I-T dept quizzes officials, beneficiaries in refund fraud

The Income Tax department has questioned some of its officials and certain beneficiaries here after it detected, earlier this month, incidents of fraudulent tax refunds, which could involve a “few crores of rupees”.

Sources said after it was found that the user IDs and passwords of certain I-T officials were “fraudulently used”, the department’s investigation wing had “queried tax officials handling the refunds and some of the beneficiaries.

The amount of money involved in fraudulent refunds could go into a few crores. But the investigation is on to ascertain the exact amount,” they said.

The department, on January 12 this year, had found “refunds had been issued from an official’s jurisdiction without his knowledge or approval of his higher authorities”.

The investigation wing in Mumbai was also carrying out searches at certain places to establish the trail of the fraudulently acquired money, they said.

The department is also taking the help of banks through which the fake refunds could have been processed.

The finance ministry had earlier said that investigators had identified bank accounts, beneficiaries and some of the scamsters involved, adding, Mumbai police and CBI, Mumbai, had been informed about the matter.

The I-T department has issued Rs 8,954 crore as refunds during the first nine months of this financial year, up 49.76 per cent as compared to last year.

After the fraud was detected, the department had said “stop-payment orders were issued and refund outgo in at least two cases could be prevented” because of the step.

To prevent the recurrence of such incidents, the Central Board of Direct Taxes (CBDT) had said: “All high-value refunds (above Rs 1 lakh) issued during the current financial year would be cross-verified. The system of handling high-value refunds will be replaced with a more robust and fool-proof system.”