The Central Board of Direct Taxes is learnt to have come across several fraudulent claims over income tax refunds.
According to sources, the Reserve Bank of India, which is the nodal body for income tax payments, detected the frauds while preparing cheques for making tax refund payments.
The frauds, amounting to a total of about Rs 9 crore (Rs 90 million), came to light when the signature of tax payers and those claiming the refunds failed to match.
The apex bank has alerted the income tax authorities to take appropriate action, said the sources. The frauds have primarily been reported in the northern zone of the country, especially in Delhi.
The economic offences wing of the Delhi Police has started further investigation, the sources said.
The frauds comprise of claims made by a number of individuals as well as three or four fictitious firms. The incidence assumes significance as each year the income tax department has to pay out more in terms of income tax refunds compared with the actual collection. This happens primarily in the corporate assessments.
With greater scrutiny of corprorate and individual assessees, the department feels, the refunds will come under the scanner before they are actually due.
Meanwhile, in the recovery of concealed income, the income tax department has recorded a 13-fold increase in recoveries at Rs 274 crore (Rs 2.74 billion) as of March 31, 2005. This is as against a mere Rs 13 crore (Rs 130 million) for the same period last year, said an official source.
The impetus on the recoverable arrears follows the estimate in the last budget that around Rs 54,000 crore (Rs 540 billion) is stuck in arrears.
The department had decided to recover around Rs 15,000 crore (Rs 150 billion) with proposals to open tax cases stuck in scams and liquidation, which were lying at various stages either with special courts or appellate tribunals.
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