IT Dept computed interests wrongly in most assessment cases: CAG

Direct tax Incom

New Delhi, Sep 23 : The Comptroller and Auditor General of India has said that the Income Tax Department computed interests wrongly in about 77 per cent of the assessment cases it had audited.

In its report on “Direct Taxes of the Union Government for the year ended March 2019”, tabled in the Parliament on Wednesday, the government auditor said that it had audited 6,217 assessment cases which were processed or completed through the AST module and examined the correctness of interest, calculated through the system and modified by assessing officers (AO) with respect to Sections 234A, 234B, 234C and 244A of the Income Tax Act.

The report said that interest was calculated incorrectly through the AST system, despite the fact that the system was designed, inter alia, to undertake assessment functions of calculation of interest under various sections of the Income Tax Act.

“The interest was wrongly computed by the ITD, in 76.68 per cent of cases of the sample of 6,217 selected out of a population of 8,35,727 records, either due to systemic deficiencies or due to incorrect interventions by the AOs,” it said.

Assessing officers also did not take any step to rectify the incorrect interest, under Sections 234A, 234B, 234C and 244A of the Act, calculated through the system, even though the AST system allowed them to modify the value of interest in accordance with the provisions of the Act, thereby leading to either short levy excess levy of interest.

The CAG recommended that the Central Board of Direct Taxies may institute appropriate checks and balances in the Income Tax Business Application (ITBA) to prevent recurrence of error in computation of tax and interest.

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