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CHAPTER-1
An Overview of South Delhi Municipal Corporation
1.1 Introduction
The Government by notification in the Official Gazette,
established for the
purpose of Delhi Municipal Corporation Act, 1957 as amended by
the Delhi
Municipal Corporation (Amendment) Act, 2011, three Corporations
charged with
the municipal government of Delhi.
Every Corporation so established shall be a body corporate with
name
duly notified by the Government having perpetual succession and
a common seal
with power, subject to the provisions of this Act, to acquire,
hold and dispose of
property and may by the said name sue and be sued. Every
Corporation, unless
sooner dissolved under section 490 of DMC Act 1957, shall
continue for 5 years
from the date appointed for its first meeting.
The Corporation is composed of the councillors who are chosen by
direct
election on the basis of adult suffrage from various wards. The
area of every
Corporation is divided into a number of zones and each zone into
a number of
wards. There are 12 zones and 272 wards (NDMC-104, SDMC-104 and
EDMC-64)
in Delhi.
South Delhi Municipal Corporation consists of 104 wards in four
zones
namely Central, South, West and Najafgarh. Post trifurcation in
the year 2012, the
basic details of the South DMC as per IVth Delhi Finance
Commission Report is
1. Area 656.91 km2.
2. Population as per 2011 census 62.14 lakh.
3. Number of Household 13.14 lakh.
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1.2 Municipal Authorities
As per Section 44 of DMC Act, 1957 there are following three
municipal
authorities under the SDMC for the efficient performance of its
functions:-
(a) The Standing Committee shall exercise such powers and
perform such
functions as are specifically conferred or imposed upon it by or
under
this Act.
(b) The Wards Committee exercise all such municipal powers
and
functions of the Corporation as are to be performed exclusively
in
zone concerned other than those relating to Delhi as a whole
involving two or more zones.
(c) The Commissioner exercises all the powers and performs all
the
duties specifically conferred or imposed upon him by DMC Act or
by
any other law for the time being in force.
1.3 Source of Revenue
(a) External Revenue by way of tax share from Government of
National
Capital Territory of Delhi, Grants & Loans by Delhi
Government.
(b) Internal Revenue by way of taxes, fees & fines.
External Revenue
As per Section 107 A the Administrator shall within one year
from the
commencement of constitution (73rd Amendment) Act, 1992 and
thereafter at the
expiration of every fifth year constitute a Finance commission
to review the
financial position of the Corporation and to make
recommendations to the
Administrator as to
(i) the distribution between the National Capital Territory of
Delhi and
the Corporation of the net proceeds of the taxes, duties, tolls
and fees
leviable by NCTD which may be divided between them.
(ii) the determination of the taxes, duties, tolls and fees
which may be
assigned to or appropriated by the Corporation.
(iii) the grants in-aid to the Corporation from the consolidated
fund of
NCTD.
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The fourth Delhi Finance Commission (DFC) established on
14.10.2009.
IVth DFC recommended devolution of taxes @ 12.5 percent of
taxes, duties, fees
and tolls collected by GNCTD w.e.f. 2012-13 to 2016-17.
The share of three Delhi Municipal Corporations was taken
@96%,
balance being assessed to be sufficient for New Delhi Municipal
Council and Delhi
Cantonment Board.
Existing distribution of funds among North, South & East
Delhi Municipal
Corporations, by GNCTD is at the rates of 40 percent, 39 percent
and 21 percent,
respectively.
Devolution of Delhi Finance Commission Grant (IVth)
Actual proceeds of Tax Revenue of GNCTD was not available with
the
accounts department. Therefore, the share of South DMC of the
total proceeds
could not be ascertained. The funds received from GNCTD as
per
recommendations of Delhi Finance Commission (DFC) were utilized
on following
purposes:
(a) Education
(b) Maintenance of school buildings
(c) Maintenance of capital assets
Under the provisions of Section 107-A of the DMC (Amendment)
Act, 2011
and the recommendations of 4th DFC, it is obligatory on the part
of Delhi
Government to release the funds amounting to Rs. 1211.52 crore
as per
statement provided by the accounts department which have been
withheld in
contravention of the constitutional provisions.
Summary of year wise status of grants received from GNCTD.
(Rs. in Crore) Year Grants to be
received Grants
received Balance to be
received Shortfall
%age 2012-13 927.46 794.35 133.11 14.35 2013-14 1011.75 756.37
255.38 25.24 2014-15 1090.86 809.41 281.45 25.80 2015-16 1170.57
830.41 340.16 29.05 2016-17 1268.94 1067.52 201.42 15.87
Total 5469.58 4258.06 1211.52
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Status of Grants
As can be seen from table-
Out of total Grants of Rs. 5469.58 crore to be received from
GNCTD during
2012-13 to 2016-17, Grant of Rs. 4258.06 crore (77.85%) was
received.
Grant of Rs.1211.52 crore is to be received from GNCTD.
Internal Revenue (Revenue realized from own resources)
South Delhi Municipal Corporation was required to generate
resources by
collecting taxes/rent/fees/fines/Tehbazari fees/ conversion
charges/parking
charges etc. from the people of areas falling under their
jurisdiction excluding
external revenue and loan. Position of target fixed (as per
revised budget
estimate) for revenue realization and achievement against the
receipt of South
Delhi Municipal Corporation during 2014-15 to 2016-17 is given
below:-
Status of Internal Revenue
(Rs. in Crore)
S. No.
Year Target as per RBE
Actual Realization
(-) Less / (+)Excess
Realization
Shortfall in %age
1. 2014-15 2583.93 2459.29 -124.64 4.82 %
2. 2015-16 2309.99 2469.36 +159.37 6.90%
3. 2016-17 2858.53 2921.08 +62.55 2.19%
927.46 1011.75 1090.86
1170.57 1268.94
794.35 756.37 809.41 830.41
1067.52
133.11 255.38 281.45
340.16
201.42
-500
-300
-100
100
300
500
700
900
1100
1300
1500
2012-13 2013-14 2014-15 2015-16 2016-17
Grants to bereceived
Grantsreceived
Balance tobe received
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Status of Internal Revenue
As can be seen from above table
Income shows increasing trend in the years 2014-15 to
2016-17.
Income was less than the RBE by 4.82% during 2014-15, but
during
2015-16 and 2016-17 income was more than the RBE by 6.90%
and
2.19% respectively.
Aggregate Receipts:- The aggregate receipts and revenue realized
from their
own resources including loan and receipts of IV Delhi Finance
Commission
during the period 2014-15 to 2016-17 is as under:-
Status of Aggregate receipts
(Rs. in Crore)
S. No.
Year Total Receipt
Receipt of IVth -DFC and
percentage of total receipt
Own Resources including loan
and percentage of total receipt
1. 2014-15 3235.06 775.76 (23.98%) 2459.30 (76.02%)
2. 2015-16 3266.12 796.76 (24.40%) 2469.36 (75.60%)
3. 2016-17 3954.96 1033.88 (26.14%) 2921.08 (73.86%)
Note:- Figures given in brackets indicate percentage with
respect to total receipts.
2583.93
2309.99
2858.53
2459.29 2469.36
2921.08
-124.64
+159.37 +62.55
-500
-200
100
400
700
1000
1300
1600
1900
2200
2500
2800
3100
2014-15 2015-16 2016-17
Target as PerRBE
ActualRealization
Less/ExcessRealization
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Status of Aggregate Receipts
As can be seen from above table receipts of IVth Delhi Finance
Commission
during 2014-15 to 2016-17 was 23.98%, 24.40% and 26.14%
respectively of
total receipts whereas funds realized from own resources during
2014-15 to
2016-17 was 76.02%, 75.60% and 73.86% respectively of total
receipts.
1.4 Overall Financial Position of South DMC.
Based on the data, the position of funds available under IVth
Delhi Finance
Commission, its own resources and its utilization during 2014-15
to 2016-17 is
given below:-
Status of Financial Position
(Rs. in crore)
S. No. Year Actual Fund Available
Actual Fund utilized
(+)Saving/(-) Excess (%age)
1. 2014-15 3235.06 2637.45 597.61 (18.47%)
2. 2015-16 3266.12 2905.52 360.60 (11.04%)
3. 2016-17 3954.96 3324.96 630.00 (15.93%)
3235.06 3266.12
3954.96
775.76 796.76 1033.88
2459.30 2469.36
2921.08
0
500
1000
1500
2000
2500
3000
3500
4000
2014-15 2015-16 2016-17
Total Receipt
Receipt of IV -DFC
OwnResources
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Status of Financial Position
As can be seen from above table, out of total fund available
during the
years 2014-15 to 2016-17 there were savings of Rs. 597.61 crore
(18.47%),
Rs.360.60 crore (11.04%) and Rs.630.00 crore (15.93%)
respectively in
comparison to receipt. This indicated that budget was not
prepared on realistic
basis. The savings should have been anticipated at the time of
preparing the
revised budget estimates so that same could be utilized
appropriately. The
savings should have been surrendered as per Rule 62(2) of
GFR.
