CBDT Busts Tax Refund Scam By CA

A Chartered Accountant (CA) in Bengaluru developed an ingenious plan to dupe the income-tax department.

He induced employees of reputed companies such as IBM, Vodafone, Saplabs, Biocon, Infosys, ICICI Bank, CISCO, Thomson Reuters etc to file revised returns of income and make fraudulent claim for refunds of tax.

The employees falsely claimed that they had suffered loss from house property and were entitled to a refund of the income-tax already paid by them.

Such was the persuasive ability of the CA that he filed nearly 1,000 returns with loss from house property and raised an aggregate loss of Rs 18 crore.

The CA’s fee for the fraudulent claim was 10 per cent of the refund received.

Unfortunately for the CA and his clients, the sleuths of the income-tax department smelt a rat when they saw the large number of refund claims coming in.

After stern interrogation by the investigation wing, the employees confessed that they do not have any “real loss” under ‘income from house property’. They blamed the CA by advising them that he could get refunds for them.

However, the CA turned the tables on his clients. He told the CBDT sleuths that he filed the bogus claims for refunds at the “insistence of his clients“.

The department conducted searches on the premises of the CA and seized bogus claim documents of his clients along with WhatsApp’s chat messages.

Breach of trust

Naturally, the CBDT is upset at the alleged “breach of trust” by the CA and the taxpayers.

It pointed out that Income-tax department now does automated and faceless return processing and issue of refunds by relying on the genuineness of the claims filed by taxpayers.

The making of claim of refunds by the taxpayer from the department is based on “trust” between the two sides and this should not be breached,” the CBDT said.

It vowed to ensure that the CA and his clients would face the necessary consequences.

Necessary action as per law will be taken against the CA as well as the persons who have claimed wrong refunds under the provisions of Income Tax Act,” it said

Taxpayers cautioned against falling prey to such fraudulent schemes

This is a case that is building up. Such a large-scale action in cases of employees seeking false refunds has been undertaken by the tax department for the first time,” a senior official said

The department cautioned taxpayers from indulging or getting influenced by such frauds.

It warned that making bogus and fraudulent claims is not only a betrayal of trust but will also expose the taxpayer to heavy interest, penalty and possible prosecution ending in a jail term.

All taxpayers are requested to be highly alert to fraudulent schemes like the present one. Such fraudulent schemes will invariably be caught out and will result in penal action on the taxpayer,” the CBDT said.

9 comments on “CBDT Busts Tax Refund Scam By CA
  1. Kartik Soni says:

    Other cases pending before Karnataka HC – CRIMINAL PETITION NO.1336 OF 2016

  2. Adv E S Jagadeeshwar says:

    While reporting the sensitive matters back ground of the people must be known clearly. To inculcate nationalism in the minds of the people, they have to be encouraged to use tax planning rather than tax avoidance or duping the department. Govts. cannot invest for welfare activities of the people if the people don’t pay taxes.

    So people must be encouraged to earn more and more and pay taxes properly. Tax Officials have to avoid coercive methods if any to collect the taxes.

    Whether the above said offence is an economic offence? or not?

  3. Ndk says:

    Grill the CA immediateky

    • Radhakrishnan says:

      Accused in Income Tax refund racket is NOT a Chartered Accountant

      In furtherance of the refund racket busted by the Income Tax (Investigation) officials of Karnataka and Goa region, it is identified that Mr. Nagesh Shastri, the person found guilty of filing revised returns to secure refunds fraudulently, has falsely claimed to be a Chartered Accountant to the Income Tax officials and to his clients.

      On 29th January 2018, CA Geetha Adhyam, Chairperson, Bangalore Branch of ICAI along with CA Cotha Srinivas, Chairman of SIRC of ICAI and CA Shravan Guduthur, Vice Chairman of Bangalore Branch of ICAI visited Shri BR Balakrishnan, Director General (Income Tax) and enquired about the case. During the discussion, it was established that Mr. Nagesh was not a Chartered Accountant and was falsely rendering services in the name of SSK & Associates (Shri Sigandur Krupa & Associates). Mr. Nagesh Shastry submitted that, all this while, he had falsely claimed to be a CA to lure clients and provide professional services in such capacity. His response was taken on record by the IT department. The IT officials have agreed to provide a statement in writing to ICAI, New Delhi, in due course to clarify this to the Institute and General Public.
      Date: 30th January 2018

      The Principal Chief Commissioner of Income Tax (A/C)
      Central Revenue Building, No.1
      Queen’s Road
      Bengaluru – 560 001

      Dear Sir/Madam,


      The Karnataka State Chartered Accountants Association (R) (in short ‘KSCAA’) is an association of Chartered Accountants, registered under the Karnataka Societies Registration Act, in the year 1957. KSCAA is primarily formed for the welfare of Chartered Accountants and represents before various regulatory authorities to resolve the professional problems faced by chartered accountants and business community.

