Put in place foolproof IT system, management mechanism to verify evaluation errors: CAG to CBDT


Declaring vital errors and irregularities in Corporation Tax assessments, apex auditor CAG on Tuesday requested the Central Board of Direct Taxes (CBDT) to place in place a foolproof IT system and inner management mechanism to keep away from such recurrences. Comptroller and Auditor Common of India (CAG), in a report tabled in Parliament, audited 356 excessive worth instances pertaining to Company Tax with tax impact of Rs 12,476.53 crore.

“These instances primarily pertained to arithmetical errors in computation of earnings and tax, errors in levy of curiosity, irregularities in permitting depreciation/enterprise losses/capital losses, irregular exemptions/ deductions/ rebates/ aid/MAT credit score, incorrect allowance of enterprise expenditure, earnings not assessed/beneath assessed beneath regular provisions, and many others,” it mentioned.

Out of 356 excessive worth instances, CAG has illustrated 38 situations of great errors/irregularities in Company Tax assessments involving tax impact of Rs 3,976.56 crore.

CAG mentioned utility of incorrect charges of tax and surcharge, errors in levy of curiosity, extra or irregular refunds “level to weaknesses” within the inner controls within the Income Tax Department (ITD) which should be addressed.

It mentioned that whereas the finance ministry has taken motion to provoke correction within the instances identified by the Audit, it could be talked about that these are just a few illustrative instances, check checked in audit. In the whole universe of all assessments, together with non-scrutiny assessments, such errors of omission or fee can’t be dominated out.

“The CBDT not solely must revisit its assessments, but in addition put in place a foolproof IT system and inner management mechanism to keep away from recurrence of such errors sooner or later,” CAG mentioned.

It additional mentioned CBDT might look at whether or not the situations of “errors” seen are errors of omission or fee and if these are errors of fee, then ITD ought to guarantee essential motion as per regulation.

The report famous that direct tax receipts decreased by 7.6 per cent in 2019-20 (Rs 10.51 lakh crore) as in comparison with 2018-19. Nevertheless, share of direct taxes in gross tax income decreased to 52.Three per cent in 2019-20 from 54.7per cent in 2018-19.

The collections from Company Tax decreased by 16.1 per cent, from Rs 6.63 lakh crore in 2018-19 to Rs 5.57 lakh crore in 2019-20 and earnings tax elevated to Four per cent from Rs 4.62 lakh crore in 2018-19 to Rs 4.80 lakh crore in 2019-20.

As per the report, the variety of non-corporate assessees elevated from 6.20 crore in 2018-19 to six.39 crore in 2019-20, a rise of three.16 per cent. The variety of company assessees decreased from 8.46 lakh in 2018-19 to eight.38 lakh in 2019-20, registering a lower of 0.9 per cent.

CAG mentioned the arrears of demand elevated from Rs 12.Three lakh crore in 2018-19 to Rs 16.2 lakh crore in 2019-20, of which greater than 97.6 per cent of uncollected demand could be troublesome to get better in 2019-20.

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