1.5 Internal Control
(i) Accounts:- The accounts depicts the financial position of
the
Corporation. Thus internal control system of the Corporation
relating to
accounts should be strong, strict and transparent.
Monthly accounts are prepared by the zones and headquarters on
the
basis of income and expenditure statement (35 columns) submitted
by the units
to the zones and by the zones to the headquarters.
Income received at zonal treasury and citizen service bureau
counters is
taken out by Axis Bank and ICICI Bank to deposit in
Commissioner`s General
Account. These banks send monthly income statements to Deputy
Controller of
Accounts (HQ) but accounts branch had not been preparing any
broadsheet to
reconcile the income received in Commissioner`s accounts from
income
statement received from zones in monthly accounts. Actual
receipts as per
3235.06 3266.12
3954.96
2637.45 2905.52
3324.96
597.61 360.6 630
0
1000
2000
3000
4000
5000
2014-15 2015-16 2016-17
Actual FundAvailable
Actual Fundutilized
Saving/(-) Excess
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monthly income statement received from bank is neither being
reconciled at HQ
nor is there any certification from zones that it is being
reconciled at zonal level.
Thus, the Internal Control system was not commensurate with size
of the
accounting activities of the Corporation. In the absence of
reconciliation the
authenticity of actual receipts could not be ascertained in
audit.
As per clause 17 of chapter-IX of Municipal Account Code, 1958 a
calendar
of returns shall be maintained in the office of the Heads of
Departments in which
all accounts, statements, and returns shall be entered with due
date of
submission, the authority to or from whom the return is due
being also shown.
Inward and outward returns shall be kept distinct in two
separate sections of the
calendar, each of which shall be divided into, daily returns,
weekly returns,
monthly returns, quarterly returns, half-yearly returns, annual
returns and
occasional returns but the following returns/records were/are
either not being
maintained or maintained improperly:-
Weekly & monthly report regarding disposal of audit
objections.
G-8 stock register in units.
register of works.
register of interest bearing securities.
register of movable & immoveable properties.
Demand & collection register of property tax, tehbazari
fees, rent and
conversion charges, parking charges, licence fee etc.
LTC advance register, temporary advance register, tuition fee
register
Recovery watch register.
(ii) Internal Audit
The internal audit is required to check hundred percent
transactions,
stores etc. before the commencement of audit conducted by the
Office of the Chief
Auditor so that the irregularities are rectified by the auditee
units.
The audit of the Unit is conducted according to audit plan
approved by
Chief Accountant-cum-Financial Advisor. All Audit Parties
comprising of Internal
Audit Officer, Assistant Accounts Officer and Auditors conduct
the internal audit
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of the various departments/units under the guidance/supervision
of Dy.
Controller of Accounts.
Deficiency in the working of Internal Audit department.
Year wise number of units audited by Internal Audit
department.
S. No.
Year No. of units
audited
Local Inspection
Reports issued
Outstanding paras of the
Reports
Paras settled
Recoveries effected (Rs. in lakh)
Outstanding paras
1. 2014-15 153 153 1590 77 33.77 1513
2. 2015-16 142 142 1528 73 49.52 1455
3. 2016-17 147 147 1715 58 2.51 1657
85.80
As can be seen from above table.
Number of units audited by Internal audit department decreased
from 153
(2014-15) to 142 (2015-16) and 147 (2016-17) which is 7 % and 4
%
respectively of units audited in 2014-15. This indicated that
either the
audit of the units was/is not being conducted 100% as per audit
plan or
audit plan was/is not being prepared on actual basis.
The rate of settlement of paras is poor as during 2014-15, 77
paras were
settled but during 2016-17 only 58 paras were settled.
No significant recoveries at the instance of internal audit were
made
during the year 2014-15 to 2016-17. Only Rs.85.80 lakh recovered
at the
instance of audit during the said years.
The internal audit should have interaction with external audit
of the
corporation and should regularly forward their inspection report
to external
audit. The local inspection reports prepared by internal audit
department of
most of the units were neither made available by internal audit
department nor
by the unit concerned to audit, in the absence of which audit
could not check the
periodicity/effectiveness of the working of the internal audit
department.
(iii) Vigilance:- The function of Vigilance department is to
keep a check on
corruption/illegal activities against the officials/officers
working in the
Corporation. Cases against the erring officials/officers are
forwarded to
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Vigilance department for investigation. After preliminary
investigation,
Regular Departmental Action (RDA) is proposed against the
officials/officers
for Major or Minor penalty as per merit of the cases. Thereafter
a charge
sheet is issued to the concerned official/officer by the legal
cell of the
Vigilance department. After conclusion of the investigation,
the
recommendation is sent to the disciplinary authority for final
disposal of the
case.
Deficiency in the working of Vigilance department.
Year wise details of pending Regular Departmental Action are as
under:-
Year Nos. of pending
RDA
Charge sheet
issued
Charge sheet not
issued
P.O./I.O. appointed
P.O./I.O. not
appointed
2012 09 07 02 07 02 2013 22 20 02 16 06 2014 60 42 18 42 10 2015
32 28 04 21 02 2016 42 32 10 32 0 2017 148 36 112 25 116
313 165 148 143 136
As can be seen from above table
Number of pending RDAs showed increasing trend.
Out of 313 cases of RDAs in 165 cases charge sheets were issued
and in
148 cases charge sheets have not been issued.
Delay in finalization of cases is not only against the law of
natural justice
but also supplement the agony of the charged officials which in
turn
affects the efficiency of the incumbent against whom an inquiry
is pending.
1.6 External Audit/Statutory Audit
The head of the Statutory Audit Department of each Delhi
Municipal
Corporation is the Municipal Chief Auditor, who is appointed by
the Corporation
under Section 89 of the DMC Act, 1957 with the previous approval
of the
Government. As per Sections 205, 209 of Delhi Municipal
Corporation Act, 1957
the Municipal Chief Auditor shall:-
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conduct a monthly examination and audit of the municipal
accounts
and shall report thereon to the Standing Committee.
deliver to the Standing Committee a report of the entire
municipal
accounts for the previous year.
audit the accounts of the Corporation.
have the power to require that any books or other documents
relating to the accounts he is required to audit shall be sent
for
inspection by him.
have authority to frame standing orders and to give directions
on
all matters relating to audit.
A. Products of the Chief Auditor’s office
Certification of accounts – The Municipal Chief Auditor
certifies monthly
accounts, annual accounts and annual appropriation accounts of
three
Corporations.
Certification of plan and non-plan expenditure.
Audit Inspection Report – The field audit parties are auditing
about 808
units of South Delhi Municipal Corporation and issuing Audit
Inspection
Reports to the Head of unit/department of each office.
Audit Reports – This office produces Annual Audit Report
relating to South
Delhi Municipal Corporation. Audit Reports for the year 2012-13
to 2015-
16 have been placed before the Standing Committee, South Delhi
Municipal
Corporation.
B. Audit Methodology
to conduct audit of the accounts of various offices/units of
South Delhi
Municipal Corporation, the audit department frames annual audit
plan
covering all auditable units.
the field audit parties under the overall supervision of the
Chief Auditor &
his/her Deputy Chief Auditors audit the various offices/units of
the South
Delhi Municipal Corporation as per the audit plan.
besides auditing the accounts of offices/units, the field audit
parties also
check monthly accounts of the zones as well as monthly accounts,
annual
accounts and annual appropriation accounts of the entire
Corporation
prepared at the HQ of South Delhi Municipal Corporation.
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six audit parties conducted audit of 250 units out of total 808
units
including municipal primary schools, dispensaries
(allopathic,
homoeopathic, Ayurvedic & Unani), maternity and child
welfare centres,
maternity homes and polyclinics during the year 2017-18. Audit
Inspection
Reports were issued to the concerned head of the department. All
types of
irregularities noticed during audit incorporated in audit
inspection reports
and irregularities involving financial implications and of
serious nature are
incorporated in Audit Report.
irregularities of serious nature and involving huge financial
implications
were noticed during the audit of the accounts of Assessment
& Collection
department, Advertisement, Licensing, Engineering, Building,
DEMS, Land
& Estate, Accounts etc. have been taken in audit paras of
Audit Report for
the year 2016-17.
as per section 209 (1) & (2) of DMC Act the Municipal Chief
Auditor may
make such queries and observations in relation to any of the
accounts of
the corporation which he is required to audit and call for such
vouchers,
statements, returns and explanations in relation to such
accounts as he
may think fit and every such query or observation shall be
promptly taken
into consideration by the officer or authority to whom it may be
addressed
and returned without delay with the necessary vouchers,
documents or
explanations to the Municipal Chief Auditor.
as per Chief Accountant’s, erstwhile MCD circular dated
30.01.1962, heads
of departments were/are required to furnish necessary
explanation,
comment, information, documents, record or other particulars as
the case
may be within a week of the receipt of the observation or
objection memo
but this is not being followed by the heads of departments and
no
concerted efforts were/are being taken by them to get the
outstanding
paras of Inspection Reports settled. However, during audit the
concerned
department either furnished incomplete reply or did not furnish
reply,
records, data and documents in respect of paras of old
Inspection Reports
and also audit memos. Further no effort was made for action
on
outstanding paras of old reports as reflected in the poor
settlement rate of
old paras of Inspection Reports & Audit Reports.
