Economy

Address weakness in internal controls on priority, CAG tells I-T Dept

Our Bureau New Delhi | Updated on July 30, 2019 Published on July 30, 2019

Incorrect assessments point to continuous weakness in internal controls

The Comptroller and Auditor General of India (CAG) has suggested that the government must put in place a foolproof IT system and internal control mechanism to “eradicate” errors of omission and commission in income-tax assessments.

The government may consider the IT system for direct taxes being placed at arms length from the Central Board of Direct Taxes (CBDT), with an independent governmental body or organisation, the CAG has suggested.

In its report (9 of 2019) on direct taxes for the year ended March 2018, the CAG has highlighted several cases of “incorrect assessments”, which point to continuing weaknesses in the internal controls on the part of income-tax department. This need to be addressed on priority, the CAG report has said.

The report has also suggested that the IT system for direct taxes needs to be designed in such a way that it should ensure zero or minimal physical interface between the assessee and the tax officers.

Incorrect assessments

The CAG report highlighted that Assessing Officers (AOs) committed errors in the assessments ignoring clear provisions in the Income Tax Act.

“The cases of incorrect assessments involving arithmetical errors in computation of income and tax are difficult to accept as mere errors, in the days of calculators and computers.

“Further, application of incorrect rates of tax and surcharge, errors in levy of interest, excess or irregular refunds etc. point to either incompetence, or mischief, as well as weaknesses in the internal controls in income-tax department which need to be addressed. The existing scrutiny assessment procedure is opaque,” the CAG report said

Published on July 30, 2019
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