The Comptroller and Auditor General (CAG), in its report tabled in Parliament on Tuesday, found that the income tax department has caused a loss of Rs 6,093 crore to the exchequer due to 1,183 mistakes made in assessing the income-tax returns (ITRs) of real estate companies between financial years 2013-14 and 2016-17.
According to the report, the department is not using other third-party data to widen their tax net, the audit report said. “Due importance was not accorded by the ITD to monitor non-PAN transactions despite these being under the highest risk category from the point of view of tax evasion in general and due to these being transactions of the real estate sector in particular,” it said.
“The Ministry does not have any mechanism to assess the impact of revenue foregone in terms of creating affordable housing and its effect on growth in the housing sector. There is a multiplicity of criteria for classifying housing projects for EWS/LIG groups by the Government of India in terms of the size/affordability of the dwelling units. The purpose of providing deduction under section 80-IB(10) for better availability of housing to EWS and LIG section of the societies were not being met to the extent that the prices of dwelling units were out of reach of these target groups. Enforcement of conditions for allowing deductions under section 80-IB(10) was weak, leading to benefits being availed by non-eligible persons/unintended groups. Thus, the targeted groups could not be benefited and the revenue foregone on this count year after year by the Government may have benefitted unintended persons,” the report said.
Further, the report said that ITD hadn’t properly used section 56(2)(vii)(b) of the I-T Act to tax transactions where sales consideration were undervalued and were lower than the value adopted for stamp duty purposes. “Audit observed 40,906 transactions in which, as per PAN, the purchasers were either Individuals or HUFs and hence attracted provisions of section 56(2)(vii)(b). The total difference between stamp duty valuation and sales consideration in these transactions was of Rs 6,057 crore,” the report said.
