HYDERABAD: The Income Tax Department in Hyderabad has uncovered a long-term capital gains (LTCG) tax fraud involving the use of AI-driven font forensics. A local taxpayer, who sold a property for ₹1.4 crore, allegedly tried to reduce his tax liability by submitting forged improvement bills.
Suspicion Over Bill Dated 2002 Uncovers Font Mismatch
The taxpayer had claimed Rs 68.7 lakh as indexed “cost of improvement” for the property between FY 2002–03 and 2007–08, in addition to Rs 73 lakh as indexed acquisition cost. Consequently, he declared a meagre LTCG of Rs 24,774 in his return.
An investigation was triggered after officials found inconsistencies in one particular bill dated July 6, 2002, amounting to Rs 7.68 lakh. Upon forensic analysis using AI tools, the department found that the document was written in the ‘Calibri (body)’ font. The anomaly raised red flags because although the font was designed around 2002–2004, it was not publicly released until 2006 and only became the default font in Microsoft Office in 2007.
Since the document purported to be from 2002, the use of the Calibri font rendered it a forgery.
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Admission and Revised Filing by Taxpayer
When confronted, the taxpayer stated that the documents were found in a folder belonging to his late father and admitted he could not verify their authenticity. Subsequently, he withdrew the Rs 68.7 lakh improvement claim, filed a revised income tax return, and paid the appropriate capital gains tax.
Income Tax officials have called this a milestone case, demonstrating the critical role of AI and digital font analysis in identifying document forgery. The department emphasised the growing reliance on forensic technology to combat tax evasion and urged taxpayers to refrain from falsifying records, warning that digital traces are now harder to hide.