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effectiveness of audit is dependent on the co-operation of
management of
auditee by giving audit due importance/priority in the day to
day function.
The auditee is expected to produce complete records, replies to
audit
observations and also ensure quick action on the observation
raised by
audit for increasing the efficiency of the department. However,
audit faces
poor co-operation from the auditee as negligible replies/records
are
furnished despite repeated reminders and requests. Old paras
of
AIRs/Audit Reports are also not settled. In the absence of
complete
records, replies and monitoring by concerned officers the audit
process is
affected.
C. Certification of Monthly Accounts, Annual Accounts &
Annual
Appropriation Accounts.
As per Regulations 5, 6 and 16 of Delhi Municipal
Corporation
(Maintenance of Accounts) Regulations, 1959 at the end of each
month/year a
monthly abstract/annual abstract as the case may be shall be
submitted to the
Municipal Chief Auditor for examination.
Being the lead Corporation, accounts department of the North
Delhi
Municipal Corporation was required to submit, monthly accounts,
annual
accounts and annual appropriation accounts in respect of
erstwhile Municipal
Corporation of Delhi for the years 2004-05 to 2011-12 and that
of after
trifurcation, the accounts department of South Delhi Municipal
Corporation has
submitted the monthly accounts, Annual Accounts and Annual
Appropriation
Accounts for the years 2012-13 to 2017-18, to the Chief Auditor
for examination.
The monthly accounts, annual accounts and annual
appropriation
accounts for the year 2012-13 to 2017-18 have been submitted to
Standing
Committee, SDMC.
D. Audit Reports and Audit Inspection Reports:-
Outstanding paras of Audit Reports.
There were 589 Audit Paras relating to financial irregularities
and 55
audit paras relating to Outstanding Audit Reports, Inspection
Reports & Audit
objections, recoveries made at the instance of audit being
informative in nature
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upto the year 2015-16 lying outstanding as on 31.01.2019.
Year-wise number of
outstanding paras for the period 1963-64 to 2015-16 in respect
of SDMC is given
in Annexure ‘A’.
It is worth mentioning that audit of transactions pertaining to
a financial
year is conducted during the succeeding financial year. The
departments are
informed of the preliminary audit observations through Audit
Memorandum/Half Margin. This is followed by Inspection Reports
issued after
completion of each audit. The irregularities which are likely to
be included in the
Audit Report are brought to the notice of the Commissioner
through draft audit
paragraphs. The departments are requested to confirm the facts
& figures stated
in the draft audit paragraphs and offer their comments within
four weeks of their
receipt. On receipt of satisfactory reply from the department,
the draft audit
paragraph is settled and in case the reply is not found
satisfactory, the same is
suitably incorporated in audit para.
Audit of transactions pertaining to the financial year 2016-17
was
conducted during 2017-18 and process of issue of draft paras
commenced during
2018-19.
45 draft paras were issued to the departments. The department
submitted
the reply/comments of 07 draft paras and have been incorporated
in the audit
report with audit observations.
Outstanding Inspection Reports/Audit Notes & Vouching
Notes.
The Corporation vide resolution No.32 dated 03.09.1959 has
prescribed a
time limit of one week for disposal of Audit Objections by the
departmental
officers and 10 days in the case of disposal by the
Commissioner.
There were 29,613 audit objections/items, which are pending in
absence
of replies by the department so far. Year-wise number of
outstanding reports and
also department wise outstanding reports and objections for the
period 1965-66
to 2016-17 as on 31.03.2018 is given in Annexure ‘B’.
Out of 2,755 Audit Inspection Reports/Test Audit Notes and
29,613 audit
observations, the department submitted replies to 196 audit
observations of
21 Audit Inspection Reports/Test Audit Notes which were
considered and
further comments were offered to the departments.
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Thus the accumulation of Inspection Reports/Audit Notes and
Audit
Observations to a good number of 2,755 and 29,613 respectively
indicates that
the departments concerned have not been following the
instructions regarding
prompt and proper disposal of audit objections and queries. The
auditee is
required to furnish the necessary explanation, information,
documents, records
and other particulars, as the case may be within a week of the
receipt of
communication from audit but Audit Inspection Reports are being
treated in a
very casual manner by the Municipal Officers who neither reply
promptly to the
audit objections nor discuss the circumstances in which the
irregularities etc.
have been allowed to continue. The primary responsibility for
taking appropriate
action and clearance of audit observations is of the department
concerned and
this casual treatment of audit observations weakens the
accountability-
mechanism. Therefore, it is strongly recommended that the
departments should
put in place an effective mechanism to monitor the timely
compliance to audit
observations and their settlement.
1.7 Recoveries at the instance of Audit – Rs.4.85 Crore.
Test check of the accounts/records of various department of
South Delhi
Municipal Corporation revealed a number of cases of overpayment
of pay &
allowances, short recovery of property tax, short recovery of
Addl. FAR charges,
excess payment due to non deduction on account of decrease in
price of steel
and/or cement under clause 10 CA, short deposit of one time car
parking charges
and conversion charges etc.
All such cases were pointed out to the concerned department
through
Audit Inspection Reports upto the year 2016-17 and the
departments have
recovered a sum of Rs.4,85,54,458/- on this account in 14 cases
at the instance of
Audit as per details given below:-
S. No.
Name of Zone/HQ Number of cases
Recoveries effected
(Rs.)
1. West Zone 05 1,67,85,058
2. Central Zone 01 22,20,279
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3. Najafgarh Zone 02 70,23,692
4. South Zone 01 86,104
5. Assessment & Collection Department (HQ)
05 2,24,39,325
Total 14 4,85,54,458
MCA/RS/DP-40(S)/16-17
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CHAPTER – 2
ACCOUNTS & FINANCE
2.1 Introduction
As per Section 204 of DMC Act, 1957, the accounts shall be kept
in such
manner and in such form as may be prescribed by regulations of
the general
account of all receipts and expenditure of the Corporation.
As per Regulations 5, 6 and 16 of Delhi Municipal
Corporation
(Maintenance of Accounts) Regulations, 1959, the accounts
department of South
Delhi Municipal Corporation (SDMC) is required to prepare
monthly abstract at
the end of each month, annual abstract and annual appropriation
account at the
end of the year. These accounts are required to be submitted to
Municipal Chief
Auditor for examination.
2.2 Accounting System and Arrangement
As per Regulation 13 of DMC (Maintenance of Accounts)
Regulations the
transaction in General Account shall represent the actual cash,
receipts and
disbursement during the year.
The Hon’ble Supreme Court of India directed (13.01.2001) the
government to start double entry system of accounting. The
Accounting
Standards of Institute of Chartered Accountants of India (ICAI)
was/is followed in
India for double entry system of accounting. The Accounts
Research Foundation
(ARF) of ICAI made accounting standards from its own accounting
standards,
Government Accounting Standards Advisory Board (GASAB) and
prepared
manual of accounts for MCD in the year 2005. It changed the
budget heads from
Roman heads to Arabic numerical.
The comprehensive Annual Financial Reports (CAFR) for the years
2002-
03 to 2004-05 were prepared by ICAI-ARF. Thereafter a Chartered
Accountants
firm M/s Das Gupta Associates was hired for preparation of CAFRs
and they have
prepared CAFR under Accrual basis doubly entry accounting system
till 2016-17.
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The firm was required to provide training to SDMC personnel on
the updated
accounting manual and also develop the training modules, but
neither they
provided training to SDMC personnel nor developed training
modules. An
amount of Rs. 1.99 Crore has been paid to M/s Das Gupta
Associates till 2016-17.
South DMC has not adopted the double entry accounting system and
books
of accounts are still kept under cash based accounting system.
For adoption of
accrual based double entry accounting system the following are
required.
(i) Modification in the existing formats in which the accounts
are kept to
accommodate accruals.
(ii) Comprehensive asset register should be prepared.
(iii) Modification in the Accounting Regulations, Budget
Regulation etc. to
accommodate account system.
(iv) Uniform Accounting manual.
