The Income Tax (I-T) Department has reopened hundreds of old assessment cases, focusing on businesses suspected of inflating expenses through fake purchases. The move is aimed at identifying companies that have allegedly used bogus invoices to suppress actual profits and reduce tax liabilities.
According to official sources, the department is revisiting cases dating back up to five years where concrete evidence of malpractice has emerged. The sectors under the scanner include trading, electronics, and construction—industries that have been found to frequently engage in dubious practices involving non-existent vendors or “entry operators.”
These entities reportedly issue fake invoices that allow businesses to falsely increase their input costs, thereby evading taxes under both the Income Tax Act and the Goods and Services Tax (GST) regime.
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Authorities are particularly focused on the wrongful claim of input tax credit (ITC) under GST, which has emerged as a common modus operandi in such cases. The investigations are being supported by data analytics, third-party information, and GST network intelligence to trace the fraudulent transactions and link them to the concerned entities.
Tax experts believe this move reflects the government’s intensified efforts to improve tax compliance and plug revenue leakages. Businesses found guilty of such practices may face penalties, interest liabilities, and even prosecution in severe cases.
This latest action serves as a stern warning to entities engaging in deceptive accounting tactics, reinforcing the message that the tax authorities are tightening the noose around evaders.
