5K get I-T notice for claiming bogus tax deductions in div

Indore: The income tax department has issued show- cause notices to as many as 5000 assessees of Indore division in the last week of March for claiming bogus tax deductions by making donations to political parties in the financial year 2018-19.
More notices for abetting tax evasion through bogus deductions are likely to be served in the new fiscal for transactions done in the financial year 2019-20.
The department has sought reply from the taxpayers for allegedly claiming bogus deduction under sections 80GGC/80GGB of the Act and Charitable Organizations under section 80G of the Act by making donations to some political parties and then receiving the money back. Of the total notices served, about 90 per cent notices are served to salaried tax payers who have claimed bogus deductions on their income by showing donations to the political parties.
Chartered Accountant Pankaj Shah said, “The action from the I-T department has come in response to the nationwide searches carried out in 2021 and 2022 that showed mostly salaried tax payers evading taxes by claiming benefits of bogus donations made to political parties and then taking the money back. The department has identified 23 political parties mostly from Gujarat involved in the tax evasion racket.”
The modus operandi detected in the search revealed that the donation is received through cheque/RTGS/NEFT in the account of some political parties and this money is then re-routed through various layers and returned to the original donor mostly in cash after deducting commission of 1 to 5 per cent, tax experts said.
Shah said, “The department has started the proceedings and sought a reply. In case of failure to receive a reply or a satisfactory one, the department will ask the assessee to file a revised return without claiming the tax deduction. The department will also levy a hefty penalty of 200% of the tax amount on the assessee.”