TIOL-DDT 122 · the untouched capture
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<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> <font color="#6633CC" size="3"><b>TIOL-DDT
122</b></font><br>
<strong>26 05 2005<br>
Thursday</strong></font></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
<font color="#006633"><strong>Income Tax Cadre Review – A review</strong></font></font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> One reason for
restructuring of the department, as stated in the Cabinet Note, was poor career
management and promotion prospects resulting in demoralization of officers
in the Indian Revenue Service making them lag behind other comparable Central
Services. And so, several posts were created, but not all of them filled up.
This indicated that these posts would be redundant and not necessary. Incidentally,
according to the instructions of Ministry of Finance in O.M No7 (7)-E (Co-ord)/93
dated 3 May 1993, these posts would be deemed to have been abolished if they
continued to remain unfilled for a period exceeding one year. Should there
be another review to abolish these posts?<br>
<br>
<strong>At What Cost?</strong> <br>
<br>
The Board did not have a mechanism to monitor the progress of its promise
of a saving of Rs.3.05 crore on salaries and wages consequent to upgradation
of posts after restructuring as no separate accounts were maintained. <strong>So
nobody knows whether the costs really came down.</strong></font></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
<strong>Results of promised benefits of restructuring</strong></font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> Revenue did
go up, not because of increased number of Commissioners, but may be in spite
of them.<br>
<br>
<strong>Tax Recovery</strong><br>
<br>
The administrative machinery of tax recovery was strengthened by allocating
one TRO exclusively to each range consequent to the restructuring of the department.
Sanctioned strength of TROs was increased from 204 as on 31 March 2001 to
472 after restructuring representing an increase of 131 percent. The sanctioned
strength was further increased to 509 as on 31 March 2003 but decreased to
462 as on 31 March 2004. <br>
<br>
The position of demand recovered during the year remained at around 19 percent
after restructuring, which was already achieved in 1998-99. <br>
<br>
<strong>Case disposal:</strong><br>
<br>
The total number of cases disposed of had declined from 11.11 per cent in
1999-2000 to 0.96 percent in 2003-04.. The position of prosecutions launched,
convictions obtained, offences compounded and acquittals allowed has, not
changed for the better after restructuring of the Income Tax Department.<br>
<strong><br>
Revenue from Search:</strong><br>
<br>
Board has no statistics on this!.<br>
<br>
<strong>Scrutiny</strong><br>
<br>
The completion of scrutiny assessments had decreased from 73.6 percent to
51.2 percent during the same period. <br>
<br>
<strong>Productivity per Assessing Officer</strong><br>
<br>
The proposal made to the Union Cabinet by the Ministry/Board on ‘restructuring
of Income Tax Department’ promised an estimated 200 percent increase
in ‘productivity’ at organizational level. <br>
<br>
This number of assessments has declined from 82.31 per assessing officer in
1999-2000 to 44.50 per assessing officer in 2003-04. Why? There are too many
Commissioners and they actually interfered and blocked the progress of assessments.<br>
<br>
<strong>Appeals</strong><br>
<br>
One of the benefits promised in the proposal of restructuring was immediate
additional revenue gain of Rs.7500 crore by increasing the number of first
appellate authorities and TROs. Besides, period for redressal of grievance
was to be reduced from 18 months to six months. <br>
<br>
Since the department was not maintaining statistics on revenue figures involved
in appeals filed, disposed off and balance at the end of the year, the basis
on which additional revenue gains of Rs.7,500 crore by increasing the number
of CsIT (A) and TROs had been promised in the proposal to the Union Cabinet
was not ascertainable.<br>
<br>
The average number of appeals disposed off by each CIT (A) in a month during
1999-2000 was 43.12, which came down to 27.53 during 2003-04. <br>
<br>
<strong>Interest on refunds</strong><br>
<br>
As per the proposal on restructuring, the interest burden was expected to
be reduced by Rs.350 crore per annum with reduction in average time taken
in issue of refunds. Neither had the amount of interest paid nor the average
delay in payment of refund decreased as promised in the proposal for restructuring.<br>
<br>
