AI font forensics helps income tax (I-T) in Hyderabad bust Rs 68 lakh LTCG fraud; exposes forged document from 2002

Time of India

3 days ago

HYDERABAD: In a case that underscores how digital forensics and generative AI tools are transforming tax enforcement, the income tax (I-T) department has unearthed a case of tax evasion involving forged improvement bills submitted to reduce capital gains liability.
The case pertains to a Hyderabad-based taxpayer who sold an immovable property for Rs 1.4 crore. But in his I-T returns, he drastically reduced his capital gains liability by claiming deductions of Rs 68.7 lakh under the head 'cost of improvement with indexation,' in addition to an indexed acquisition cost of Rs 73 lakh.
As a result, the long-term capital gains (LTCG) declared was a mere Rs 24,774. The fraud was caught after AI tools found the font in a document didn't exist in that year.
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AI flags fake document through Calibri font
The claimed cost of improvement spanned years 2002–03 to 2007–08, with the original value of Rs 24 lakh indexed to Rs 68.7 lakh. To substantiate his claim, the assessee submitted photocopies of expenditure bills dated between 2002 and 2008.
One bill (July 6, 2002) showing an expense of Rs 7.68 lakh raised red flags in I-T department. A forensic analysis using generative AI tools revealed the document's text was in 'Calibri (body)' font.
Investigators found Calibri was designed between 2002 and 2004, but released to the public in 2006, becoming Microsoft Office's default font in 2007.
Since the font did not exist at the time bill was purportedly issued, officials concluded the document was fabricated.
The assessee claimed the copies were found in an old folder belonging to his late father. He admitted he could not verify its authenticity. He withdrew claim, filed a revised return excluding cost of improvement, and paid taxes based on the corrected capital gains.