Faced with an aggressive Congress attack over there being no provision for "presumptive loss" in the statute, comptroller and auditor general Vinod Rai cited three income tax assessment orders to argue that the procedure was not just notional as dues had been recovered from assesses. 

Congress MP Manish Tewari questioned CAG's "presumptive" loss of between Rs 57,000 crore to Rs 1.76 lakh crore in the scam saying the Central Board of Direct Taxes had told the Joint Parliamentary Committee that the term did not exist in the I-T Act, 1961. But while Rai agreed the term was not defined, he said it was a well-established practice to calculate tax lost or presumptive loss. 

Tewari comment at Tuesday's meeting of the JPC on CAG led to some heated exchanges with Rai terming some of the references as "irrelevant". He quoted an order of the I-T commissioner in Surat who reassessed the case of SNS Textiles Ltd for 2007-08 and found that the "incorrect carry forward of losses involved a short levy of potential tax of Rs 2.25 crore". 

With Congress members arguing the law only provided for "potential loss" and relying on the CBDT opinion that field officers did not assess presumptive losses, Rai said the loss was recovered by the I-T department under section 143 (3) in November 2010 from the company. 

Another case referred to that of Inductor Ispat Alloys Ltd by CIT, Ahmedabad where again losses carried forward by the company erroneously resulted in a potential tax loss of Rs 62.81 lakh. The I-T department reassessed the accounts of the company for 2006-07 to recover the tax of Rs 62.81 lakh. A third similar case pertained to a Kilburn Engineering Ltd of West Bengal where the company's tax liabilities were reassessed and increased by Rs 2.13 crore. 

Rai said even the proposed Direct Tax Code and the finance bill have references to presumptive and potential loss while reassessing income in case of undisclosed income. He criticized the government's attempt to use CBDT's clarification to media that there was no such practice. 

Congress members pointed to Rai's deposition in May when he said the reference was not a figment of his imagination. Rai said he was referring to section 44 A(d) of the Act but CBDT has said this was used in a different context - dealing with presumed income in case of establishments with a turnover of less that Rs 60 lakh a year. 

Congress also questioned the CAG report stating that consultation between telecom and finance ministries did not take place. (Times of India)