Revenue dept pulled up on case selection process

The Comptroller and Auditor General has criticised the revenue department's process of selection of cases for scrutiny, saying assessees during the period 2002-03 to 2004-05 availed unentitled benefits involving revenue effect of Rs 390.51 crore.

The CAG, in its performance audit tabled in Parliament today, pointed out that despite the finance minister announcing in his Budget speech in 2003-04 that the discretion-based system for selection of returns for scrutiny would be replaced by a computer-generated intelligent random selection, several categories of cases were being selected manually even in 2004-05.

It said the government should review its chain system of internal audit and increase the number of scrutiny assessments completed by fixing suitable targets and increasing the proportion of officers in the department on assessment duty.

The CAG said the government could also consider fixing a time schedule for issuing instructions for selection of cases to be scrutinised, which would give more time to the assessing officers for completing the assessments.

In its review of the search and seizure operations, the CAG said, "An examination of the appeal process showed that only 15.16 per cent of the selected sample was held up in favour of revenue, whereas 44.77 per cent of the cases were decided in favour of the assessee. Audit analysis also revealed that the proportionate resources spent on the search and assessment process were approximately six times the benefits accruing from it."

Revenue collection through search and seizure as a percentage of total revenue collection in selected states has declined from 1.57 per cent in 2001- 02 to 1.30 per cent in 2004-05.

The CAG recommended that the Board consider the possibility of setting up appropriate benchmarks to judge performance in respect of costs incurred, as compared with revenue benefits from search and seizure operations.