₹263 Crore Tax Fraud: Another TDS refund of ₹12 lakh under ED scanner

In the case of fraudulent issuance of ₹263 crore refund of Tax Deducted at Source (TDS), the Enforcement Directorate’s (ED) probe into alleged irregularities has taken under its scanner excess TDS refunds worth around ₹12 lakh with respect to another assessment year.

This refund was allegedly availed via a bank account that was different from the one used earlier, sources said.

The fraudulent TDS refunds of around ₹263 crore pertain to assessment years of 2007-08 and 2008-09. It has been alleged that an accused firm had fraudulently obtained the TDS refunds in lieu of genuine claims worth around ₹16 lakh spread over the two assessment years with the help of an Income Tax employee.

Tax officials involved in TDS refund scam

The fraudulent refunds were undertaken with the alleged help of Tanaji Mandal Adhikari, a senior tax assistant, and a few others. The ED’s probe is based on a CBI case registered by one of its Delhi units on receipt of a written complaint from the Central Board of Direct Taxes’ (CBDT) Additional Director General.

Various refunds were allegedly issued between November 2019 and November 2020 on the Income Tax (IT) system, after manipulation, wherein the amount of TDS against the genuine claim was increased, ED sources said. The IT department found that claims made in the ITRs (income tax returns) were allegedly inflated and credited to the account.

How the tax fraud was committed

It has been alleged that the accused firm gave bank details of its current account with a public-sector bank in its ITR. In 2019, an additional savings bank account with another public-sector bank (with a branch in Panvel) was added in the name of a proprietary concern of an individual and first fraudulent credit was made.

The additional savings bank account was removed from the IT department’s system later in July 2021.

“The probe also revealed that a refund amounting to ₹19.51 lakh was issued to the assessee in respect of an order under the Income Tax act, allegedly passed on July 8, 2021, for the assessment year of 2012-13.

"It was noticed that though the assessee had claimed TDS credit of around ₹19.94 lakh, the same was fraudulently inflated to Rs31.63 lakh, which resulted in granting excess refund to the assessee,” an ED source said.

Fake bank details provided

The source said that it was also noticed that the bank details were allegedly modified and the refund was credited to the assessee’s original account.

“Once the Panvel bank account was deleted from the IT Department system, the refund for assessment year 2012-13 was again credited to the original account to remove all trace of the Panvel account, where the earlier fraudulent refunds went,” the source said.