & M & M including that of the assessee (Shinde) was filed by a tax consultant namely Patil. We further find that the assessee (Shinde) came to know from other employees in the company that Patil with his expertise is able to legally calculate lower tax, resulting in a refund of TDS deducted by the employer. The assessee (Shinde) was unaware about the contents of the Income Tax Return filed by Patil & truly believed that the returns (ITR) are filed legally as per the provisions of the Income Tax Act. The assessee being from technical background does not understand ABCD of Income Tax & therefore completely relied on the above named tax consultant, who without informing him & others, claimed excess deduction under chapter VI-A of the IT Act & claimed refund. It was Patil who cheated all the employees & claimed excess deduction in their returns without informing them for his own benefit. The fact of the cheating came to light when a survey u/s 133A was conducted at the premises of Patil. When the fact that this kind of fraud was made in the name of a number of persons all of them complaint to the Economic Offence Wing of Police, against the tax consultant Patil. It is also apparent that there is no mistake of the assessee but it was the hidden interest of the tax consultant who triggered the gun by using the shoulders of the assessee & many more for his own benefit.' What did ITAT Pune say about Shinde's action post the fraud coming to his notice It is also found that as soon as the fact of excess deduction claimed, came to the knowledge of the assessee (Shinde) he immediately paid the due tax with interest, even before the issue of notice under Section 148 & contacted another genuine tax consultant who prepared and furnished correct return in response to the notice under Section 148. We find that the Assessing Officer has levied a penalty under Section 270(A) of Rs 1,46,760 on the basis of the fact that the correct income was not returned voluntarily but only after issue of notice under Section 148. It is also found that when the notice under Section 148 was issued the appellant (Shinde) has disclosed his correct income & paid the due tax before issue of notice. We also find that the Income Tax Department Assessing Officer has accepted the return as it is, which was furnished by the appellant (Shinde) in response to the notice under Section 148. ITAT Pune final judgement We cannot accept the contention of Ld. DR (Income Tax Department lawyer) that the revised return was not voluntary therefore the penalty under Section 270(A) is inevitable. In this regard the contention of counsel (Shinde's lawyer) is also important wherein he stated that the due tax along-with interest was already paid before the issue of notice under Section 148 & admittedly the return of income (ITR) could not be filed as the due date was already over. We find force in the arguments of the counsel of the assessee (Shinde) that the amount of tax & interest was deposited voluntarily much prior to the issue of notice under Section 148 since the income tax with interest was deposited by the assessee on 28-05-2019 whereas the notice under Section 148 was issued on 25-02-2020. What is the significance of this judgement for other taxpayers? 'In this case, the taxpayer was unaware about the incorrect or excessive claims made by the consultant in his income tax return and had relied entirely upon the consultant's expertise. Subsequently, when he came to know about the incorrect or excessive claim in his return, he promptly recomputed the correct tax liability and interest thereon and voluntarily deposited. This he has done before any notice could be issued by the tax department and this proactive approach saved him from penal consequences. While the applicability of this decision to other cases would depend on the specific facts involved, however, this may serve as a relevant precedent in a situation where a taxpayer voluntarily pays the correct tax and interest before receiving any notice, and is able to demonstrate bona fide reliance on third party consultant along with a lack of his personal knowledge of the tax laws.' 'The judgment lays emphasis that due to the assessee's bonafide intentions, proactiveness to make things right, no intention of tax evasion would have weightage over mistakes done in ITR without his knowledge, even if it led to under reporting of income. If the assessee due to his different technical background, fully relied on his tax consultant, who undertook a fraudulent act for which the assessee had no knowledge and as soon as he became aware, he rectified it suo moto, and should not be held responsible or punished ( be it financially) for someone else's malafide act. So if one is aware and prompt in his corrective actions, along with facts and evidence, he can demonstrate his genuine position and get relief from such a penalty.' The Income Tax Department imposed a penalty equivalent to 17% of Mr Shinde's salary after it was proved that he had claimed false income tax deductions to under-report his income by about 50% to lower his net income tax liability. The penalty imposed by the income tax department amounted to Rs 1.4 lakh. Shinde's actual salary was Rs 8 lakh a year, which he reported as only Rs 4 this might look like a fair punishment for someone who wilfully