The Hindu : New Delhi News : Under-assessment of direct taxes total 3,500 crore: CAG

Online edition of India's National Newspaper
Wednesday, May 24, 2006

New Delhi

New Delhi

Under-assessment of direct taxes total 3,500 crore: CAG

Special Correspondent

NEW DELHI: Major irregularities pertaining to nearly 700 cases of under-assessment of direct taxes, totalling almost Rs. 3,500 crore in 2004-05, have come under the lens of the Comptroller and Auditor-General (CAG).

Expressing concern over the delay in response by income tax authorities, the CAG, in its audit of all taxes under the Central Board of Direct Taxes (CBDT) during the fiscal, noted that 15,874 cases of under-assessment, involving a tax effect of Rs. 6,522 crore. Likewise, there were also 112 cases of over-assessment involving a tax effect of Rs. 144 crore during the same year.

In its report presented to Parliament last week, the CAG pointed out that most of the cases pertained to application of incorrect tax rates, excess allowance of business expenditure, omission to assess capital gains, excess exemptions, wrong deductions and even arithmetical mistakes, leading to under-assessment of income, either in the hands of corporate entities or firms and individuals.

Out of these cases, 688 cases with substantial tax effect, amounting to Rs. 3,486 crore, were referred to the I-T Department and the Finance Ministry to elicit their response for which sufficient time was given.

Despite the wait, the responses from the Ministry were not forthcoming.

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