This year, claiming a full income tax (I-T) refund could take longer than you expect if the amount mentioned in your return does not match that in the department’s system. Bitten by a Rs 14-crore refund scam in December last year, I-T authorities have ordered that an assessee can only get the refund amount shown in the department’s computer system, and that if the assessee claims more than that, he or she can only get it after filing for rectification and submitting the relevant documents.
The scam, uncovered in January, involved a chartered accountant and his accomplices siphoning off funds using the department’s Electronic Clearing System — they gained access to the system by stealing the password of an assessing officer.
The accused filed returns online in the name of relatively much poorer individuals by showing them as high earners. They processed the returns online by using the assessing officer’s password and claimed large sums as refunds, after showing that they had paid excess tax.
A senior I-T official said the scam grew out of the fact that officials, at the time, had the power to clear a refund mentioned in the assessee’s return without scrutiny even if it didn’t match the amount in the department’s system.
“The accused misused this and used the assessing officer’s password to clear the refund,” the official said.
After the scam broke, the department initially said it would only release the refund amount shown in the department’s system, even if it were less than the assessee’s claim.
“We were not allowed to manually rectify the amount in case of a difference,” the official said.
“However, we realised many assessees would lose a part of their legitimate refund if the department made a mistake in calculating it,” the official said.
Now, the department has decided to return the difference after making a manual rectification.
“But for this, the assessee will have to file for rectification and claim the differential amount,” the official said.
For this, the assessee needs to submit the relevant documents — this will delay the refund by two months.
Officials said while the new instructions will make the system foolproof, and better protect the department from another scam, it will need assessees to be more patient, given the resultant delay in the refund process.
Refund rules
- In the 2009 refund scam, a chartered accountant siphoned off funds using the I-T department’s Electronic Clearing System — he gained access by stealing an assessing officer’s password.
- The scam grew out of the fact that officials, at the time, had the power to clear a claimed refund without scrutiny even if it didn’t match the department’s calculation.
- To correct that, the department has decided to return the difference between the claimed refund and the amount in its system, after an assessee files for rectification and submits relevant paperwork.
ASHOK GOYAL ADVOCATE Secretary Income-tax Bar Association,Sirsa.
There has been a huge and cry for issuance of refund vouchers. Assessee are facing a lot of problem in getting their refunds. Though the CBDT has issued instruction no.5 dated 21.07.2010 for issuance of refund upto Rs.25000/-while processing the return for the assessment year 2009-10 but the concerned official are not issuing the refund vouchers. It is, therefore, requested that necessary instructions for strict compliance of these instructions be again issued in the interest of public. It may also be further added that this programme of accepting the refund may be added in the software itself so that people may not suffer. I personally think that more than 80% people will get relief.
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There has been a huge and cry for issuance of refund vouchers. Assessee are facing a lot of problem in getting their refunds. Though the CBDT has issued instruction no.5 dated 21.07.2010 for issuance of refund upto Rs.25000/-while processing the return for the assessment year 2009-10 but the concerned official are not issuing the refund vouchers. It is, therefore, requested that necessary instructions for strict compliance of these instructions be again issued in the interest of public
CBDT has issued instruction No. 1/2010 dt. 25.02.10, No. 5/2010 dt. 21.07.10 that whereever there is missmatch in TDS entries and prepaid taxes, the AO should verify at his level and upto his satisfaction with physical and original records and if he is satisfied he should grant the refund.
But AO’s and CIT-III, Jaipur in Rajasthan says that the meaning of the term mentiond in CBDT Instruction viz;”due verification” is not clear to us. CBDT should clarify it further. According to them due verification means online matching and we have no powers to verify the TDS with original papers.
If the intention of the CBDT had been to issue refunds only after online matching then there was no need to issue such instruction. CBDT has given powers to AO to verify the TDS and prepaid taxes with original documents and after that if he is satisfied he should grant the refunds. It shall also reduce the fraud and issue of wrong refunds.
Please clarify the meaning of due verification mentioned in CBDT instructions.
As expected the CBDT has finally taken the most retrograde step of harassing tax payers by throwing them back to the ITOs waiting for this opportunity which of course was being done by the Delhi IT Ombudsman already. If that is so, then the department must pay interest on the delayed refund and must automatically ensure that the ITOs do NOT attach bank accounts as is being rampantly done by ITOs in salary circles in Delhi after hastily passing orders for penalty if tax payers are not paying bribes. Their staff are going to the houses of tax payers to threaten them and their bosses are also in this conspiracy. The Finance Minister and Revenue Secretary must protect tax payers like pensioners and ladies and lady MPs must also look into this. The situation is very grave. Appeals are “expensive” as without sending notices the officers pass orders if “proper arrangement” are not made. ITOs already attach bank accounts. Pensioners are suffering because of corruption and greed. Who will listen to all this?
Even after passing through the OLTAS, Income Tax Refunds are still not reaching the tax payers in almost 90% of cases. The problem is mainly due to the TDS mismatch. In the case of a very high ranking Income Tax official himself, TDS of 1.26 lakh was deducted but only Rs. 26000/- was accepted while processing the return and a demand has been raised against him. It is surprising why such a mismatch of TDS arises when the tax payer pays the full amout is really a mystery because very top officers with fabulous salary and perquisites bring about the system after expensive and repeated foreign visits. The main sufferers are senior citizens, salaried class, infirm pensioners who cannot run again and again to the I.T deptt. where nobody is going to listen to them. Such a horrible drama is going on which no one is prepared to rectify. Sometimes staff is not there, sometimes officers are not there, and if they are there, they are busy elsewhere or they hardly meet the tax payers. The CBDT just is careless, the new Ombudsman in Delhi never bothers and Grievance Cells do not function any more. Ultimately it is the rule of the blood hounds who must get minimum 25% of the refunds below 10,000/-.
The Grievance Cell of CBDT must be taken over by the Secretary of Revenue department as CBDT itself is not effective at least against corruption in the board and in the department.
What is the new instructions as discussed in the above note.
The problem is compounded by a non-functioning Ombudsman in Delhi who routinely advises tax payers to contact the ITOs and closing the files.
Is there no authority to supervise his functioning?
Because of fraud at one area, the whole system is affected; the sufferers are the innocent assesees from whom tax is deducted and who are in pocession of the certificate for TDS. They are denied of their legitimate refund since the same does not appear in Form 26AS due to the fault of deductor. In such cases wherein if it is proved that the deductor has either failed to quote the correct PAN or did not file eTDS returns correctly in spite of the fact that he has issued TDS certificate then the deductor should be penalised heavily so as to avoid such failures in future atleast.