The CAG has criticised Income Tax Department for its failure to monitor and check tax evasions by charitable trusts floated by Tata, BCCI and other high profile trusts. The report by the apex auditor has found these trusts, backed by big corporate, were used to route huge money to falsely claim tax exemptions.
Jamshetji Tata Trust and Navajbai Ratan Tata Trust routed more than Rs3000 crore in “prohibited modes” resulting in a tax loss of the more than Rs1000 crores. The report also exposes how the several cricket associations and BCCI caused tax loss of Rs37 crore by false exemption claims like TV subsidy. The report was tabled in parliament on Friday.
“In Maharashtra, DIT-E, Mumbai, Jamshetji Tata Trust and Navajbai Ratan Tata Trust earned Rs1,905 crore and Rs1,234 crore on account of capital gain during AY 09 and AY 10 respectively and invested the same in prohibited mode of investments which is in contravention to the provisions of section 13(1)(d) of Act. It resulted in short levy of tax of Rs1066.95 crore,” said the CAG, adding that its findings in this regard were accepted by Finance Ministry.
“IT Department allowed irregular exemptions of TV subsidy received from BCCI in cases of Saurashtra Cricket Association, Baroda Cricket Association, Kerala Cricket Association and Maharashtra Cricket Association resulting in short levy of tax of Rs37.23 crore,” observed CAG.
The report also blamed the IT Department for not monitoring the trusts which received foreign contributions. It observed that in 2010 alone, in total all the trusts in India received more than Rs10000 crore, and the IT department did not verify any of these transactions from abroad.
The CAG’s random check on the various trusts highlighted a total tax evasion of more than Rs3000 crore. The audit report observed that IT did not apply uniform procedures in granting tax exemptions.
“The Ministry may consider providing suitable database of registered trusts/institutions to AOs to have co-ordination between Approving Authorities and AOs. The activities beyond scope of its objects and omissions on the part of the assessee should be reported by AO to Approving Authorities so that withdrawal or penalty may be initiated against erring Institutions,” urged CAG.