(v) Adoption of software.
(vi) Training.
No efforts were/are being made to complete above mentioned
requirements and implement the double entry system in SDMC by
the Accounts
department despite lapse of 5 years.
2.3 Finances of the South Delhi Municipal Corporation
The Municipal fund is constituted under section 99 of the Delhi
Municipal
Corporation Act, 1957 which includes all moneys, proceeds of the
disposal of
property, rents, tax, cess, fees, fines, interests, profits,
Govt. or any individual,
associates of individuals (grant or gift or deposit) received by
or on behalf of the
Corporation. This fund is kept in the State Bank of India.
(a) Position of overall receipts and expenditure of South Delhi
Municipal Corporation during 2014-15 to 2016-17.
As per budget estimates for the years 2014-15 to 2017-18,
following is
the overall receipt and expenditure position of South Delhi
Municipal
Corporation:-
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19
Status of overall receipts and expenditure (Rs. in crore)
Year Receipt Expenditure (-)Excess/ (+)Saving
2014-15 3235.06 2637.45 (+) 597.61 (18.47%)
2015-16 3266.12 2905.52 (+) 360.60 (11.04%)
2016-17 3954.96 3324.96 (+) 630.00 (15.93%)
Status of overall receipts and expenditure
As can be seen from the above table, out of total fund available
during the
years 2014-15 to 2016-17 there were savings of Rs. 597.61 crore
(18.47 per
cent), 360.60 crore (11.04 per cent) and 630.00 crore (15.93 per
cent)
respectively in comparison to receipts.
(b) Receipts:-
(i) External Revenue:- The South DMC received assistance from
the
Government of National Capital Territory of Delhi (GNCTD).
Trend of assistance received during 2014-15 to 2016-17 is as
under:-
(Rs. in Crore) Receipts (Actuals)
S. No. Particulars 2014-15 2015-16 2016-17
External Revenue
A Education grant and maintenance of capital
387.47 398.40 460.38
3235.06 3266.12
3954.96
2637.45 2905.52
3324.96
597.61 360.6 630
0
1000
2000
3000
4000
2014-15 2015-16 2016-17
Receipt
Expenditure
(-)Excess/(+)Saving
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20
assets.
B Share of Assigned Taxes & other grants
388.29 398.36 573.50
Total 775.76 796.76 1033.88
Status of External Revenue
As can be seen from above table there was increasing trend of
education
grant and assistance received from GNCTD.
(ii) Internal Revenue:- Internal Revenue of the SDMC consists
of
taxes & rates, rents, fees & fines, loans, other misc.
income. Trend of
internal revenue during the years 2014-15, 2015-16 & 2016-17
is as
under:-
(Rs. in Crore)
Internal Revenue S. No. 2014-15 2015-16 2016-17
1. Taxes & Rates 1599.98 1808.83 2188.72 2. Rent, fees &
fines 84.63 169.42 123.58
3. Loans 0.00 0.00 0.00
4. Other Misc. Income (fee from mobile phone towers,
Development/Deficiency Charges, Road Restoration Charges, Escrow
Account & other misc. Income)
774.69 491.11 608.78
Total 2459.3 2469.36 2921.08
387.47 398.4
460.38
388.29 398.36
573.5
0
100
200
300
400
500
600
700
2014-15 2015-16 2016-17
Education Grant
Share ofAssigned Taxes& other grants
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21
Status of Internal Revenue
As can be seen from above table-
(i) Internal revenue showed increasing trend.
(ii) Other misc. income showed decreasing trend i.e. from (Rs.
774.69
crore) 2014-15 to (Rs. 491.11 crore) 2015-16 and (Rs. 608.78
crore)
2016-17 which is 63.39 per cent and 78.58 per cent respectively
in
comparison to 2014-15.
(c) Expenditure:-
As per Revised Budget Estimates for the years 2015-16, 2016-17
and
2017-18, the details of expenditure of SDMC during the year
2014-15, 2015-16
and 2016-17 are as under.
(Rs. in Crore) Expenditure (Actuals)
S. No. Particulars 2014-15 2015-16 2016-17
1. General Admn. 426.17 469.45 513.44
2. Community Services 56.71 54.60 84.37
3. Education 526.23 584.46 629.76
4. Veterinary services 17.91 14.57 17.48
5. Health 147.98 156.46 166.16
6. Sanitation 515.51 724.65 866.71
1599.98
1808.83
2188.72
84.63 169.42 123.58
0 0 0
774.69
491.11 608.78
0
500
1000
1500
2000
2500
2014-15 2015-16 2016-17
Taxes & Rates
Rent, fees & fine
Loans
Other Misc. Income
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22
7. Engg-Public works & Street
lighting
455.32 506.99 567.59
8. Land & Estate 5.50 1.66 3.32
9. Licensing 1.34 1.64 1.87
10. Horticultural 139.13 137.74 159.33
11. Exclusive Dev. Expenses 176.30 106.01 178.67
12. Loan Repayment 169.34 147.29 136.26
Total 2637.44 2905.52 3324.96
As can be seen from above table expenditure on General
Administration,
Health, Education, Sanitation and Engineering, Public works and
street light
showed increasing trend.
2.4 Budget Estimates & Actuals
The budgeted and actual figures under revenue receipts and
expenditure
for the year 2016-17 are as under:-
(Rs. in Crore) Receipts Expenditure
S. No
Particulars RBE 2016-17
Actuals (2016-17)
Particulars RBE 2016-17
Actuals (2016-17)
1 External Revenue General Admn. 582.57 513.44
A Education grant 441.60 460.38 Community Services
127.54 84.37
B Share of assigned taxes & other grants
556.20 573.50 Education 727.04 629.76
997.80 1033.88
2 Internal Revenue Veterinary Services
33.93 17.48
(i)
Taxes & Rates
2086.28 2188.72 Health 230.84 166.16
(ii) Rent, fees & fines 208.34 123.58 Sanitation 890.62
866.71
(iii) Loans - - Engineering- Public works & Street
lighting
773.75 567.59
(iv) Other Misc. Income (fee from mobile phone towers,
Development/Deficiency Charges, Road Restoration Charges, Escrow
Account & other misc. Income),
563.91 608.78 Land & Estate 7.41 3.32
Licencing 2.53 1.87 Horticultural 225.94 159.33
Exclusive development
334.26 178.67
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23
There was considerable variation between budget estimates and
actuals in
the case of several key parameters.
I. Receipts:- Overall Revenue receipts was on higher side than
the targets
fixed by Rs. 98.63 crore (Rs.3954.96 crore – Rs.3856.33 crore)
which is
(Rs. 2.56 %).
(i) Education grant was more than the target by Rs. 18.78
crore
(4.25%).
(ii) Share of assigned taxes and other grants was also more than
the
targets by Rs. 17.30 crore (3.11%).
(iii) Taxes & Rates were more than the targets by Rs. 102.44
crore
(4.91%).
(iv) Rent, fees & fines were less than the targets by Rs.
84.76 crore
(40.68%).
II. Expenditure:-
(i) Overall expenditure was less than the targets by Rs.747.79
crore
(Rs. 4072.75 crore - Rs. 3324.96 crore) which is 18.36 per
cent.
(ii) There was savings of Rs. 630.00 crore (Rs.3954.96 crore
-
Rs.3324.96 crore) which is 15.93% as against the actual
receipt.
Out of total non-plan expenditure of Rs. 3324.96 crore an
amount
of Rs. 927.63 crore was incurred on different items viz a viz
repair and
maintenance works (Rs.457.39 crore), purchase of medicines,
equipments,
instruments etc. (Rs. 2.60 crore), cost towards electric energy
charges
(Rs.171.36 crore), conservancy sanitation (Rs. 35.74 crore),
repayment of
loan (Rs. 136.26 crore) and other misc. welfare scheme/ projects
(Rs.
124.28 crore) which is 27.90% of total expenditure incurred by
the
corporation and the rest of the expenditure i.e. 72.10% was
incurred on
salary and establishment.
Total 2858.53 2921.08 Loan Repayments 136.32 136.26
Grand Total 3856.33 3954.96 Total 4072.75 3324.96
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24
2.5 Plan Head:-
As per Budget Estimates, the total income and expenditure under
plan
heads of the Corporation during the year 2016-17 is as
under:-
(Rs. in Crore) S. No. Particulars Actual
Income Actual Expenditure Total (+)Saving/
(-) Excess Revenue Capital
1. 1. Education 110.60 36.49 55.58 92.07 (+) 18.53
2. 2. Public Health & Medical including Incinerator
69.75 40.11 25.96 66.07 (+) 3.68
3. 3. Conservancy Services 206.00 207.98 8.53 216.51
(-)10.51
4. 4. Horticulture Development
5.00 0.00 1.96 1.96 (+) 3.04
5. 5. Construction of Community Centre/Barat Ghar
23.00 0.00 18.26 18.26 (+) 5.26
6. 6. Augmentation of Road/ Streets / Local Park/Street light
etc. in each assemble constituency
11.80 0.00 7.16 7.16 (+) 4.64
7. 7. MPS local area development scheme
10.00 0.00 16.79 16.79 (-) 6.79
8. 8. Urban Roads 45.00 0.00 0.00 0.00 (+) 45.00
9. 9. Additional facilities in 44 resettlement colonies
18.00 0.00 0.00 0.00 (+) 18.00
10. 10.