      With this backdrop, we have written to your good selves many a times populating issues and possible solutions. As you are already aware about the Press Release by the Director General of Income Tax (Investigation) – Karnataka & Goa, wherein fraudulent income tax refund scam busted in Bangalore- a case of tax professional abetting tax evasion. In this connection, we wish to present before you the following facts on the ongoings:

      The press release spoke of a practicing Chartered Accountant, who was hand in glove with the fraudulent income tax refund claims by filing revised returns in connivance with employees of noted corporates like IBM, Vodafone, Biocon, Infosys, ICICI Bank, CISCO etc. and collecting a said percent as kickback for such favours.
      There was a repeated reference to the aspects and quantifying as CA in the said release and this has been in circulation in social media and print media on a mass scale.
      A section of media has been pointing out and portraying the CA community in bad light. This has been rather disturbing as they have taken the fact that multiple CA offices were raided, and incriminating evidence were found. Such news though baseless has raked up and projected the fraternity in a manner which is questionable.
      The profession being media trialed is a sad state of affairs for the illustrious profession, which is governed by rather stringent code of ethics and peer reviews.
      A censure has to be person wise rather than brandishing a community on singular terms.
      To top this all, the very fact that the notorious consultant Mr. Nagesh Shastry falsely pretended to be a CA to lure clients and provide professional services in such capacity came up in the interaction with Shri. B.R. Balakrishnan, DGIT (Inv.), Bengaluru as had with the Chairperson and office bearers of ICAI Bangalore Branch and Chairman of SIRC of ICAI.
      While the Income tax officials have agreed to provide a statement in writing to ICAI, New Delhi, in due course to clarify this to Institute and General Public; it is our kind request to your goodselves to issue a press release on this matter as Corrigendum and clarification of the facts. Also, it is our request to your goodselves to exercise restraint in communication till trial of subject.
      We would be highly thankful if you could have a press release to this extent and also, seek restraint in communication by singularly naming community in future and measured disclosure is highly appreciated! Further, keeping with the friendly tradition and support that we have enjoyed all the while, we extend our fullest support and seek your support as well to render the best of services in nation’s interest!

      Thanks & Regards,

      CA Raghavendra T N | President


      No.7/8, 2nd Floor, Shoukath Building, S.J.P Road, Bangalore – 560002. India
      T +91 80 2222 2155 | M +91 98801 87870| E president@kscaa.com | W kscaa.com

  4. j r kota says:

    With due respect to the Department official who had briefed the press- this is not the first instance. In the later part of ’80 s and in the beginning of ’90 s a similar racket was unearthed in Bangalore itself. At that time the employees were from the ten KEB (Karnataka Electricity Board – the former incarnation of Bangalore Electric supply company). At that time due to release of arrears of DA and salary hike were given resulting in a higher TDS deduction.

    Why should the Department feel shy of naming the CA.( Any vested interest in not naming). It should forth with come out with naming and in a time bound period file the civil and criminal cases against him, recover the amount with exemplary penalty and interest and give a briefing of the out come of the case in news papers and insist on ICAI to publish the same in their website. Even now also the Department should approach the Institute to take an action suo motto and take it to logical conclusion.

    • Waghela b.s. says:

      Why not charge this CA for Abetment of Offences under IT Act/IPC ? Why wait for CA Institute for take action ? Institute will not do him any harm because vested interest if ruling there. So for how many CAs are debarred from doing Practice ? perhaps none. Why not name and shame the concerned CA ? Has he bribed the concerned CIT/CCIT/Pr.CCIT ? Country wants reply from the Chairman of the CBDT.

  5. Waghela b.s. says:

    Such things are going on in the Incometax Department since decades and at all places. Poor Incometax Officers are helpless since the Board has concentrated all powers with itself by issueing Instructions for accepting Returns u/s.143(1). Why the Board is not allowing ITOs free-hand to pick up cases for scrutiny whereever they feel some thing is wrong. I know some ITPs who are claiming all deductions given in IncomeTax Recknoners irrespective of the facts whether the Assessee has made actual payments/investments. Biggest culprits are Salaried Employees; if you give them proper legal advice they run to another ITP who may teach them lessons in tax evasion. Why cases of Salaried persons are not being taken for SCRUTINY ? From my experience of more than 50 years dealing with Salaried persons, I can say that majority of them are TAX EVADERS. BOARD SHOULD WAKE UP.




  7. Rupesh says:

    Other cases pending before Karnataka HC – CRIMINAL PETITION NO.1336 OF 2016

3 Pings/Trackbacks for "CBDT Busts Tax Refund Scam By CA"
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