AI Tools Catch Rs. 68 Lakh Capital Gains Tax Fraud in Hyderabad

A recent case in Hyderabad has been circulating regarding how digital forensics and artificial intelligence (AI) tools are becoming powerful weapon in detecting tax fraud. The Income Tax Department found a big case of tax fraud where a person used fake improvement bills to reduce capital gains tax.

The case includes a person who had sold a property for Rs. 1.4 crore. While filing the income tax return, the taxpayer claimed Rs. 68.7 lakh as the cost of improvement after the indexation and Rs. 73 lakh as the indexed purchase cost. As a result, the declared long-term capital gains (LTCG) came down to just Rs. 24,774. For supporting this claim, the person submitted photocopies of expenditure bills which was supposedly dated between 2002 and 2008. One such bill, which was dated on July 6, 2002 showed an expense of Rs 7.68 lakh. This document looked suspicious when the tax department checked it closely.

The officials conducted a detailed examination of the submitted documents using advanced AI tools. The AI flagged the July 2002 bill because the text was typed using the ‘Calibri (body)’ font. It was not available to the public until 2006 and only became the default in Microsoft Office in 2007, while this fond was designed between 2002 and 2004. Since the bill was dated 2002, the use of the Calibri font revealed that the document could not have been genuinely created at that time and was therefore fake.

The taxpayer claimed that the bills were found in an old folder that belonged to a deceased family member and admitted being not sure about their authenticity when questioned. The claim was later withdrew by the members, then filled a revised return which excluded the false improvement costs and paid taxes on the correct capital gains.

This case clearly shows how digital tools and AI-based forensic analysis can help tax authorities identify fake documents and prevent tax evasion. It also emphasises the importance of honesty when filing returns and highlights how modern technology is supporting fairness in the tax system.