Comptroller and Auditor General of India (CAG) has expressed concern over a huge build-up of tax arrears due to a poor recovery mechanism and lack of staff in the income tax (I-T) department. According to a latest CAG's audit finding report, which is yet to be tabled in Parliament, shows due to lack of tax recovery officers (TROs) and poor recovery mechanism, the uncollected portion of income tax demand has gone up by 176% in 2010-11 from 2005-06.

"The uncollected portion of the tax demand has risen from Rs 95,387 crore in 2005-06 to Rs 2.63 lakh crore in 2010-11," the CAG draft report accessed by the Hindustan Times mentioned.

The report said filing of appeals by the taxpayers and delay on part of the I-T department to follow up recovery mechanism led to the huge build-up of arrears.

The CAG has observed that shortage of TROs - a cadre introduced in 1972 to strengthen tax recovery mechanism - has escalated the arrears.

The finding has also questioned the efficiency of TROs, stating that target of disposal of 1,200 recovery cases by a TRO (mandatory) could not be achieved. "Target of disposal of 1,200 cases seems not realistic."

The audit scrutiny revealed continuing lack of coordination between tax assessing officers (AOs) and TROs, which resulted into several fold increase in tax demand arrears since 2001.

The findings has also pointed towards lack of effective internal audit leading to procedural deficiencies, AOs not directing the employers to deduct salary from the defaulter assesses to recover pending demand and TROs not taking effective steps for attachment and sale of immovable properties of tax defaulters.