Wednesday, January 27, 2010

Income Tax refund fraud in Mumbai

No.402/92/2006-MC (05 of 2010)
Government of India / Ministry of Finance
Department of Revenue
Central Board of Direct Taxes
New Delhi dated 25th January 2010


On or about 12th January 2010, an officer in the Income Tax department, Mumbai, noticed that refunds had been issued from his jurisdiction without his knowledge or approval of his higher authorities. He immediately brought the matter to the notice of his superior officers.

2. On internal inquiry by the Income Tax department, it was found that User Ids and Passwords of certain officers had been fraudulently used to generate refunds in some cases. Upon detection of the fraud, the following actions were taken by the Income Tax department to contain the damage:-

  • (i) Stop payment orders were issued. As a result, refund outgo in at least two cases could be prevented.
  • (ii) Investigation and search action was undertaken by the Directorate of Income Tax (Investigation), Mumbai to detect the bank accounts to which the refunds had been credited and the beneficiaries.
  • (iii) I-T investigators have identified the bank accounts, beneficiaries and some of the scamsters involved.
  • (iv) Mumbai police and CBI Mumbai have been informed.

3. Further actions being taken to prevent the recurrence of such frauds are as follows:-
a) All high value refunds issued during the current financial year will be cross-verified.
b) The system of handling high value refunds will be replaced with a more robust and foolproof system.

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