Income Tax Arrears - 12 Individuals account for 90 percent of arrears - Most of them not recoverable: CAG
THE Comptroller and Auditor General of India has come out with interesting findings on the Income Tax arrears.
Direct tax collections, amounting to 4.35 lakh crores accounted for three-fourth of revenue receipts of the Government of India in 2009-10. At the same time, the uncollected portion of tax demand was 2.29 lakh crores in March 2010 equivalent to 54 per cent of total direct tax collections. The arrears of demand also registered a steep hike in last five years.
The demand against individuals is highly skewed with just 12 individuals accounting for 90 per cent of the outstanding demand. Further, 84.3 per cent of the arrear demand amounting to 1,65,337.42 crores is categorized as unrealizable demand by the Department.
One individual Hassan All Khan accounts for 43 per cent of the total arrear demand and owes Rs. 50,000 Crores while Chandrika Tapuriah Rs. 21,000 Crores and Harshad Mehta Rs. 16,000 Crores!
CAG Recommends :
++ The Department may ensure preparation of a robust and reliable database of arrear demand by reconciling the data maintained by different wings of the Department, towards effective monitoring and follow up of arrears.
++ A reasonable time may be made mandatory for the drawal of Recovery Certificates by the TROs.
++ The target for drawing up of Recovery Certificates by the TROs may be revisited and a appropriate norm may be fixed on the basis of the actual work load in different charge instead of the existing norm of 1200 certificates to be disposed annually.
++ Ministry may consider working out appropriate modalities for liaison between AOs and TROs under supervision of the higher authorities to ensure better co-ordination and speedy disposal of cases.
++ Ministry may consider strengthening Internal Audit of the post assessment collection process to effectively monitor the recovery of tax arrears by prescribing minimum number of TROs to be covered by Internal Audit every year.
++ The Department may ensure correct and timely credit of TDS/TCS to the assessee by introducing reconciliation with concerned agencies to avoid mismatches resulting in creation of wrong demand.
++ Reasons for low disposal of appeals by CIT(A) need to be analysed. Wherever pendency is due to lower efficiency, strict administrative measures may need to be taken.
++ Department needs to effectively pursue the cases locked up in litigation at the ITAT and higher formations.
++ The provisions of adjustments of arrear demand while granting refunds should strictly be followed. The system may provide for fixing responsibility in such cases.
++ The information collected through Annual Information Returns by the Central Information Branch (CIB) particularly about the properties owned by the assessee should be accessible to the TROs also.
++ The write off proposals in justifiable cases may be pursued and such irrecoverable demand may be considered for write off after following due administrative procedure.
++ The mechanism of Regional Economic Intelligence Committee (REIC) needs to be strengthened to facilitate sharing of information among different revenue collecting agencies.
Maybe the first thing they can do is to write off those unrealiasable arrears