IT dept detects fraudulent refunds, to cross-check high refunds

Income Tax Department has detected incidents of fraudulent tax refunds in Mumbai earlier this month and has decided to internally cross-check the genuineness of all payouts of more than Rs one lakh to prevent such recurrence.

The Central Board of Direct Taxes (CBDT) is also working to replace the current system of issuing refunds with better mechanism, an official statement said here.

The statement said an officer in the I-T Department of Mumbai circle noticed that refunds were issued from his jurisdiction without his knowledge earlier this month.

On internal inquiry by the Department, it was found that user IDs and passwords of certain officers had been fraudulently used to generate refunds in some cases.

As such, "stop payment orders were issued and refund outgo in at least two cases could be prevented," it said.

Investigation and search action was undertaken by the Directorate of Income Tax and (Investigation), Mumbai, to detect the bank accounts to which refunds had been credited and the beneficiaries.

The I-T investigators have identified bank accounts, beneficiaries and some of the scamsters involved, the statement said, adding that Mumbai police and CBI Mumbai have been informed.

CBDT sources said the amount of refund given fraudulently is still not known as investigations are on and it is still not clear whether I-T software was hacked.