NEW DELHI: A compliance audit of I-T collections from 11 distilleries and breweries in UP, Maharashtra, Karnataka, and Delhi has uncovered significant under-reporting of sales, with the Comptroller and Auditor General estimating the tax implications of this “short accounting” at approximately Rs 12,800 crore over a 10-year period.
The CAG report, tabled in Parliament last week, reviewed the sales of these 11 distilleries and breweries for a 10-year period, till Dec 2022.
In one case against a distillery in UP, CAG said its audit found Rs 1,378 crore of alleged under-reporting of sales with a tax implication of Rs 448 crore. “While the distillery had reported sales in its profit and loss account at Rs 4,036 crore, whereas information made available by UP excise dept revealed that sale reported by assessee was Rs 5,414 crore,” CAG noted.
The under-reported sales of Rs 1,378 crore were accepted by I-T dept in AY 2011-12 to 2013-14, which resulted in short computation of income, involving a tax effect of Rs 448 crore, excluding interest, the audit said. CAG has found deficiencies in functioning of I-T assessment units where they found that “information available within I-T dept was not utilised by assessment units.” Reconciliation of details from assessees was not carried out by assessing officer, which involved a tax impact of Rs 12,781 crore, it said.
The auditor has asked CBDT to consider issuing a SoP/MoP for specifically requisitioning info/statement of financial transactions from the state excise authorities as mandatory while conducting assessment of the distilleries and breweries. Pointing to systemic failure in I-T dept, CAG observed that a large amount of rebates, discounts, etc., was allowed as expenditure in accounts of distilleries while the genuineness of such claims were not verified.
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