Income Tax Fraud Worth Rs 500 Crore Uncovered in Pune; IT Officials Hunt for Beneficiaries

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The Directorate of Income Tax (Investigations) has uncovered a massive income tax fraud involving tax professionals exploiting loopholes in the old return filing system to claim unauthorized deductions. A senior Income Tax officer estimated the fraudulent claims to be over Rs 500 crore.According to the officer, tax consultants operating in Pune and nearby areas acted as “return specialists,” targeting salaried individuals by promising unusually high tax refunds.

Over five years, more than 10,000 fraudulent claims were filed. Investigators identified a recurring pattern: deductions were claimed for housing loan interest and principal repayments, medical and insurance payments, investments in savings schemes, education loans, and house rent allowance (HRA) — all without proper documentation. This loophole has since been addressed by the revamped return filing system.The ongoing scrutiny reveals consistent misuse of deduction claims that were not legally valid.

“We have already taken action against the tax professionals involved and are now working to identify individual taxpayers who benefited from these bogus returns. These individuals will face penalties and prosecution,” the officer said.The department warned taxpayers that they cannot evade responsibility by blaming intermediaries. “Any refund claimed fraudulently in their name will be thoroughly reviewed, and penal provisions will be enforced,” the officer added.

This case is among many similar bogus deduction scams being exposed across India.Previously, the Income Tax department has detected tax evasion through PAN manipulation, TDS credit fraud, and bogus trusts. However, officials investigating the Pune scam stated this is the largest fraud they have encountered in recent years.