Mumbai Businessman Duped of ₹31 Lakh by Fake Tax Consultants

Issue: A Mumbai businessman filed a police complaint after he was cheated by two tax consultants who allegedly pocketed the funds meant for his Goods and Services Tax (GST) and Income Tax payments, leading to severe penalties for the complainant.

Facts:

The complainant, a 56-year-old businessman from Goregaon running a fabrication business, hired the primary accused as a tax consultant in 2018 based on a recommendation from a friend’s firm.
In 2019-2020, due to the Covid outbreak, the complainant was unable to pay tax dues and the consultants offered to pay the dues on his behalf, accepting a sum of ₹27.8 lakh from him.
In May 2023 and February 2024, the complainant received notices from the GST Department confirming that his dues were unpaid and demanding the principal amount plus interest and penalty.
He later received a show cause notice from the Income Tax Department for not paying tax on business profits.
The complainant confronted one accused, who assured him the matter would be settled for an additional ₹1 lakh, which the businessman paid, but the accused subsequently switched off his phone and claimed to have gone missing.

Decision:

The businessman lodged a complaint with the Goregaon police, stating that the consultants took ₹27.8 lakh for tax payments and caused him to pay an additional ₹3.29 lakh in penalties.

Key TakeDowns:

Nature of Fraud: The fraud involved a high-trust relationship where the consultants misappropriated tax payments, causing the client to face tax demands, interest, and penalties from both the Income Tax and GST departments.
Total Loss: The businessman was cheated out of ₹31.09 lakh (₹27.8 lakh given for tax payment + ₹3.29 lakh paid in subsequent penalties).
Vulnerability: The incident underscores the vulnerability of taxpayers who rely completely on tax professionals, highlighting the need for vigilance and direct verification of challan payments and compliance status on government portals.