Wiping paint to pretend not to have been hit is cheating
Ill leave it to the tournament crowd to say how common it is
Wiping in a tournament and getting caught will get both you and your team mates out
To lose a game because someone wiped and multiple players put out wont make the wiper popular
In high level tournaments its a risk taken by players - and there are things at stake such as a high value prize, keeping in the tournament and keeping your sponsors name in view etc
Wiping on a recreational basis is a bit sad
In scenario and big games it does happen. The individual does not want to be out, or in games a number of years back you probably had to walk a long way to respawn
It's still cheating
In scenario you can wipe without cheating by using a medic, go to the medic or have the medic come to you and 'tap' back in game, so you need to wipe off the hit
It's common to wipe off on the way back to respawn as well - strictly speaking you shouldn't until you get to spawn