PAN card holders play conspirators in I-T fraud

Mumbai Be careful who you share your PAN (permanent account number) card details with. There are ways in which it can be misused. One of them, as the Anti-Corruption Bureau of the Central Bureau of Investigation (CBI ACB) recently found, is to file fake income tax returns and obtain illegal refunds in the name of a PAN card holder, all this with the help of I-T officials.

In mid-February, the CBI unearthed such a scam allegedly involving a small-time television actor, a senior tax assistant and officials of the income tax department. The fraud so far amounts to Rs3 crore, but investigating officials believe the figure is likely to touch Rs14 crore.

The CBI ACB arrested Dilip Vyas, a Dahisar (East) resident and the lead player in this case, on February 17. He has been remanded to police custody till March 3. On Sunday, television artiste Manoj Sangtiyani, senior tax assistant Rajesh Pillai and I-T officials Pramod Prabhakar and Raju Nagpure were also held. It is learnt that Vyas and Sangtiyani were business partners, involved in bill discounting and supply of construction materials. Mohan Ghatge, Ninad Dalvi, Sandeep Roy and another I-T official identified only as Shrikant, are still wanted in the case.

Interestingly, there were no ‘real’ victims in this case. Vyas, it appears, had used the PAN details of only those who were known to him, superintendent of police, CBI ACB, Anil Modak, told DNA. “He told the PAN card holders that he wanted to use their bank accounts to deposit some money and had promised one per cent of the deposited amount in return,” Modak said. Given their acquiescence in this conspiracy, even the real PAN card holders may be charged with abetting the crime.

Modak said that Vyas and Sangtiyani, with the help of their
assistants Dalvi and Roy, collected the PAN and bank details of 23 persons, as well as blank signed cheques from them. He then made fake income computations of the PAN card holders, stating fake transactions through which income had been generated. He then used these documents to file fake I-T returns on those PAN cards. The transactions shown were those that reduced the tax liability, thereby generating refunds. The e-refunds were then deposited in the concerned bank accounts.

The network grew after Vyas, who also claimed to be a chartered accountant, met Sangtiyani, who was known to Prabhakar and Nagpure at the terminal branch of the I-T department, at the Bandra Kurla Complex, Modak said.

Vyas provided PAN numbers, bank details and the fake I-T returns along with enclosures to Prabhakar (the I-T officials) through Sangtiyani,” said CBI joint director (west zone) Rishiraj Singh.

A CBI officer explained that Prabhakar, along with his assistants Nagpure and Shrikant, visited the BKC branch where they managed to break into the network access of the department, known as RSA Code. “But in order to access it, they required an identity and password. Pillai played a crucial role here, as he was close to an I-T official working there; they used his ID and password to log in,” he said.

They then entered the said data into the computer system and generated the e-refund, which would be electronically transferred to the respective bank accounts, said the official. “The money was then withdrawn and deposited by the accused into their bank accounts. There was no income tax deposited against these returns,” Singh said.

About Rs3 crore was credited to the bank accounts of the 23 PAN holders which was then withdrawn by using signed blank cheques. The bank accounts were mainly with the United Bank of India, Dahisar branch, and Kotak Mahindra Bank, Kalba Devi branch.

The scam came to light because of the amount of e-refunds generated.“Since such huge e-refunds are never migrated from the Central Circle office, this raised suspicion among senior I-T officers, who then informed the I-T commissioner about the fraud. He then got in touch with the CBI ACB,” said a CBI official, requesting anonymity.

How well do you know your CA?
How safe is the money of a common man who files his income tax returns, trusting his chartered accountant? “In this fraud, the PAN holders were close to the accused and had permitted them to use their documents and bank accounts through the greed of money (as they had been promised a commission). The common man should understand to what extent a person can be trusted as far as filing tax returns or getting refunds is concerned,” said Anil Modak, SP, CBI.

Holes in the I-T dept’s computer system
According to the CBI, this scam has revealed inherent loopholes in the income tax department’s computer system. For instance, even after one logs out of the network facilitating refunds, the machine will remain valid for processing for about four hours. In this time, any person having knowledge of the username and password of the assessing officer can access the network. What’s worse is that the officers do not change their passwords as required. They prefer to function on the default which is known to many, including their assistants.