The income tax (I-T) department had erred in computing the income tax liability or interest due to non-payment of tax in cases like that of Hasan Ali and cardiologist Naresh Trehan, according to the Comptroller and Auditor General (CAG).
“These cases of incorrect assessment point towards weaknesses in the internal controls on the assessment process being exercised by the income tax department,” CAG said in its report for 2010-11, tabled in Parliament today.
On stud farm owner Hasan Ali, the report said the department completed the assessment of Hasan Ali’s income in December 2008 and his taxable income was found to be Rs 528.9 crore in 2001-02, which rose to Rs 54,286.6 crore in 2006-07. Hasan Ali had not filed income tax returns for five assessment years. The department levied an interest of Rs 706.1 crore, instead of Rs 4,056 crore, for the default in furnishing returns and Rs 10,033.3 crore, instead of Rs 9,756.9 crore, for the default in payment of advance tax, CAG said.
While computing the tax liability for the assessment year 2001-02, Rs 69.5 crore was added back, instead of Rs 69.5 lakh, on account of the commission income and consulting fees earned. These errors resulted in a short levy of interest of Rs 3,349.9 crore, an excess levy interest of Rs 276.4 crore and an excess levy of tax of Rs 24.1 crore on Ali, the report said. Hasan Ali alone accounted for Rs 71,874 crore, of the Rs 2-lakh crore uncollected demand that remained uncollected in 2008-09, said the report.
In the case of eminent cardiologist Naresh Trehan, the department levied surcharge and education cess at 2.5 and 2 per cent, respectively, in the assessment year 2005-06, instead of 10 per cent and 2 per cent, which resulted in a short levy of tax of Rs 34.5 lakh, including interest.
In all, CAG discussed 75 cases, of which 64 involved an undercharge of Rs 3,396.7 crore and 11 cases involving an overcharge of Rs 310.8 crore.
