New guidelines to check I-T refund fraud

The instruction has been issued after it recently emerged that fraudsters misused the secret passwords.

“Please avoid telephonic queries regarding passwords. Passwords will not be communicated over telephone or e-mail under any circumstances,” the I-T Department in a classified communication advised its officials entrusted with the disbursement of refunds.

The department has also advised its officials that communications regarding passwords should be done through internal portals of the Department only after proper checks, sources in the Central Board of Direct Taxes (CBDT ) told Deccan Herald.

Early this year frauds in I-T refund came to light when an I-T officer based in Mumbai circle noticed that refunds had been issued from his jurisdiction without his knowledge or approval of his higher authorities.

The officer immediately brought the matter to his superior officers.

The CBI in Mumbai has already arrested five persons, including three IT officials for allegedly duping the I-T Department of Rs 3 crore by filing fake I-T returns.

The I-T Department, in its internal inquiry, had found that user IDs and passwords of certain officers had been fraudulently used to generate refunds in some cases resulting in siphoning off the money, sources said. As per the modus operandi unearthed by the CBI a chartered accountant collected personal account numbers (PAN) from some persons and bank account details and blank post-dated cheques signed by them.

The CA then prepared fake I-T returns and other related documents of these PAN card holders and provided the details to an IT official.

Subsequently, the I-T official entered the said data into computer system of the I-T Department and generated e-refund, which was electronically transferred to bank accounts of the PAN card holders. To prevent recurrence of such frauds the CBDT has decided to replace the existing electronic system of handling high value refund claims with a “more robust and foolproof system,” CBDT sources said. 

The CBDT has directed a complete revamp of the security system in the software of the I-T Department dealing with electronic processing and disbursement of refund claims, sources said. I-T offices across the country have been advised not to process refund claims through electronic clearing system till the foolproof system is in place.