evaded paying income tax, Mr Shinde argued in court that he was just an innocent employee with a technical background. He said that like him, many other employees from companies like Ceat, Bosch, HAL, Mahindra and Mahindra among others, relied on a tax consultant named Mr Patil to file their Income Tax Returns (ITRs). Patil assured them that he was an expert in tax law and could legally calculate a lower tax, leading to a refund of the TDS deducted by their lawyers told ITAT Pune: 'The assessee was unaware about the contents of the Income Tax Return (ITR) filed by Patil & truly believed that the returns are filed legally as per the provisions of the Income Tax Act.'Shinde also informed the court that as soon as he found out about this illegal act of claiming false tax deductions, he had filed a complaint in the Economic Offence Wing, Maharashtra Police against paid the full tax amount plus interest, just like he was supposed to, without claiming any bogus tax deductions. However, the income tax department stated that even though he returned the owed tax with interest, he should still face penalty for committing this offence and for not voluntarily submitting a revised first, Shinde filed an appeal against the penalty of Rs 1.4 lakh that the tax department slapped on him with the Commissioner of Appeals (CIT (Appeals)). However, CIT (Appeals) rejected the appeal, leading Shinde to take his case to ITAT Pune. There, he won the case and the entire penalty of Rs 1.4 lakh was main reason why Shinde won this case is because ITAT Pune recognized his good behavior. He pointed out the illegal actions of his tax consultant (Patil) and returned the full amount of the income tax owed, along with interest, just as the law Pune said: '....It is found that when the notice under Section 148 was issued, the appellant (Shinde) has disclosed his correct income & paid the due tax before issue of notice. We also find that the Assessing Officer of Income Tax Department has accepted the return (ITR) as it is which was furnished by the appellant (Shinde) in response to the notice u/s 148. We cannot accept the contention of Ld. DR (income tax department lawyer) that the revised return (revised ITR) was not voluntary, therefore the penalty u/s 270(A) of the Act is inevitable….'Check out the info below to find out why and under what circumstances Shinde managed to win this income tax penalty case despite claiming false tax deductions to declare lower income and pay less to ITAT Pune judgement dated May 8, 2025. Here's the timeline of events:Also read: Income Tax Bill 2025: Income from house property taxation related two key amendments suggested by select committee, know the impact According to the judgement order, here's what ITAT Pune said:(No part of the judgement is altered and the same is presented below as it is)According to the judgement order, here's what ITAT Pune said:ITAT Pune deleted the tax notice and thus the penalty of Rs 1.4 lakh stood what ITAT Pune said:'Considering the totality of the facts of the case, we are of the considered opinion that this is not a fit case to impose penalty u/s 270(A) & accordingly the order passed by Ld. CIT(A)/NFAC is set-aside & the Assessing Officer is directed to delete the penalty of Rs 1,46,760 imposed u/s 270(A). Thus, the grounds of appeal raised by the assessee are allowed.'ET Wealth Online reached out to a number of lawyers and chartered accountants to get their take on the importance of this judgement for other taxpayers. Here's what they said:'This ruling marks a significant development in tax penalty jurisprudence. It emphasises that even under the newer Section 270A regime, tax penalties are not merely about ticking boxes but involve a fair process that considers the taxpayer's intent and actions. The key takeaway from this ruling is that it reassures taxpayers that if they are honest and proactive—even when faced with mistakes or misleading advice—they are protected by law. Salaried taxpayers and those relying on consultants now see a tribunal recognising their situation and not penalising them for third-party misleading advice or fraud.''This is a welcome judgment, particularly in times where taxpayers often face genuine hardship in filing a revised ITR beyond the prescribed due date. The judgment also underscores the bona fide of a taxpayer and the principle that the taxpayer must approach with clean hands, as was demonstrated in this case, where the taxpayer proactively paid the taxes along with applicable interest immediately upon being made aware of the consultant's error, and notably, even before receiving any demand notice.''In the said case, involving peculiar facts, the Appellate Tribunal held that improper deduction claimed in reliance on professional advice—being influenced by an advisor's hidden agenda—should not attract penalties if there was no willful intent by the taxpayer to evade tax. It further clarified that taxpayers who voluntarily correct such errors and pay taxes before detection may be spared from penal consequences. The ruling reaffirms the principle that not every ineligible claim warrants a penalty, especially in cases of bona fide error. With the Income-tax Department intensifying scrutiny of improper deductions, this decision offers timely relief to similarly affected taxpayers.'
