Mistakes in tax calculation. - Income Tax - 1052/CBDT

INSTRUCTION NO. 1052/CBDT Dated : April 6, 1977 The public Accounts Committee have taken very serious notice of mistakes in tax calculation resulting in substantial loss of revenue and were constrained to observe as under in their 193rd Report (1975-76): "5.11 - The Committee learn that Gift-tax Officers had been specifically enjoined to check tax claculations in all cases where the demand raised exceeds Rs.25,000 or refunds exceed Rs.10,000 only with effect from October, 1972. Prior to this date, there was apparently no clear provision for the arithmetical check of Gift-tax calculations and the guidelines in volume-II of Income tax Manual, according to which tax calculations are to be checked by an Upper Division Clerk, Head Clerk and the Income-tax Officer in appropriate cases, were expected to be followed in the case of Gift-tax and Wealth-tax assessments also. In the instant case, despite the fact that the value of the taxable gifts made in the assessment years 1968-69 and 1969-70 was respectively Rs,7,29 lakhs and Rs.8.09 lakhs, the check of arithmetical accuracy was carried out only by the Head Clerk who had also been admitted 'Casual' in his attitude. Judging from the number of mistakes in the calculation of tax that have been brought to their notice by Audit every year, the Committee are not satisfied with the some what desultory checks hitherto prescribed by the Department. Now that it has been decided that the Gift-tax Officer should personally re-check the tax calculation in all cases where the value of the taxable gifts is Rs.1 lakh or more or where the refunds due exceed Rs.5,000, the Committee trust that mistakes in the calculation of tax would be minimised, if not altogether eliminated. 6.13- The Committee consider that the mistakes committed in this case, by an Upper Division Clerk, while computing the gift-tax, which resulted in over assessment, are inexcusable. Obviously, the clerk had neither applied his mind nor used the Schedule for tax calculation which itself has been fairly simplified. The Committee note that the defaulting Official has been warned and a copy of the warning placed in his confidential character roll. 6.14- What is more deplorable is that the Gift tax Officer concerned has not checked the tax calculations in this case. The Committee view with consternation the statement made by the Finance Secretary during evidence that the assessing officers are 'under the impression that is not their duty' to check the correctness of the tax calculations made by the subordinates. The Committee are of the view that the sooner this notion is dispelled from the minds of the assessing officers, the better it will be both for the revenue and for the assessee. Since the assessing Officers are responsible for all assessment made by them, checking of tax calculations must be one of their essential functions. This responsibility cannot be foisted on the staff at the lower levels of the hierarchy. The Committee desire that suitable instructions should be issued in this regard." 2. Comprehensive instructions in this regard have already been issued by the DI(IT Audit) Vide F.No.Audit-9/73/74/DIT dated 11.3.74 fixing responsibility at different levels for checking the correctness of tax calculations under the Income-tax Act and other allied Acts. The monetary limits prescribed for checking of tax calculations at different levels are reproduced in the annexed table. 3. The Board reiterate the above instructions issued by the DI(IT Audit) and desire that the said instructions should be carefully followed by all officials at various levels.