Report of P.A.C. and their possible implications. - Income Tax - 924/CBDT

INSTRUCTION NO. 924/CBDT Dated : February 24, 1976 With reference to Paragraph 42 of the Report of the Comptroller Auditor General of India for the year 1972-73 Union Government (Civil), Department of Supply, the Public Accounts Committee (1974-75) in their 160th Report, made a number of observations in regard to the agency commission payable or paid to the agents, in India, of the foreign suppliers with whom the Government purchasing departments enter into contracts for the purchase and supply of various goods. The Committee expressed serious concern, inter alia, on absence of adequate coordination, in practice, between the purchasing departments of the Government, the Ministry of Finance, the Income-tax Department, the Enforcement Directorate and the Reserve Bank of India which detracts from the effectiveness of the action for default of tax or of foreign exchange obligations. 2. A working Group was set up to study in depth the various issues arising out of the above report of the P.A.C. and their possible implications with particular reference to the leakage of foreign exchange and evasion of taxes. This Group has made a number of recommendations. 3. In para 31 of its Report, the Working Group has observed as under:- "Another important point, in our opinion, is about effective coordination amongst the various departments and agencies. Where common items are purchased by different purchasing departments, they should have a system of frequent consultations among themselves. The advantages of such mechanics for such consultation must necessarily be evolved by the departments themselves. In addition, it is necessary that action of say, on agency does not run counter to that of another. The income-tax Department, the Enforcement Directorate and the Customs Department are represented on Coordination Committees at various Zonal, Regional and Headquarters level. These Committees meet frequently and can be useful forums for initiating and ensuring the coordination that we have in view." The recommendations contained in the above para have been accepted by the Board. You are, accordingly, requested to see that the meetings of the Zonal, Regional and Headquarters Coordination Committees are fully utilised for initiating and ensuring coordination in respect of cases involving large scale purchases by Government Departments from foreign suppliers.