Pulling up the Income Tax (I-T) department for the inordinate delays in settling disputes and appeals, causing severe inconvenience to taxpayers, the Comptroller & Auditor General of India (CAG) in its recent report has revealed that a whopping sum of Rs 2.2 lakh crore has got locked up in appeals at various levels.
The report on the 'Appeal Process' for the year ended March 2009 mentions that on an average 48 per cent of tax demands remain uncollected and disputes account for 45 per cent of uncollected demands.
"The dimensions of disputes in income tax are staggering. The amount locked up in appeals can almost wipe off the revenue deficit of the Union Government in 2008-09," said Anupam Kulshreshtha, deputy CAG. He said the low disposal of cases, especially the low-end ones, which comprises 66 per cent of the total cases, have badly affected the small taxpayers across the country.
The report has stated poor maintenance of records across the assessment and judicial wings of the department as an area of major concern. "Absence of centralised database on appeals, non-production of records during audit was a major constraint and concern," the report said.
The audit findings indicate that inadequate attention on correctness in implementation of appellate orders led to mistakes amounting to Rs 1,465 crore in 385 cases.
The report states that 97 per cent of the mistakes in implementation led to under-assessment of tax and thereby benefiting the taxpayer, which raises doubts. In comparison to international standards like Australia (6 months), China (60 days), UK (45 days) — the average time for disposal of cases by Commissioner of Income Tax (Appeals) was 14 months.