IT officials involved in scam

Five persons, including three Income Tax department officials and a television artist, have been arrested on charges of duping the department to the tune of Rs three crore by filing fake I-T returns of PAN card holders and illegally transferring refunds in their own accounts, CBI said here on Sunday.

The accused were identified as Dilip Vyas, I-T inspector Pramod Prabhakar, senior tax assistant Rajesh Pillai, I-T employee Raju Nagpure and television artiste Manoj Sangtiyani, CBI officials said.

While the main accused Vyas was nailed on February 17, the rest were arrested today, they said, adding that four more accused Mohan Ghadge, Sandeep Roy, Nidan Dalvi and I-T employee Shrikant are still absconding.

The officials said although Rs three crore fraud has come into light so far, the cheating amount may go over Rs 14 crore.

Explaining the modus operandi, CBI Joint Director (west zone) R R Singh said, "Vyas, posing as a chartered accountant, has collected PAN card numbers from 23 persons and bank account details and blank post-dated cheques signed by them.

"He then prepared fake IT returns, computation sheets and other related documents of these PAN card holders and provided the details to his aide Prabhakar.

"Subsequently, Prabhakar entered the said data into the computer system of IT department and generated e-refund which was electronically transferred to bank accounts of the PAN card holders."

Vyas then transferred the I-T refunds in his and aides' bank accounts in United Bank of India and Kotak Mahindra Bank using signed cheques issued by the PAN card holders, leaving one per cent of the refund amount in the holders accounts, Singh said.

"In this manner, the accused have transferred about Rs three crore in their account in the last seven months. The accused had another 70 PAN card holders' details. The fraud might go over Rs 14 crore," he said.

The cheating came to light when one of the I-Ts top officials were tipped off about it on January 19, Singh said.

"Prabhakar knew all loopholes in the Information Technology Department and practises of the I-T department and took advantage of them to execute their plan," Singh said.

Stating that the software of the I-T is incapable of making online checking of the TDS payments, Singh said the officials should also regularly change their passwords to prevent misuse of the system.

CBI is also probing if the 23 genuine PAN card holders had any idea about the fraudulent practice by the accused, he said.

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.

IT officials involved in scam

Mumbai, Feb 21 – The Central Bureau of Investigation (CBI) has arrested one person and detained four income tax (IT) department officials in connection with a Rs.30 million-IT refund scam, a top official said here Sunday.

The IT officials work in the information technology and other departments of the department in Mumbai, said CBI Western Region Director Rishi Raj Singh.

One of them had managed to secure the confidential password of the IT refunds assessing officer and it was used to process many forms using the IT PAN Card details of 23 ordinary people, he said.

‘By this, the accused managed to transfer over Rs.30 million worth of IT refunds to their personal accounts,’ Singh said.

The officials detained were Pramod Prabhakar, a senior IT inspector, Rajesh Pillai, Raju Nagpure and Manoj Santgiyani. They were undergoing CBI interrogation.

Their associate – Dilip Vyas, who acted as middleman in the scam – has been arrested.

The CBI is on the lookout for Vyas’ associates Sandeep Roy, Mohan Ghatge, an IT official Shrikant and one Ninad Dalvi who arranged the PAN cards.

‘The fraud was possible due to loopholes in the internal information technology systems of the IT department,’ Singh observed.

Investigations into the fraud are still underway and the IT department expects it to touch Rs.100 million and the number of PAN cards used in the scam could be more than 100.

The CBI acted on a complaint lodged by the IT Department Feb 4. The accused have been charged under various Indian Penal Code sections pertaining to cheating and committing fraud.