Repair of Dhobi Ghat 1.00 0.00 0.46 0.46 (+) 0.54
11. 11.
JNNURM 16.63 0.00 16.63 16.63 0.00
12. 15 Development of urban villages
9.10 0.00 3.99 3.99 (+) 5.11
13. 16 Common Wealth Games 0 0 11.19 11.19 (-) 11.19
14. Roads and Bridges 0 0 45.24 45.24 (-) 45.24 15. Rural
Development
Board 0 0 20.38 20.38 (-) 20.38
16. Provisions for essential services in unauthorized
colonies
0 0 24.36 24.36 (-) 24.36
17. Development of Regularized unauthorized
0 0 1.94 1.94 (-) 1.94
18. 16 Misc. Schemes 0.00 17.33 0 17.33 (-) 17.33
Total 525.88 301.91 258.43 560.34 (-) 34.46
As can be seen from above table
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25
As against the fund of Rs. 525.88 crore received under plan head
for the
year 2016-17 for execution of plan schemes/works, the
corporation had
incurred Rs. 560.34 crore resulting thereby excess expenditure
of
Rs. 34.46 crore which is 6.55%.
Out of fund of Rs. 525.88 crore an amount of Rs.301.91 crore
incurred
under Revenue scheme and Rs. 258.42 crore incurred under
Capital
scheme.
Total expenditure of Rs. 560.34 crore incurred on plan
schemes/works
includes 10% expenditure on salary & contingencies.
There was savings in Education (Rs. 18.53 crore), Public
Health
(Rs.3.68 crore), construction of Community Centre/Barat Ghar
(Rs.4.74
crore), augmentation of Road/Street/lock park etc. (Rs.4.64
crore) Urban
Roads (Rs.45.00 crore), Development of Urban villages (Rs. 5.11
crore)
etc.
Excess expenditure was incurred more than the funds available
on
conservancy services (Rs.10.51 crore), MPS local area
development
scheme (Rs.6.79 crore) etc.
Expenditure was incurred without funds/provisions on Roads &
Bridges
(Rs 45.24 crore) Rural Development Board (Rs. 20.38), Provisions
for
essential services (Rs. 24.36 crore) common wealth schemes (Rs.
11.19
crore) etc.
2.6 Functions and Audit Comments:-
2.6.1 Non-submission of statement of assets and liabilities.
Statement of assets and liabilities is required to be submitted
to audit
alongwith the Annual Account in terms of Standing Committee
Resolution No.149
dated 05.05.1961. However, the statement of assets and
liabilities were not
submitted alongwith the Annual Accounts of South Delhi Municipal
Corporation
from the year 2012-13 to 2016-17.
2.6.2 Unrealistic Estimate.
As per Regulations 4, 5 and 8 of Budget Estimate Regulations,
1958
accounts section of South DMC prepares estimates of income and
expenditure on
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26
behalf of the Commissioner for onward submission to the
Standing
Committee/Corporation. The Standing Committee considers the
estimates and
frames budget estimates. Thereafter, the Commissioner gets the
estimates
printed not later than 15th day of January and forwards a
printed copy to each
member of the Corporation. The Corporation considers the budget
estimate and
concludes the general discussion on budget estimates before 10th
day of
February.
During the year 2016-17, position of target fixed by Corporation
for
income and achievement against thereof is as under:-
Income
(Rs. in crore)
RBE 2016-17 Actual Excess % age of excess
2858.53 2921.08 62.55 2.19
The estimated and actual expenditure for the year 2016-17 is as
under:-
Expenditure
(Rs. in crore)
RBE 2016-17 Actual Saving % age of Saving
3954.96 3324.96 630.00 15.93
Analysis of above data showed that neither the estimates of
income nor
the expenditure were done on realistic data.
As regards expenditure there was saving of Rs. 630.00 crore
which was
due to delay in initiation/finalization/implementation of
schemes.
During audit of various units it was pointed out through Audit
Inspection
Reports either the departments were incurring expenditure in
excess of
allocation without obtaining additional grant or the expenditure
was incurred
less than the budget allocation. The budget was also not
surrendered at the time
of revised budget estimate in the month of December for its
effective utilization.
2.6.3 Non reconciliation of income statements.
The income collected at zones and consolidated at zonal treasury
is taken
by the bank to deposit in the Commissioner’s General Account and
the bank sent
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27
income statements to accounts headquarter. These income
statements have
neither been reconciled at zonal level nor at Headquarter. This
lapse may result
in short deposit or misappropriation of funds.
2.6.4 Non-adjustment of Advances.
Advances are required to be adjusted within one month from the
date of
drawal but the advances amounting to Rs. 23.99 crore paid to
employees and
outside agencies were outstanding as on 31 March 2017. Due to
non adjustment
of above advances expenditure incurred therefrom could not be
verified.
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28
2.7 Non-reconciliation of funds released by pension cell for
disbursement to pensioners of unified MCD/SDMC – Rs.366.16
Crore.
The scheme of disbursement of pension/family pension, payment
of
Death-Cum-Retirement Gratuity etc. to municipal employees
through various
branches of Punjab National Bank in Delhi was introduced in MCD
in the year
1987-88 for payment of pensionery benefits. The disbursement
of
pension/family pension to the pensioners who were/are residing
outside Delhi
was/is being made through various branches of UCO bank. Every
month large
sum was/is being deposited with the banks by the pension cell of
erstwhile
Municipal Corporation of Delhi for payment of pensionery
benefits. It was
observed that after trifurcation, Pension Cell, SDMC opened new
bank accounts
in Punjab National Bank, Chandni Chowk and UCO bank, Chawri
Bazar, Delhi.
It has also been pointed out vide para No.2.5 of Audit Report,
South Delhi
Municipal Corporation for the year 2015-16 that pension cell
released fund
amounting to Rs.266.17 crore during the period 2013-14 to
2015-16 to the
Punjab National Bank & UCO Bank for disbursement of pension
to 5,387
pensioners but the department did not carry out any
reconciliation relating to
these funds.
It was further observed that an amount of Rs.99,98,98,200/- was
released
to the Punjab Nation Bank and UCO Bank for disbursement to the
pensioners
during 2016-17.
As the banks disburse pension through their automated core
banking
system, the generation and submission of scrolls within a short
time after the
disbursement can be ensured. This will in turn ensure that the
expenditure
incurred on account of pension in any year will get accounted
for in that year
itself as the Govt. accounts are kept open for booking of
expenditure for some
time after the closure of the year. This will also ensure that
the pension
No reconciliation of funds released during 2013-14 to 2016-17
by
Pension Cell to Punjab National Bank & UCO Bank for
disbursement to pensioners was done.
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29
department of SDMC can check the scrolls timely for any errors
or omission and
commission, including under and overpayments.
However, it was noticed that no such efforts were made by the
pension cell
to carry out any verification/reconciliation to ascertain as to
whether the
remittance made by them tallied with their receipts/accounts and
the payments
were made to the bonafide pensioners. In the absence of
reconciliation,
correctness of debits made to the deposit account of SDMC on
account of payment
made to the pensioners amounting to Rs.366,15,98,200/- during
the years
2013-14 to 2016-17 and surplus funds lying with the bank cannot
be ascertained
(as detailed below).
S. No.
Year Amount released to (Rs.)
SDMC Unified MCD
Punjab National Bank A/c No.
0113002107358647
UCO Bank A/C No. 00700210001318
PNB A/c No. 0113002103049857
UCO A/c No. 200005679
1. 2013-14
8,10,00,000 90,00,000 - -
2. 2014-15
19,55,00,000 2,90,00,000 - 350,00,000
3. 2015-16
46,53,00,000 13,09,00,000 171,60,00,000 -
4. 2016-17 81,33,98,200 18,65,00,000 - -
Total 155,51,98,200 35,54,00,000 171,60,00,000 350,00,000
G. Total (155,51,98,200 + 35,54,00,000 + 171,60,00,000 +
3,50,00,000) 366,15,98,200
The irregularity was brought to the notice of the Deputy
Controller of
Accounts (Final Payments), SDMC in December, 2018. Reasons for
non-
reconciliation of funds released to banks, lapses at each level
may be elucidated
to audit and action taken be reported
MCA/RS/DP-37(S)/16-17
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30
CHAPTER-3
PROPERTY TAX
3.1.1 Introduction.
Property tax is one of the taxes levied by the Municipal
Corporation of
Delhi under section 113 of DMC Act, 1957 in order to meet its
civic obligations. It
is the main source of revenue of the Municipal Corporation of
Delhi. Property tax
comes from Government and private properties. This tax is
leviable on the lands
& buildings in the limits of the Delhi Municipal
Corporations.
