Another probe by the income tax department here has led to suggestions to build safeguards against fraud in tax deducted at source (TDS) refunds. The department is mulling a water-tight system to detect mismatch in the name mentioned in permanent account number (PAN), and that against which tax was deducted and deposited in the govt exchequer.
This followed an investigation into an alleged TDS scam in Canara Bank at Nagpur and some zilla parishad schools in Gondia. Central Bureau of Investigation (CBI) too joined the probe and registered an FIR on Thursday.
A former outsourced employee of Canara Bank, who continued to hold login details of the system, is the main accused. As per CBI, he identified accounts in the bank, where TDS was charged on fixed deposits, but no PAN was available. Manipulating the system, he inserted PAN of persons known to him against such accounts. So, refunds were claimed in their names as he also netted a part of the amount. This involved tweaking the bank’s returns filed for TDS deductions too.
As the case exposed the vulnerability of the system, it has been suggested that any mismatch should reject returns at the outset. Since the scamster tweaked decade-old records and revised returns from the banks’ side, a plan is afoot to set a time limit for such revisions too, said sources.
In the Gondia case, an income tax practitioner adopted a slightly different tactic and bagged fraudulent TDS refund. PAN of employees of zilla parishad schools was replaced by his own number. This helped him divert TDS credits in their name to his account. On the basis of credits, he claimed a refund. Around 36 lakh was claimed through 70 refunds, exposing another loophole, said a source. One more case of trusts facilitating tax exemptions through fake donations was also unearthed. Donations to registered trusts get tax exemption.
Source #TOI
