ADDITIONAL MANPOWERREQUIREMENTFORINCOMETAXDEPARTMENT- an analysis of news report and some suggestions.

[C.A. DEV KUMAR KOTHARI]

According to a press release  the Income tax Department require 30000 officers and staff for better administration of the department. The news report is analyzed below:

Sanctioned posts:

The department has 58,000 sanctioned positions out of which about 8,000 posts are lying vacant that means presently there are about 50000 people working in income tax department.

Additional requirement:

As per report the department needs additional 4,000 officers (including 2,000 assessing officers), 4,000 inspectors, 12,000 tax assistants, data entry operators and other support staff, and about 2,000 as reserves. Therefore, as per this report total requirement for new posts are 22000.

As per report department needs 30000 people  That is 22000 additional posts plus 8000 vacant posts to be filled in.

Purpose:
It is stated that  "To avoid affecting the overall revenue collection and delivery of tax payer services, the department immediately requires 22,000 additional employees apart from filling up the 8,000-odd vacant positions," the official said.

Accordingly the matter for additional staff was planned to be  raised in the annual conference of Chief Commissioners to be held in New Delhi on June 9 and 10.

Suggestions:

Increase productivity and efficiency without increasing staff:

It is experienced that excessive staffing results in lower productivity and lesser efficiency.  There should be optimum staffing. Generally government departments are over staffed. It is felt that the income Tax Department is also not an exception of this rule.  The indications of excess staffing can be observed by the following ground realities as indicators:

a.        Late coming and early going by officers and staff is generally noticed - empirically with a large sample of 60 persons/ occasions it is applicable to about 2/3 of strength.

b.    Not being available during total office hours is also a general feature. Even if we assume normal office hours for government employees, between time of 12 - 16 hours, we feel non-  availability of officers  and staff on one-third of occasions even when the case is pre-fixed.

c.     Personal work during office hours is also a common feature- about 15% of time of real attendance is used for various personal work by officers and staff.

Therefore, by improving real working hours by timely coming and going, avoidance of time wastage, avoidance of personal work during working hours  etc. real working hours available can be can be improved by about  30- 40 % of existing  real available working hours.

Even if we take 25% of more real working hours available by better administration, it will be equal to 12500 people without any addition of new staff.

Unproductive work:

It is experienced that a large number of proceedings by way of rectification, revision, reassessment  etc, are initiated knowing that any purpose will not be served because initiation of proceeding itself is illegal and improper and many times just for sake of doing something such proceedings are initiated. This is evident from the fact that a large proportion of such proceedings are ultimately proved totally futile or futile in respect of major portion of the work done in pursuance of such proceedings.   

In scrutiny assessments large additions and disallowances are made just for sake of making additions and disallowances fully knowing that they will not stand scrutiny in appeal. In about 80% cases, it is found that scrutiny has not resulted into any significant gain to the revenue.

Lack of result orientation towards work.

Many work are done just for sake of working without any result orientation. Many times too much time is wasted on petty matters.

Un-necessary litigation.

Unnecessary litigation is a big cause of wastage of time and money. It is empirically noticed that about 65% of litigation initiated by revenue is futile.

By avoiding such unproductive and un-necessary work , and applying result orientation the requirement of manpower can be reduced by about 25%.

Some examples of unproductive work:

Unnecessary additions and disallowances:

Suppose an assessee has paid tax of Rs. Five crores. The AO must appreciate it, however, general tendency of the AO is that the assessee is chor. He has paid Rs. 5cr. So  he must have avoided 15 cr. - this is the way of thinking. Now by making scrutiny assessment demand is raised  for  additional Rs. Two crores, after disposal of appeals the assessee is ultimately found liable to pay say Rs. Five lakh. In many cases assessee may  have lower tax liability then the returned liability if additional claims preferred by the assessee are allowed.

In such case it  is  advisable to accept payment of Rs. Five crore and honor the assessee. Why to make some disallowances which are sure to be deleted.

An assessee  has returned loss of Rs. ten crores. He has accumulated losses of Rs. thirty crores. In due course a part of losses may lapse as there are remote chances of assessee earning substantial profits for a long period. Does it serve any purpose to scrutinize the assessee , assess loss of Rs. Eight crores initially and loss of Rs.9.90 crore ultimately after appeals. Why not to accept loss of Rs. Ten crore,to avoid wastage of time so that time can be used for more productive work.

Litigation on issues having only time factor:

There is lot of litigation on various issues which just have a bearing on time factor-  e.g whether a deduction is allowable in first year or in second year ? or whether deduction is allowable over five years or eight years. For example additions on account of stock valuation, adjustments u/s 43B, depreciation at lower rates etc. have only a deferring effect. Over a period of say 2-3 years usually there is no overall impact. Therefore disallowances and additions on such issues can be avoided all together.

For example, in case of a loss return, it makes no difference if an expenditure is disallowed in one year and allowed in next year.

Litigation on petty issues:

We find litigation on petty issues like miscellaneous expenses, motor car expenses, travelling expenses, telephone expenses, disallowance of petty sums. The classical example of litigation is about petty expenses on account of tea, coffee, snacks etc. which were held not to be entertainment by the Supreme Court, then an amendment was made with retrospective effect. How far retrospective effect has been useful to generate revenue, is not known. This shows that lot of time is being spent on petty matters, which can be avoided.

 By doing work with greater result orientation about 20% time can be saved.

More use of computers and ITES:

With more use of computers and ITES, requirement of people can be reduced considerably. For example, assesses, may be required to furnish their email id. It can be made more useful and secure if each assessee is given an email id by the income tax department combining brief name of assessee and his full PAN. Service of notice can be assumed after seven days from the day on which email is sent and the email is not returned undelivered.

Service of notices and orders can be through email on registered email id of assessee.

Written submissions and details etc. can be received from assessee through his registered email id.

Saved and scanned documents can be prescribed to avoid possibility of alterations and related disputes.

Remembering past:

In this connection author recalls his experience of childhood. He had several neighbors, working in various government departments.  He was always astonished when he noticed that most of government employees(officers of   income tax department, sales tax department, Electricity Board, Railways, Municipalty officers etc.) , remained at home till 11 -12 AM and used to come back to home by 4-5 PM. If on some day one went early say by 9 AM, he used to return by 2 PM Many times they did not go to office yet they used to get salary.

However, during the 'state of emergency period' (25 June 1975 - 21 March 1977)  the same people used to leave home by 9- 9:30 hours and used to return home late at about 18- 19 hours. He used to ask some of them and they used to reply that in emergency we have to be regular in office. Considering this reality, the author feels that there should always a mini emergency to enforce discipline and regularity of work in government departments.

A check on deficit:

By improving time utilization, productivity and efficiency, in various government departments an effective check on unproductive costs can be placed and it can reduce deficit as well as inflation.

Conclusions:

By improving attendance, result orientation and productivity and efficiency there will be no shortage of officers and staff in income tax department. As noticed earlier there are about 50000 employees at present working in the income tax department. If the real working time can be increased by say even 25%   the same strength of officers and staff will be equal to 62500. By avoiding unproductive work the requirement can be reduced by 10 - 15 % . More use of ITES can reduce requirement of people and then there will be no requirement of new staff and officers.