CASH query

New Delhi, April 16: The Reserve Bank of India (RBI) has detected serious irregularities in the income tax refund process. While auditing accounts of banks, the RBI has discovered cases of fraudulent issue and encashment of refund orders on the basis of bogus certificates.

The RBI has pulled up the income tax department for failing to update regularly the list of officers authorised to issue income tax refund orders (ITROs). “It is a pre-requirement that in the event of any change in the incumbency of the signing officers on account of transfer, retirement, termination of service or death, duly attested specimen signatures of the relieving officers should be furnished by the I-T department and the signature of the previous incumbent should be deleted from the file,” a source said.

While the signatures of the newly posted or promoted officers are immediately registered with the RBI, those of retired officers are not cancelled by the I-T department.

Sources said the tax authorities do not immediately inform the RBI the “list of lost/stolen/missing ITROs from their books” to ensure “stop payment”. “At times these are not reported at all or are reported after eight to nine months, by which time the forged instrument might have been encashed. Availability of this information to the RBI in time will go a long way in prevention of such frauds,” the sources added.

The authorised officials have also not been furnishing the complete 12-digit alpha-numeric code of the missing ITROs while reporting the loss of the instruments to the RBI for recording stop orders.

In addition, it is mandatory for the tax authorities to inform the RBI about the serial number of the ITRO books allotted to each ward or circle. This practice is not being followed by most I-T offices. “As a result, the RBI is not aware of the number/series of the ITRO books used by each ward/circle or the distinct numbers of ITROs in each book,” said the source.

The central board of direct taxes (CBDT) has written to all chief commissioners of income tax (cadre controlling) on the irregularities spotted by the RBI. Moreover, in gross violation of norms, ITRO books are not always being kept with the issuing officers.

The CBDT has now instructed the chief commissioners to ensure that refund order books are kept in the custody of the assessing officers.