Since 01.04.2004 Unit Area Method (UAM) for property tax has
been
adopted. Under this system, unit area value per sqm. of the
covered space for all
categories grouped in eight different categories has been fixed
for calculation of
property tax. The property tax for a particular property is a
fixed percentage of
amount of annual value arrived at by multiplying unit area value
assigned to the
colony/locality by covered area of the property and the
multiplication factors of
occupancy, structure, use etc. Minimum of 6% and a maximum of
20% rate of tax
has been provided. Commercial properties have been given a use
factor of 4 as
against 1 for residential properties. Relief of 30% has been
given to properties
owned by senior citizens or women.
3.1.2 Relevant Acts/Provisions.
(1) As per section 115A of Delhi Municipal Corporation Act, 1957
every
building and every vacant land shall be assessed as a single
unit.
(2) As per Bye-law 7 of Delhi Municipal Corporation (Property
Taxes) Bye-
laws 2004 a register is required to be maintained showing the
vacant
land and buildings exempted from the property tax.
(3) As per section 123A (1&3) the Commissioner shall by
public notice
require the owner and the occupier of such land and building to
furnish
a return not being less than 30 days from the date of
publication of such
notice. Further, the Commissioner or any person subordinate to
him
and duly authorized by him may make any inspection or survey
and
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31
take measurement of such land or building with a view to
verifying the
statement made in the return.
(4) As per section 124, a Municipal Assessment Book is required
to be
maintained and made available for inspection.
(5) As per section 125, a register is required to be maintained
wherein the
property identification code numbers shall be recorded in
respect of
each such premises in the Municipal area.
3.1.3 Duties and Responsibilities
Under Section 123D, a penalty not exceeding 30% of the
difference in tax
arising from non-filing of return in time, giving wrong
information or willful
suppression of fact can be imposed. Under Section 152A, the
owner may be
punishable in the case where the amount of tax sought to be
evaded exceeds Rs.
Ten lakhs and Under Section 156A such sum together with all cost
and penalty
may be recovered under a warrant by distress and sale of the
movable property
or the attachment and sale of the immovable property of the
defaulter.
Jt A&C, 2%
Dy A&C, 10%
AA&C 25%
Jt A&C, 1%
Dy A&C, 25%
AA&C, 100%
Z1/AZI/ Billing clerk to collect the data for each property from
property file, D&C register, property tax guide and fill the
property register forms, sort it, make envelopes of 100 property
register forms each in a sequence and hand it over to AA&C.
AA&C to incorporate corrections in red ink, Dy. A&C in
black and Jt. A&C in green and sign the abstracts.
Jt.A&C to hand over the envelopes to the department’s IT
coordinator who in turn would transfer the envelopes to the
data entry company.
Data entry operator to enter the data in excel sheet and hand
over the envelopes and excel spread sheet and printout of data
entry to deptt. IT coordinator
Data entry operator to check the
signatures in abstracts
Percentage of errors to be recorded
by all in the abstract
Jt. A&C if satisfied, the data entry operator give final
printout to the department/ coordinator
IT department to run error reports and assign UPIC (Unique
Property Identification Code)& MCD to import the data base into
property database.
Test Check
Test Check
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32
3.1.4 Financial Profile
Property tax is the main source of revenue of South DMC. It
comes from
Government and Private Properties. It contributes 35.72% of
total municipal
revenue.
(a) Year wise details of property tax collected.
S. No.
Name of Zone
Number of tax payers Collection of property tax (Rs in
Crore)
2014-15 2015-16 2016-17 2014-15 2015-16 2016-17
1. South 76940 82370 88401 107.52 114.87 143.59
2. Central 98554 103786 111417 130.68 148.76 180.77
3. West 128466 137715 146499 65.24 76.92 95.44
4. Najafgarh 77166 82440 92959 38.71 47.34 68.12 5. HQ (GRP
Section and Circle)
3014 3840 4956 202.85 262.68 413.65
Total 384140 410151 444232 545.00 650.57 901.57
Transfer duty - - - 624 577.93 511.00
Gross total - - - 1169.00 1228.50 1412.57
As can be seen from above table that;
Number of tax payers increased by 60092 (444232-384140)
during
2014-15 to 2016-17 at the rate of 6.77% to 8.31% with respect to
the
previous years.
Property tax was also increased by Rs. 243.57 crore (20.83%)
during
2014-15 to 2016-17.
Collection of property tax from Government properties such as
Public
Works Department offices including hospitals, schools,
Government
institutions, Delhi Development Authority, Delhi Government
and
Union Government Buildings was increased by Rs.210.80 crore
(104%) during 2014-15 to 2016-17.
Property tax amounting to Rs. 1412.57 crore collected during
2016-17
was 35.72% of total receipt (Rs. 3954.96 crore excluding
loans).
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33
(b) Year wise details of Expenditure:-
(Rs. in Crore) Year (RBE) Expenditure Total (+) Savings
Establishment salary
2014-15 58.92 25.06 15.56 40.62 18.30 (31.06%) 2015-16 54.08
24.36 16.62 40.98 13.10 (24.22%) 2016-17 47.74 21.48 17.09 38.57
9.17 (19.21%)
As can be seen from above table
Less expenditure was incurred on salaries and others than the
revised
budget estimates ranging from 19.21 % to 31.06% during the years
2014-
15 to 2016-17.
An amount of Rs. 15.56 crore (38.31 %), Rs. 16.62 crore (40.56%)
and
Rs.17.09 crore (44.31%) was incurred on salary during the years
2014-15
to 2016-17.
Less expenditure was incurred due to non filling up of vacant
posts.
Savings should have been surrendered at the time of preparation
of
revised budget estimates.
3.1.5 Human Resources.
S. No.
Name of Post Sanctioned Working Strength
Vacant
1. Addl. Cm. (Rev.) 1 1 0
2. A & C 1 1 0 3. Jt. A & C 5 5 0 4. Dy. A & C 10 6
4 5. A A & C 21 14 7 6. Superintendent/Warrant Officer 4 17
(+)13 7. Head Clerk/ZI 54 39 15 8. UDC/ Asstt. Zonal Inspector 126
35 91 9. LDC 96 69 27
10. Notice Server 26 25 01
Shortage of staff
As can be seen from above table, there is shortage of Deputy
A&C (4),
AA&C (7), Head Clerk/Zonal Inspector (15), UDC (91), LDC
(27). ZI& AZI are
required to maintain office record, collect property tax and
enter property tax
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34
paid by the tax payer in Demand & Collection Register,
scrutinized property tax
returns, inspect properties and issue notices.
Efforts should be made to fill up the vacant post.
3.1.6 Incomplete implementation of Unique Property
Identification Code
(UPIC).
Assessment and Collection department, South DMC awarded work to
M/s
Delhi Integrated Multimodal Transit System (DIMTS) on 07.12.2015
for printing
of UPIC Cards @Rs.15/- per card. Initially the work was awarded
for printing of
3,73,934 UPIC Cards which was extendable for allotment/printing
of UPIC to the
subsequent newly added tax payers on year to year basis.
The department identified 5,03,201 properties on the basis of
online
records for issue of UPIC Cards out of which 3,14,764 cards have
been printed
and issued by the agency to the property owners. the agency did
not conduct
survey of the properties falling under the jurisdiction of SDMC
rather the agency
printed UPIC Cards on the basis of data provided by the
department. The work
has not been completed and the contract has been extended upto
31.08.2019 as
1,88,437 UPIC Cards (37%) are still to be printed and issued to
the owners.
Assessment & Collection department released on amount of
Rs.47,21,460
(3,14,764 × Rs.15) to the agency.
Audit observed that
The Assessment & Collection department should have completed
this job
immediately after the implementation of the Unit Area System of
property
tax, but this was started in December 2015 i.e. after a lapse of
11 years of
implementation of Unit Area System (01.04.2004). Non fixing of
UPIC
numbers in time not only resulted in not bringing all properties
under
property tax net but also deprived the person from making
correspondence with the corporation/paying property tax.
Although the work was awarded in Dec. 2015, but it was still in
progress
at the time of audit. The department did not take any action
against the
agency and granted extension of the contract upto
31.08.2019.
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35
Efforts should be made to bring all properties situated in area
falling
under South Delhi Municipal Corporation under property tax net
by issuing UPIC
cards.
