Recently, the Central Board of Direct Taxes (CBDT) has acted upon many intermediaries who were involved in filing income tax returns with bogus claims of deductions and exemptions under the Income Tax Act.

The exercise revealed that some intermediaries have established network of their agents all over India for filing returns with incorrect claims on commission basis. 

It was observed that huge amount of bogus claims have been made on account of donation to Registered Unrecognised Political Parties (RUPPs) or Charitable Institutions and reduced their tax obligations and have also claimed bogus refunds.

Evidence gathered from enforcement actions indicated that RUPPs many of which were non-filers, non-operational at their registered addresses, and are not engaged in any political activity were being used as conduits for routing funds, hawala transactions, cross border remittances and issuing bogus receipts for donations.

The CBDT carried out follow up searches against some of these RUPPs and Trusts and gathered incriminating evidences in respect of bogus donations by individuals and bogus CSR by companies.  

The CBDT has strengthened its data-driven approach to early detection of suspicious claims and identification of high-risk behaviour patterns, one such risk pattern has been identified for taxpayers who have made claims under section 80GGC or 80G of the Income Tax Act, 1961.

The data analytics indicated that many taxpayers are suspected to be indulged in claiming deductions for donation made to suspicious entities or have not provided relevant information to ascertain genuineness of entities.