<strong>Delay in implementation of the scheme:</strong> Cabinet approved the
scheme in August 2000. Revised jurisdictions were notified on 31 July 2001
for implementation by the department from 1 August 2001. One year was spent
in revising the original orders and in implementation of the scheme of restructuring.<br>
<br>
<strong>Transfer of records – No records are available to show that
records have been transferred properly.</strong><br>
<br>
These are the findings of the CAG. The results in the other Board must be
similar. But there are a few tips the CBEC can learn from CBDT, if they have
not already learnt. Don’t maintain data on important aspects and even
if they are made don’t make them available to Audit.<br>
<br>
<strong>In spite of the risk of repetition, the CAG’s conclusions are
worth recapitulating. The findings of the CAG are disturbing to put it mildly
and deserve the urgent attention of the minister. </strong><br>
<br>
• There has been increase in revenue; to what extent this increase was
directly attributable to efficiency and productivity improvement after restructuring
was not ascertainable in audit.<br>
<br>
• Large number of vacancies remained unfilled at various levels for
a number of years indicating that these posts may not really be needed as
the department’s performance at ‘macro level’ in terms of
overall revenues realized and summary assessments completed has apparently
improved despite these ‘vacancies’.<br>
<br>
• After restructuring the average number of scrutiny assessments completed
by an assessing officer had declined.<br>
• In the absence of details of taxes collected as a result of scrutiny/
assessments that have stood the test at least at the first stage of appeal,
improvement effected in the quality of scrutiny assessments was not ascertainable.<br>
<br>
• Efficiency in bringing stop filers back to the tax net and the accretion
of revenues from this function was not ascertainable.<br>
<br>
• Almost 46 percent of outstanding arrear demand was locked up in appeals
at the CIT(A) level. Pace of disposal of appeals at CIT(A) level was not according
to the norms indicated by the Board and there was no mechanism to establish
and relate the fact of release of tax demands for recovery to increase in
the number of posts of CIT(A) after restructuring.<br>
<br>
• The increase in number of summary assessments disposed off annually
after restructuring was almost entirely attributable to “outsourcing”
of data entry and related functions rather than direct efficiency or productivity
improvement after restructuring.<br>
<br>
• No separate account of the costs incidental to restructuring was maintained.
Substantial expenditure consequent to and related to restructuring exercise
had not been separately budgeted or projected as expenditure relating to restructuring.<br>
<br>
• In the absence of clear targets and well-designed, transparent and
verifiable criteria of efficiency and productivity, monitoring has suffered.
There was no dedicated or clearly identified Wing/Division in the Board to
effectively monitor efficiency and productivity improvements consequent to
restructuring.<br>
<br>
• Apart from introduction of new chain system of internal audit and
new system of inspections, online tax accounting system and electronic filing
of TDS returns, audit did not notice evidence of concerted efforts at rationalization
of work norms or practices after restructuring. <strong>Despite the introduction
of the chain system of internal audit, the internal control of the department
had weakened after restructuring.<br>
<br>
</strong><font size="1">(from CAG’s report to Parliament).</font></font></p>
<p align="center"><font color="#006633" size="2" face="Verdana, Arial, Helvetica, sans-serif">
<strong>Import of metallic waste - DGFT adds more ICDs</strong></font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> The shock of
the container blasts have died down and slowly more and more ICDs are being
added to the list of stations through which the scrap can be imported. It
is sincerely hoped that these new additional places have the infrastructure
for proper scrutiny. As usual, after the DGFT, the CBES has to come up with
another notification to actually make the DGFT PN effective.<br>
<br>
<a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=47&filename=notification/dgft/2005/dgft05pn010.htm"><strong>PUBLIC
NOTICE NO. 10 /(RE-2005)/2004-2009, Dated: May 20, 2005</strong></a><br>
<br>
<b><font color="#FF6666">Until Tomorrow with more DDT<br>
<br>
Have a Nice Day. <br>
<br>
Mail your comments to</font></b> <b>vijaywrite@taxindiaonline.com </b></font>
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