3.1.7 Audit Methodology
The audit of property tax collected by the Assessment &
Collection branch
of South Delhi Municipal Corporation started with an entry
conference held at the
start of the audit with Jt. Assessor & Collector, Dy.
Assessor & Collector of the
zones & headquarter. The audit of the records (assessment
files, self-assessment
property forms, G-8 receipts, demand & collection register
etc.) of Assessment &
Collection branch of all zones for the year 2016-17 was
conducted during 2017-
18 through examination of a sample of records of the zonal
offices of Assessment
& Collection branch, information collected through audit
memos and
questionnaires. After holding exit conference Audit Inspection
Reports were
issued to the concerned Joint Assessor & Collector/Deputy
Assessor & Collector
of zones & HQ for comments on the audit observations.
5978 paras of 405 Audit Inspection Reports for the period upto
2016-17
are outstanding for want of replies from the department.
3.1.8 Systemic & Procedural Irregularities
The Assessment & Collection branch has not been following
the provisions
of sections 123A (3), 124, 125 of DMC Act, 1957- & Bye-law 7
of DMC (Property
taxes) Bye-laws due to which exact position of assessment of
properties &
collection of municipal revenue cannot be ascertained.
During the course of audit following irregularities were
noticed;
application of wrong use factor.
area of the property short assessed.
application of wrong unit area value.
application of wrong rate of tax.
improper maintenance of demand &collection register.
non-review of property tax return.
-
36
non-maintenance of register showing details of exempted
properties.
Survey of properties not conducted.
The Assessment & Collection department, SDMC has not been
scrutinizing
the self-assessment property tax returns (online & offline)
in accordance with the
laid out rules so as to check the correctness of the
self-assessment done by the tax
payers. Non-scrutiny of self-assessment forms cause loss of
revenue to the
Corporation.
Survey of the properties was not conducted after the
implementation of
unit area method since 2004. In the absence of survey actual
number of
properties, the number of assesses paying the property tax and
the number of
assesses who are not paying the property tax cannot be
ascertained in audit.
Important irregularities have been included in the following
audit paras of
this Audit Report.
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37
3.2 Outstanding arrears of property tax - Rs.1177.47 crore.
A reference is invited to Audit Paras 2.1.1 of Audit Report
2013-14, 2.1.1 of
Audit Report 2014-15 and 3.2 of Audit Report 2015-16 pertaining
to South Delhi
Municipal Corporation vide which position of outstanding arrears
of property tax
pertaining to the period prior to 01.04.2004 was
highlighted.
Again, it was observed that as per information provided by
Assessment &
Collection, (HQ) SDMC, an amount of Rs.1177.47 crore pertaining
to the period
prior to 01.04.2004 was lying outstanding as on 31.03.2018
against 74,156
number of properties falling under the jurisdiction of four
zones and headquarter
(Circles & Government Railway Property cell (GRP), SDMC.
South Delhi Municipal Corporation (HQ- Circles & GRP cell)
is required to
recover the outstanding dues of property tax from the Government
properties as
well as private properties viz malls, farm houses, cinema halls
etc. falling under
its jurisdiction. Assessment & Collection branches of all
four zones are also
required to take effective steps to recover the outstanding dues
from the owners
of the properties falling under the jurisdiction of zones. But
no efforts were taken
by both A&C, (HQ) & A&C branches of zones of SDMC to
recover the heavy
outstanding dues of property tax.
Year wise position of outstanding arrears of property tax is
given below:-
(Rs. in Crore)
S. No.
Name of Zone Number of properties
Arrears of property tax as on 31.03.16
(Rs.)
Number of Properties
Arrears of Property tax as on
31.03.2017
(Rs.)
No. of properties
Arrears of Property tax as on
31.03.2018
(Rs.)
1 Central Zone 18,588 237.36 15642 195.25 13658 186.73
2 South Zone 15,464 265.70 8400 175.03 5172 163.47
3 West Zone 57,057 260.94 57020 242.38 45535 183.30
4 (i) Najafgarh Zone
(Dwarka)
(ii) Najafgarh Zone
(Kakrola)
7,513
5,190
96.49
28.80
5658
5172
70.21
28.60
4251
4991
53.12
26.54
5 (i) SDMC
(HQ-Circles)
638
64.11
560
56.75
545
50.86
The Assessment & Collection department of all four zones of
SDMC is yet to recover dues amounting to Rs. 1177.47 crore towards
property tax.
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38
(ii) SDMC
(HQ-GRP Cell)
05 537.78 4 513.45 4
513.45
1,04,455 1491.18 92456 1281.67 74156 1177.47
As can be seen from table, the rate of recovery of outstanding
arrears of
property tax prior to 01.04.2004 is very slow-
(i) During 2016-17 A&C department, SDMC recovered Rs.209.51
crore
(Rs.1491.18 crore – Rs.1281.67 crore) from 11,999 properties
(1,04,455 –
92,456) which is 14% of the arrears of property tax of
Rs.1491.18 crore
lying outstanding as on 31.03.2016.
(ii) During 2017-18 A&C department, SDMC recovered Rs.104.20
crore
(Rs.1281.67 crore – Rs.1177.47 crore) from 18,300 properties
(92,456 –
74,156) which is 8.13% of the arrears of property tax of
Rs.1281.67 crore
lying outstanding as on 31.03.2017. Thus the outstanding arrears
have
gone down marginally only 8.13% as compared to 14% of the
year
2016-17.
(iii) A concrete plan of action needs to be put in place to
recover the
outstanding dues from the owners of the properties so that
financial
position of SDMC can be strengthened to enable it to provide
better
facilities to the citizens of Delhi. Reasons for not recovering
the
outstanding dues for such a long period of 14 years may be
elucidated,
lapses at each level and action taken be reported.
MCA/RS/DP-22(S)/16-17
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39
3.3 Short recovery/deposit of property tax due to wrong
application of
rates - Rs.4.50 crore.
Bye law 5 of the Delhi Municipal Corporation (Property Taxes)
Bye-laws -
2004 provides that any vacant land or building shall be deemed
to be used for
agricultural purposes, if such land or building is situated in
the agricultural or
rural zone in accordance with the provisions of the master plan
for Delhi in force
and if
such land is used in accordance with the science or practice
of
farming, including cultivation of the soil for the growing of
crops and the
rearing of animals to provide food, wool and other agricultural
products or
such building is used solely or partly for the storage of crops
or food, wool
or other agricultural products, or for sheltering animals, as
aforesaid.
Provided that no vacant land which is appurtenant to a farmhouse
shall be
construed as agricultural land, and such land shall be liable to
property tax.
Further, Assessment & Collection department of erstwhile MCD
vide letter
No. Tax/SR/GP/2005/ 457 dated 19.02.2005 categorized farm houses
& vacant
land as under:-
MCD zone in which farm house is located
Category of farm house
Category of vacant land
South & Central Zones
West & Najafgarh Zones, Civil Lines, Shahdara (North),
Shahdara
(South),
Narela Zone & Rohini Zone
C
D
E
F
G
H
A review of assessment files & self-assessment property tax
forms of four
farm houses (Motels) viz. ‘The Umrao’, ‘four Points’, ‘Mapple
Emerald’ & ‘Motel’ at
village Samalkha, New Delhi, South Delhi Municipal Corporation
disclosed that
the owners of the farm houses constructed buildings on the land
during 2007 to
2013-14. The assessees have been paying property tax for the
covered area and
vacant land area by taking wrong unit area values of the
properties i.e. Rs.100 per
Property tax amounting to Rs.4.50 crore was short deposited due
to wrong application of rates.
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40
Sqm. instead of applicable rate of Rs.320 per sqm. for the
constructed area and
Rs.200 per sqm. for vacant land area.
In these cases there is a conversion of farm house to motel
(commercial
property) which is solely being used for commercial purpose
including the vacant
land portion. Since this property is a farm house originally and
as per the
classification category ‘D’ for the farm houses and ‘G’ for the
vacant land was/is to
be assigned as per assessment & collection department’s
letter dated 19.02.2005,
but this was not done. This resulted in short recovery/deposit
of property tax
amounting to Rs.4,49,99,422/- due to wrong application of rates
as detailed in
Annexure ‘C’.
The irregularity was brought to the notice of the Joint Assessor
&
Collector, A&C department, SDMC in January, 2017. The Asstt.
Assessor &
Collector/HQ, SDMC stated (20.07.2017) that motel was
constructed and is
running on farm house land. Motel is not a farm house. It is
like any other
commercial property. Redevelopment of farm houses into motels
and their
categorization was considered in the Corporation at the highest
executive level
and it was decided that after redevelopment of farm houses as
motel, it is no
more a farm house and the categorization as farm house shall no
more exist and
such building shall be valued as any other commercial property
in rural area.
