A Parliamentary committee has come down heavily on the Finance Ministry for writing off over Rs 1.33 lakh crore as non-recoverable direct tax saying it owes an explanation on how the situation was allowed to reach "irretrievable" levels.
The Parliamentary Standing Committee on Finance has expressed surprise that out of a total demand of Rs 2,48,927 crore as direct tax arrear, Rs 1,33,665 crore is not "realisable".
It said a tax demand of Rs 61,846 crore falls under the category of "difficult to recover", leaving a balance of mere Rs 7,348 crore as collectible arrears.
"The Committee are alarmed at such a huge amount of tax due to government, which cannot be collected at all. The Department of Revenue thus owes an explanation to the Committee as to how such an irretrievable situation arose," the panel has said in its draft report.
The Department of Revenue told the Committee that recovery of tax arrears from Pune businessman Hassan Ali Khan, an accused in cases of money laundering, is not possible despite attaching his known movable and immovable assets.
It said as per the existing guidelines, recovery through sale of attached properties can be made only after the decision of appeal filed before the Income Tax Appellate Tribunal.
"Further, the attached assets are inadequate to recover the entire dues," it said.
In cases related to the security scam also, the recovery is not possible as it pertains to persons notified under the Special Court (TORT Act, 1992), and no recovery can be made directly from these persons, the department said.
It said out of the total arrear of Rs 2,48,927 crore, Rs 1,30,500 crore pertained to money laundering and securities scam cases.
On the issue of Hassan Ali and Securities Scam issue, The Department of Revenue had made a similar presentation before Public Accounts Committee (PAC) recently.