CAG finds 1,676 cases missing essential documents under Vivad se Vishwas Scheme

It assessed whether the scheme achieved its objectives of reducing litigation and generating timely revenue, and whether internal controls and IT systems were effective.

Who it concerns: Union Government, Department of Revenue – Direct Taxes (Income Tax Department)

What the auditor found

• 389 cases involving ₹ 1,675.65 crore found to have non-compliance with DTVsV Act/Rules by the Designated Authority.
• In 63% of audited sample cases, Form-3 was issued after the 15-day limit, with delays up to 868 days.
• In 45% of cases where Form-5 was issued, there was a time gap up to 954 days, delaying refunds to taxpayers.
• In 1,676 cases, essential documents were missing from files, meaning the veracity of payable amounts was not ensured.
• In 208 cases involving ₹ 423.47 crore, the Designated Authority incorrectly determined the amount payable.
• In 55 cases involving ₹ 1,168.27 crore, the Department failed to withdraw interest paid to assessees, resulting in revenue loss.
• In 10 cases, valid declarations were incorrectly rejected by the Designated Authority, denying eligible taxpayers benefits.
• Internal audit was conducted by the Department in only 2 out of 91 responding PCsITs.
• Recommendations include fixing specific timelines for issuing forms, auto-populating data to reduce manual errors, and issuing Standard Operating Procedures (SOPs) for uniform implementation.

Also in the document

• CAG found that in 1,676 cases, essential documents were missing, indicating that the accuracy of the amounts paid by taxpayers was not verified.
• CAG noted that in 55 cases involving ₹ 1,168.27 crore, the government lost revenue because it failed to withdraw interest previously paid to taxpayers.
• CAG reported that in 10 cases, the Department incorrectly rejected valid applications from eligible taxpayers, causing a loss to the exchequer and defeating the scheme's purpose.
• CAG found that in 20 PCsITs, no Standard Operating Procedures (SOPs) had been received from the Department, leading to inconsistent handling of cases.