CAG Raps Income Tax Department for bad administration of Prosecution
IN its report tabled in Parliament yesterday, the CAG has found that the prosecution mechanism in the Income Tax Department (ITD) is awfully bad.
CAG found mismatches at every stage of selection, initiation, pursuance and disposal of cases as also at every level of monitoring and coordination. To handle prosecution cases, CBDT has not ensured posting of appropriate officers as Nodal Officers in its field formations; Nodal Officers have not maintained the prosecution registers despite various instructions issued by CBDT; ITD has not given adequate priority in launching of prosecution as indicated by delay in initiation of cases and by not launching the prosecution even in approved cases; Prosecution cases are being pursued on companies which have already been liquidated or have been declared sick by BIFR; CBDT is wasting resources in pursuing cases under repealed sections of the Act, dead assessees etc.; CBDT did not utilize the prosecution mechanism for ensuring tax compliance under section 276CC of the Act.; ITD's nominees are not attending regular hearing in the Courts impacting disposal of cases; ITD has poor records maintenance and inadequate monitoring of prosecution cases pending in the Courts; Poor record maintenance and delay in timely production of evidences has led to acquittal of assessees in prosecution related offences; The enforcement of CBDT's policy and procedures on Prosecution Counsels has not been effective and has impacted the pursuance of cases; ITD did not use the compounding of offences as alternate dispute resolution mechanism effectively to reduce the litigation and realize the due revenue; ITD has acted not in consonance with the spirit of National Litigation Policy by wasting prosecution machinery on technical offences; Prosecution machinery of ITD was used to handle individual assessees and low money value cases, not against systematically organized entities; Central Economic Intelligence Bureau established for gathering, collation and dissemination of information among tax gathering agencies like CBDT, CBEC etc. has not worked in coordinated manner to arrest tax evasion by prosecution.
CAG concluded that ITD has not given adequate priority to prosecution in tackling tax evasion and prosecution mechanism is not working effectively and efficiently.
CAG Recommended :
1. The entire process of initiation, levy and order of penal proceedings to be duly recorded so that proceedings do not suffer from procedural infirmities.
2. The Ministry may ensure that concealment of income is penalized as per the Act.
3. The Ministry may put in appropriate mechanisms to ensure that tax demands are collected on time and defaults penalized.
4. The Ministry may ensure coordination between various wings within ITO so that revenue efforts are synergized.
5. The Ministry may put in a mechanism for ensuring appropriate penalties for cash transactions relating to loans and deposits beyond prescribed limits.
6. The Ministry needs to ensure instituting a more robust mechanism for identifying cases for prosecution which takes into account timeliness; quantum of tax evasion; and contemporary impact.
7. CBDT should ensure posting of a designated and experienced Nodal officer to handle prosecution at the field level with independent charge. CBOT is to ensure periodical interaction amongst authorities (like quarterly) so that status of a case is ascertainable at any point of time.
8. CBDT should take up work of cleaning of records and data bases to ascertain actual pendency and status of prosecution cases at various levels. CBOT should ensure maintenance of updated prosecution records at all levels.
9. CBDT should ensure periodical physical verification of prosecution related files.
10. Ministry needs to streamline the mechanism for appointment and evaluation of departmental counsels representing the ITO before judicial authorities. The remuneration rates also need a relook in accordance with the tasks associated so as to avail and retain the services of experienced counsels.
11. The Ministry may ensure regular coordination with the judicial machinery.
12. CBDT should perform one time exercise to identify the stage of pendency of all cases in the various Courts and follow it actively for resolution.
13. CBDT should consider compounding offences before launching the prosecution proceedings so that revenues are collected.
14. CBDT should deploy prosecution machinery for high impact cases and avoid focussing on low impact cases.