Hans India
4 hours ago
- Business
- Hans India
Awareness session on ELI scheme today
Vijayawada: AP Chambers in association with Employees' Provident Fund Organisation (EPFO) and the Income Tax Department is organising awareness session on 'Employment-linked incentive (ELI) scheme' and 'TDS/TCS provisions and their compliances' at AP Chambers Office on MG Road here at 4 pm on Thursday. The Union government allocated around Rs 1 lakh crore for the Employment-linked incentive (ELI) scheme to boost employment generation in the country. In this regard, AP Chambers and EPFO are organising this session to bring awareness among the business enterprises about the ELI scheme. Senior officials from the Employee Provident Fund Organisation and the Income Tax Department will speak in the session. AP Chambers' president Potluri Bhaskara Rao appealed to entrepreneurs to participate or depute their department staff concerned in the awareness session to gain an understanding of the ELI Scheme and TDS/TCS Provisions. There is no participation fee, but prior registration is mandatory. He requested interested entrepreneurs to call AP Chambers at +91 91212 21473, +91 91212 21474, and +91 99120 92222 to register forthe sessions.
News18
4 hours ago
- Business
- News18
How To e-Verify ITR Using Aadhaar OTP And Why It Is Important
Last Updated: e-verifying your ITR through Aadhaar OTP is one of the most convenient options. Filing your Income Tax Return (ITR) is only half the job done. To complete the process, the Income Tax Department requires you to verify your ITR and without it, your return won't be processed. Among the easiest and fastest ways to do this is by using your Aadhaar-linked mobile number to generate an OTP. Here's a detailed guide on how to e-verify your ITR through Aadhaar OTP. What Is e-Verification? e-Verification is the process of validating your ITR after it has been submitted. The Income Tax Department allows multiple modes for this, including net banking, bank account verification, Demat account and Aadhaar OTP. e-verifying through Aadhaar OTP is one of the most convenient options, provided your Aadhaar is linked to your PAN and your mobile number is active to receive the OTP. Eligibility Checklist Before You Begin Before you proceed with Aadhaar OTP verification, make sure: Your PAN is linked to your Aadhaar. Your mobile number is registered with Aadhaar and is active. Your Aadhaar details match those in the Income Tax Department's records. If any of these conditions are not met, the Aadhaar OTP option will not work, and you'll need to choose a different method. Login using your PAN and password. On the dashboard, go to 'e-File' > 'Income Tax Returns' > 'e-Verify ITR through Aadhar Return'. Select the return you want to verify. Choose 'Verify using OTP on mobile number registered with Aadhaar" as your preferred verification option. Click on 'I agree to validate my Aadhaar Details" and generate Aadhar OTP for ITR (this OTP will be valid for 15 minutes only). Enter the 6-digit OTP sent to your Aadhaar-linked mobile number. Click 'Submit' to complete the process. Once submitted successfully, you'll see a confirmation message and your ITR will be officially verified. Why It Matters Verifying your ITR is mandatory under Indian tax laws. Failing to do so within 30 days of filing can make your return invalid. Aadhaar OTP verification is free, quick and paperless, making it the go-to method for salaried individuals, freelancers and even small business owners. First Published: July 24, 2025, 07:45 IST Disclaimer: Comments reflect users' views, not News18's. Please keep discussions respectful and constructive. Abusive, defamatory, or illegal comments will be removed. News18 may disable any comment at its discretion. By posting, you agree to our Terms of Use and Privacy Policy.
News18
4 hours ago
- Business
- News18
ITR Filing 2025: Not One Deadline For All; Check Last Dates For Salaried, Businesses, More
Last Updated: ITR Filing Deadline 2025: The income tax department extended the ITR filing deadline for FY2024-25 to September 15, 2025, for individuals and HUFs. ITR Filing 2025 Last Date: The income tax department has extended the deadline for the ITR filing for FY2024-25 (Assessment Year 2025-26) for 45 days to September 15, 2025, from July 30, 2025. This new due date applies to individuals, Hindu Undivided Families (HUFs) and other taxpayers whose accounts don't require auditing. The CBDT ascribed the extension to the extensive changes implemented in the notified ITRs, citing the time needed for system readiness and the rollout of Income Tax Return (ITR) utilities for Assessment Year (AY) 2025–26. 