Scamsters milk loopholes in TDS system; CBI files FIR

Fifteen entities in Uttar Pradesh have allegedly cheated the income tax department by claiming refunds on fake TDS deductions, prompting the CBI to register a case.
The agency has booked 15 entities based in Lucknow and Kanpur that had milked the loopholes in the income tax system for six years to their advantage on the basis of bogus Tax Deduction Account Number (TAN) and Permanent Account Number (PAN).
CBI sources said the agency was ascertaining the amount that these entities swindled out of the department.
The agency suspected that some income tax officials might have been involved in the case.

It found that TDS deductors reported tax collection in their statements of Tax Collected at Source (TCS) without depositing the amount to the exchequer.
The deduction was also mentioned in the forms issued to the tax payers on the basis of which they claimed tax refunds from the income tax department.

Later, the TDS statements were allegedly revised by these 15 entities reducing the transaction and bringing tax amount to be zero.
"The correction might have been made with the intent to reduce or clean up the short payment of TDS default without payment of any tax or by paying nominal amount of tax," the FIR alleged.

The suspects used bogus bank accounts for the purpose of reclaiming TDS.
It is alleged that fraudulent refunds have been obtained by at least 15 parties by giving their addresses of Lucknow and Kanpur prompting the agency to register a case of cheating and corruption against them and unidentified Income Tax officials.
TAN is a 10 digit alpha number issued by the income tax department to all employers who collect tax on behalf of the department.
TAN in these cases were obtained on the basis of forged and fake documents and identity cases. The gang also included some holders of PAN who joined hands in the scheme.

These PANs were allegedly used to claim tax refunds even when actual TDS deductions were not deposited.