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Tax department busts refunds scam by PSU staff, 3000 under scanner

RAIPUR: The Income Tax department has unearthed a “refund scam” in Chhattisgarh, and identified nearly 3,000 employees of public sector giants Bhilai Steel Plant and South Eastern Coal Fields Limited and some major private industrial units who allegedly manipulated online IT returns to claim higher refunds.
The IT department has issued notices to many of them and is set to launch prosecution proceedings. So far, irregularities of Rs 9 crore have been detected, say officials.

“The agents who helped these employees file online refund claims exploited a loophole – that refunds up to Rs 1 lakh are directly credited to assessees because the government starts with the first step of trusting the person who is filing the I-T return,” income-tax chief commissioner K C Ghumaria told TOI on Monday.
The investigation started in 2015 after Raipur’s IT department received an alert from Central Board of Direct Taxes that there were sudden jumps in refunds being claimed by the salaried class, suspecting that there was suppression of income by some assessees.

The IT department initiated surveys in PSUs in Bhilai, Korba and Ambikapur and zeroed in on a number of employees, including senior officials, of BSP, SECL and Vedanta group’s Bharat Aluminium Company Limited (BALCO).
IT department sources told TOI that steps have been initiated for the prosecution of 60 employees of BSP while two employees of SECL and three employees of BALCO have already been arrested. As many as 2,700 similar cases have been identified in SECL in Ambikapur, and notices have been issued to 300 of them for “suppression of salaried income” to claim higher refunds, say sources.

When they started the probe in steel city Bhilai, IT officials were intrigued to learn that there was a rush of BSP employees at one particular shop, who helped them get quick refunds. The taxmen launched an investigation. They requested for the Form-16s from BSP to cross-check the salary given and tax deducted from employees. Many employees had shown a lower salary in their I-T returns, say sources. Also, the tax department realized that all the suspicious returns were filed from a particular e-mail ID.

IT sleuths swooped down on the shop and were shocked to learn that the “consultants” who filed the online returns for these employees were not chartered accountants. One of them, in fact, is a diploma holder in fire management, an IT official said.
In most cases, the refund amount was less than Rs 1 lakh as their annual income ranged between Rs 2 lakh and Rs 14 lakh, which is why it flew under the radar.

During questioning, the “consultants” told IT officials that they used to reduce the number of taxable perquisites, like house rent and allowances, by misleading clients that these are not taxable. The employees got excited when their colleagues began getting more refunds and they were attracted to the same “consultants”.
The inquiry revealed that the scam was on in Bhilai for two years, during which one of the accused bought land and a car. The I-T department has filed FIRs against 60 employees of BSP along with the e-return filing consultant, say sources.

Caught on the wrong foot, some BSP employees tried to argue that they were not aware of Income Tax provisions and used to take the services of the consultant because he always assured them quick refunds, but the taxman isn’t convinced.

A senior IT official said: “Unscrupulous consultants exploited the fact that the department always trusts small taxpayers. But the employees cannot shirk their responsibility.”
BSP DGM (public relations) Vijay Mairal told TOI: “The PSU has nothing to do with this. We have deducted income tax at source as per rules and handed over Form 16 to employees. Now, it’s totally an individual’s responsibility to file their returns and seek claims, if any, as per the provisions.” SECL spokesman Milind Chande echoed this and said, “We expect they will file return and seek genuine refunds.”

A BALCO spokesman said that some employees have been booked for claiming false refund “in their individual capacity” about the returns filed through some outsiders. “We have deducted tax properly and handed over Form 16 as per law,” he said.

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