The CAG has pulled up the Income Tax Department for not recovering tax arrears worth over Rs 4,500 crore from various entities due to a lack of coordination between two of its wings. The government auditor, in its latest report tabled in Parliament, said it “found several cases where the Assessing Officers (AOs) did not communicate updated information relating to demands to Tax Recovery Officers (TROs).”
“We noticed 1,54,198 cases involving outstanding demands of Rs 4,543.83 crore where the demand was not transferred to the TROs inspite of non-recovery for more than one year,” the Comptroller and Auditor General’s (CAG) report said.
The report on ‘recovery of arrears of tax demand’ also “noticed instances of non-disposal of arrear cases and differences in the figures of arrear demand in the books of the AOs versus TROs due to the lack of coordination between them.”
Accordingly, the CAG has recommended that the Finance Ministry “may consider working out appropriate modalities for improving the liaison between AOs and TROs under supervision of the higher authorities to ensure better coordination and speedy disposal of cases.”
“The AO may ensure timely transfer of the undisputed cases of unrealised demand to the TRO,” it added.Online GST Certification Course by TaxGuru & MSME- Click here to Join
Calling TROs the “most important functionary” in monitoring and recovery of I-T arrear demands, the CAG also asked the Central Board of Direct Taxes (CBDT) to make the roles of TROs independent from that of AOs.
“A dedicated collection unit with requisite complement of staff engaged in tax recovery process without any additional responsibilities would accelerate the realisation of outstanding demand,” the CAG said.
“Uninterrupted attention of the officers entrusted with the responsibility of recovery of arrears is absolutely essential for ensuring recovery of arrears of demand. TRO’s charge may be separated from AO’s,” it said.
In its reply to the top auditing body of the country, the I-T Department said it intends to separate the role of collection and recovery of taxes under its Vision 2020 initiative.
However, the report noted, “Despite the TRO being the most important functionary involved in monitoring and recovery of arrear demand, the department is not maintaining a centralised database of the sanctioned strength vis-à-vis deployment of TROs.”
“Thus, vacancy position in this important cadre is not being monitored exclusively and is being done as part of the overall cadre of Income Tax officers,” it added.
Under the I-T rules, the assessing officer is responsible for the collection and recovery of taxes, but if the recovery is not effected within a year of raising the demand, the AO is required to send the details of arrears cases to the TRO after ensuring that all possible measures have been taken for recovery of demand.
The TROs are further authorised to initiate “coercive measures” like seizing of goods, selling movable property and even arresting the defaulter to collect tax dues.