'Accordingly, to facilitate a smooth and convenient filing experience for taxpayers, it has been decided that the due date for filing of ITRs, originally due on 31st July 2025, is extended to 15th September 2025," CBDT said in the press release. Income tax return form of ITR-2 has been enabled to file through Online mode with pre-filled data at the portal a week ago. September 15 Deadline For Those Who Don't Require Audit The tax department has extended the deadline for those taxpayers who don't require audit to file the taxes. The changes in income tax forms, new slabs under new income tax and capital gain taxes have prompted the department to extend the dates. Who Can File ITR By October 31, 2025? Taxpayers whose accounts need to be audited—such as companies, proprietorships, and working partners in firms—have until October 31, 2025, to file their income tax returns (ITR) for the financial year 2024-25 (assessment year 2025-26). Before they can do that, they must ensure their audit report is submitted by September 30, 2025. As of now, the Income Tax Department has not announced any extension to this deadline. ITR Filing Deadline for Those with International Dealings If a taxpayer is involved in international transactions or certain specified domestic transactions, they are required to submit a report under Section 92E. In this case, the due date for filing ITR is November 30, 2025. To stick to this timeline, their audit report must be submitted by October 31, 2025. Just like in other categories, the government has not given any update about extending this due date. Missed the Due Date? Here's the Belated ITR Deadline If you miss the original ITR deadline, you can still file a belated return. For all taxpayers, the belated ITR for FY 2024-25 can be submitted until December 31, 2025. However, keep in mind that filing late might attract a penalty or reduce some tax benefits. What Happens If You Miss The Deadline? Taxpayers then need to pay interest at a rate of 1 per cent per month or part month on the unpaid tax amount. Late Filing Penalty Rs 1,000: If total income is below Rs 5 lakh. Rs 5,000: If total income is above Rs 5 lakh and return is filed after the due date but before 31st December. Losses under capital gains or business/profession can't be carried forward to future years if you file late. First Published: July 24, 2025, 07:10 IST Disclaimer: Comments reflect users' views, not News18's. Please keep discussions respectful and constructive. Abusive, defamatory, or illegal comments will be removed. News18 may disable any comment at its discretion. By posting, you agree to our Terms of Use and Privacy Policy.
The Hindu
5 hours ago
- Business
- The Hindu
AI tools enabled ₹11,000-crore of additional tax revenue in last 4 years: CBDT Chairman
Through the use of various artificial intelligence (AI) tools, the Income Tax Department has over the last four years encouraged more than one crore taxpayers to voluntarily update tax returns leading to ₹11,000 crore of additional tax revenue for the government, Central Board of Direct Taxes Chairman Ravi Agarwal said in an interview. Mr. Agarwal added that these tools also helped reveal ₹29,000 crore worth of previously undisclosed foreign assets and ₹1,000 crore of foreign income related to cryptocurrencies, or virtual digital assets (VDAs), in 2024-25. 'The AI analysis comprises two parts: the AI tool itself, and the database that the tool has to analyse,' Mr. Agarwal explained. 'We have engaged vendors for the tools themselves. There are various tools depending on the stage and the platform where the AI is being used. For example, in the Centralized Processing Centre for Income Tax returns in Bengaluru one component of AI is being used.' He explained that, while the tax department generates Annual Information Statements (AIS) for about 40 crore unique taxpayers, nine crore of those actually file returns. The first step for the AI tool is to analyse whether any of the remaining 31 crore should be filing returns. 'The second component is people who have filed their return, and whether they have filed the right return or not,' Mr. Agarwal said. 'That analysis is also through AI, where you analyse the patterns of past history and find out. And the third is to determine who are the habitual defaulters.' The Income Tax Department then employs a system called NUDGE (Non-intrusive Usage of Data to Guide and Enable) to send letters to taxpayers. On the basis of these letters, the taxpayers either revise or update their returns or inform the Department that they stand by them. 'As a result of this exercise, in the last 4 years since 2021-22, more than 1 crore updated returns have been filed wherein ₹11,000 crore of additional tax revenues have come in,' Mr. Agarwal said. Encouraged by this, the I-T Department last year tweaked its rules to say that returns could be updated up to four years later, instead of the earlier two-year limit. 'The point was that, if the Income Tax Department is flagging the issue, the taxpayers should have an opportunity within the statute wherein they can correct the mistake,' Mr. Agarwal explained. Apart from the additional foreign assets worth ₹29,000 crore and foreign income worth more than ₹1,000 crore related to VDAs that were disclosed in updated returns last year, the Income Tax Department in January to March this year also conducted a similar NUDGE campaign for political donations. Taxpayers claiming deductions under Section 80GGC of the Income Tax Act, which pertains to political donations, were 'nudged' through SMSs and emails. According to the Department, due care was taken to exclude genuine donors whose names or details appeared in the contribution reports filed by the political parties on the Election Commission website. Through this campaign, 6.25 lakh taxpayers received 'nudges' for the claims they made for the financial years 2022-23, 2023-24, and 2024-25. Of these, 35,260 taxpayers amended their returns, and ₹404.2 crore of additional tax was paid.
