Organised refund fraud detected: income tax officials gang involved

The Directorate-General of Intelligence and Investigation has detected an organised tax fraud in Punjab involving a gang of income tax officials, who issued fraudulent refunds to the fake government contractors.
A senior official of the DG Intelligence, Islamabad, told Business Recorder on Sunday that the nature of this tax fraud was entirely different from the modus operandi of the income tax gangs recently busted in Enforcement Zone, Companies-IV, Karachi and Lahore.
It has been found that income tax officials issued illegal refunds on fake withholding tax claims filed by the so-called 'government contractors'. The income tax officials, headed by an Inspecting Additional Commissioner, issued refunds on bogus tax deduction claims, in violation of law. The agency is working out the revenue loss caused by the gangs, but initial reports showed huge loss to the national exchequer.
Sources said that the seriousness of the scam is evident from the fact that the 'contractors' had tried to show themselves as registered contractors of sensitive government departments. There are apprehensions that the gangs would try to tamper the tax record to hide the evidence of the bungling committed by the income tax officials.
The modus operandi of the whole scam was chalked out by this senior income tax official, having reputation of committing frauds, and has been famous in Punjab. The mastermind has links with a well-knit mafia for committing tax frauds.
If the concerned senior income tax official is not transferred from Bahawalpur, he would definitely change the entire record which would hamper the on-going investigation, DG, Intelligence, opined.
He further pinpointed that Income Tax Circle Ahmedpur East, Bahawalpur, took the lead in issuing illegal refunds to fake government contractors.
Beside DG, Intelligence, the Directorate General of Inspection and Internal Audit has also confirmed that serious irregularities have been committed by the income tax officials in Bahawalpur Zone to issue bogus refunds. The initial investigation, conducted by DG, Inspection, unearthed this mega fraud. The directorate has started thorough investigation of the record to check the quantum of refunds issued in this case. In this connection, the concerned Zonal and Regional authorities have been contacted by the investigators.
Sources said that one of the interesting reasons for committing massive tax fraud by the involved tax official in Bahawalpur is that he has three wives and many kids. It is almost impossible to breed three families on government salary and it seemed that the concerned official was involved in tampering of record and mis-statements and had committed other irregularities to earn illegal money.