Why My CA Says a Good Night’s Sleep Is Better Than a Risky Refund

Email to an old client

Subject: Why Honesty Still Pays - My Thoughts on Your Refund Query

Dear Nikhil bhai,

Warm greetings.

Thank you for your email and the trust you’ve continued to place in our office for the last 25 years. It’s always been a pleasure to be of service to you, and it’s nice to hear that your son is now starting his professional journey. May he do well and prosper.

I understand from our discussion / your email that your son, based on some peer advice, has suggested that we create additional / dummy expenses in your ITR to get a higher refund. I’m writing to explain, as clearly and respectfully as possible, why this is not just unadvisable - but potentially dangerous.

Let me begin by saying this: our office does not believe in or engage in filing returns with false or fabricated claims. Not only is it ethically wrong, but it’s also legally risky. And the consequences, especially today, are far-reaching.

The Income Tax Department has moved far beyond random checking. It now relies on sophisticated data analytics, AI-driven algorithms, and annual information statements (AIS) to match your claims with data from banks, insurers, mutual funds, and other reporting entities. If your return shows inflated expenses without matching bank trail, vendor invoices, or business patterns, it will likely trigger red flags. Once that happens, scrutiny notices, inquiries and even penalty proceedings or prosecution under can follow.

In your case, since you are a long-standing insurance agent with regular commissions, the department already has access to all TDS deductions and turnover via Form 26AS and AIS. Any mismatch or suspicious claims can open the door for assessment. And as you know, these assessments often stretch for months, requiring explanations, documentation, and unnecessary mental stress -  even if one has nothing to hide.

Nikhil bhai, you’ve always been a straight-forward professional and a respected client of our firm. Please don’t let momentary temptation, peer pressure, or hearsay dilute that. It’s always better to pay the right tax and sleep peacefully than to gain a few extra rupees only to lose your peace of mind. And as someone who has built a clean track record over decades, your reputation with the department is an asset - let's not compromise that for short-term gains.

We’ll be happy to file your return accurately and in line with actual expenses you’ve incurred. If there are genuine deductions available, we’ll certainly claim them - as we’ve always done. But let’s not take the slippery slope of creating fiction in the return. That’s not the legacy I want for your son to inherit either.

Looking forward to your confirmation so we can proceed with finalising the returns for both of you.

Warm regards,
CA S Srinivasan
S&Co, Chartered Accountants

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