The reply furnished by the department is not acceptable as there
is a
conversion of a farm house to a commercial property (Motel).
Motel is built on
farm house land and hence is to be categorized under the unit
area value for farm
houses. In similar situation Assessment & Collection
department, North Delhi
Municipal Corporation has adopted a policy for uniform treatment
and
transparency for the purpose of property tax that a motel in the
jurisdiction for
NDMC shall be treated as a hotel (i.e. hotel below three stars).
It is recommended
that necessary action may be taken to make a transparent policy
for the
assessment of motels.
MCA/RS/DP-7(S)/16-17
-
41
3.4 Short deposit of vacant land tax and property tax due to
wrong
application of rates – Rs.3.37 crore.
A review of assessment file and self-assessment property tax
forms of
property – “Garden of Five Senses” situated at Saidul Ajaib
village, Saket, New
Delhi disclosed that the Garden of Five Senses is a park spread
over 20 acres
(81723 sqm.) of land near Mehrauli Heritage area and developed
by Delhi
Tourism and Transportation Development Corporation, Delhi. It
includes forest
area of 22233 sq. m. It has been designed to the imagery
suggested by the name
Garden of Five Senses, Colour, fragrances, texture and form all
come together in
an evocative bouquet that awakens the mind to the gift of sight,
sound, touch,
smell and taste. Besides, commercial activities like social
functions, shooting of
feature film, serials etc., festival by parties etc. are also
running in the Garden of
Five Senses.
It was observed that the assessee, DTTDC has been paying vacant
land tax
and property tax of covered area by taking less vacant land area
of 40,483.27
sqm. in place of 57,146 sqm. unit area value of Rs 100 per sqm.
in place of
applicable rate of Rs 230 per sqm. and use factor `1’ instead of
`4’ for vacant land
since 2004-05. This has resulted in short deposit of vacant land
tax and property
tax due to wrong application of rates amounting of Rs
3,36,53,402 as detailed in
Annexure ‘D’.
The concerned Inspector of Assessment & Collection deptt.
(HQ), SDMC
was required to review the self-assessment property tax forms
vide which the
assessees deposited the property tax to ensure that the
assessees have applied
the rates accurately, but these were not reviewed by the
concerned Inspector.
However, Jt. Assessor & Collector vide letter dated
11.2.2016 pointed out
discrepancies to the assessee in the self-assessment property
tax forms filed for
the year 2010-11 to 2015-16.
On application of wrong category.
Assessment is required under unit area method.
Vacant land tax and property tax amounting to Rs.3.37 crore was
short deposited due to wrong application of rates.
-
42
The assessee was requested to file correct PTR with the payment
of due
tax, failing which the assessment will be finalized on the basis
of information
available. Neither the assessee took action on the discrepancies
pointed out nor
the Assessment & Collection Department, SDMC took action
against the assessee.
The irregularity was brought to the notice of Jt. Assessor &
Collector
(GRP), SDMC in Nov. 2016. The Asstt. Assessor & Collector,
HQ stated (28.7.2017)
that advisories have been issued to the assessee in May 2016,
Jan 2017, May 2017
and July 2017, but no response has been received from the
assessee. The
Assessment & Collection Department (HQ), SDMC is suggested
to make serious
efforts to recover the dues from the assessee.
MCA/RS/DP-3(S)/16-17
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43
3.5 Non-recovery of dues against dishonoured cheques - Rs. 2.83
crore.
As per instructions issued from time to time from the office of
the Chief
Accountant, following procedure is to be followed for the
accountal and
re-adjustment of dishonoured cheques.
When a dishonoured cheque is returned by the bank, the
reconciliation
clerk in the Accounts department was to trace from the dates on
reverse of
cheques, the daily return received from the department and
take
necessary action for passing reverse entries of original credits
to revenue.
He should return the cheque to the department concerned for
claiming
amount from the parties.
The amount of dishonored cheques would immediately be debited in
the
cash book to the head of account against which the credit was
originally
given. The zonal A.C.As. (now Dy. Controller of Accounts) would
maintain
chronologically a register of dishonoured cheques received from
A.O. (HQ)
and also watch their clearance.
The department concerned shall ensure quick recovery of the dues
from
the defaulting parties alongwith penalty wherever it is
leviable.
The Zonal D.C.As. shall ensure that the registers for watching
adjustment
of dishonoured cheques are invariably maintained in their
respective
offices. They should also furnish a certificate regarding minus
entry in
demand and collection registers or recovery action from the
department
concerned of the zones.
The Assessment & Collection Branch of four Zones, South
Delhi Municipal
Corporation was required to take action as per instructions
mentioned above. A
review of Dishonoured Cheque registers for the years 2015-16
& 2016-17
maintained in Assessment & Collection (A&C) branch of
Central Zone, Najafgarh
Zone, West Zone & South Zone disclosed that the A & C
department neither took
write back action nor did it recover the dues amounting to
Rs.2,83,13,446/-
against 1544 dishonoured cheques despite lapse of three
years.
The Assessment & Collection branch, Central Zone, Najafgarh
Zone, West Zone & South Zone, South DMC is yet to recover dues
amounting to Rs.2.83 crore against 1544 dishonoured cheques.
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44
Zone wise position of dishonoured cheques is as under:-
Sl. No.
Name of the Zone
Number of dishonoured
cheques
Amount involved
(Rs.)
Number of major
defaulters
Amount involved
(Rs.) 1 Central Zone 655 1,39,25,141 24 64,31,250 2 Najafgarh
Zone 420 62,12,764 19 23,58,521 3 West Zone 215 44,81,279 19
14,53,316 4 South Zone 254 36,94,262 7 8,92,993
Total 1544 2,83,13,446 69 1,11,36,080
Further, out of 1544 cases, there were 69 major defaulters, who
had
tendered cheques for more than Rs.50,000/- to Rs.1,00,000/-
amounting to
Rs.1,11,36,080/- (as detailed in Annexure ‘E’) which were
dishonoured.
The irregularity was brought to the notice of the Assessment
& Collection
Branch of Central Zone, Najafgarh Zone, West Zone & South
Zone, South Delhi
Municipal Corporation in August, 2017, October, 2017, February,
2018 &
May, 2018. Asstt. Assessor & Collector, Central Zone stated
(15.01.2018) that
necessary action /entries have been made in the relevant
register and efforts are
on to recover property tax dues from defaulter
assessees/property owners.
The department neither furnished any details of cases where
action/entries were made in D&C register nor supply any
documents showing
details of efforts made to recover dues to Audit.
MCA/RS/DP-05(S)/16-17 MCA/RS/DP-09(S)/16-17
MCA/RS/DP-10(S)/16-17 MCA/RS/DP-28(S)/16-17
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45
3.6 Non-deposit/Non-recovery of Property Tax – Rs. 1.37
crore.
A review of Assessment file of property – F-24, Pushpanjali
Farms, Dwarka
Link Road Bijwasan disclosed that the farm house has total land
area of 11000
sqm. and built up area of 113 sqm. at Ground Floor.
The assessee M/s Elevation Holdings Pvt. Ltd. did not pay
property tax for
the year 2004-05 to 2009-10 and paid property tax of
Rs.3,21,121/- for the year
2010-11. Till then the assessee has not been paying property
tax. The Assessment
& Collection department (HQ), SDMC issued notice under
Section 123 D of the
DMC (Amendment) Act, 2003 on 16.11.2015, 18.01.2016 and
03.11.2016
requesting the assessee to submit the documents failing which
suo-motu
assessment of property will be finalized on the basis of
information available in
the assessment file.
During the course of audit of Jt. Assessor & Collector (HQ),
SDMC for the
year 2015-16, non-recovery of property tax was pointed out in
January, 2017
through Audit Inspection Report. The department issued notice
under Section
123 D of DMC Amendment Act. 2003 to the assessee on 14.02.2017.
Neither the
assessee appeared in Assessment & Collection’s office nor
did any
correspondence with the department.
Jt. Assessor & Collector (HQ), SDMC assessed (02.02.2018)
the property
suo-motu on the basis of information/documents available with
department
alongwith information gathered from the site.
Annual value of covered area – Rs.16,00,000/- w.e.f.
01.04.2004
Annual value of vacant land – Rs.24,00,000/- w.e.f.
01.04.2005
Accordingly the demand letter for payment of property tax
amounting to
Rs.1,36,77,487/- was issued to the assessee on 05.02.2018
followed by reminder
issued on 05.06.2018. Show cause notice was also issued to the
assessee on
18.12.2018 directing him to make the payment within seven days
of receipt of
Property tax amounting to Rs.1.37 crore was not
deposited/recovered despite issue of show cause notice to the
assessee.
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46
this notice, failing which necessary action will be taken and
the amount will be
recovered by way of attachment & sale of immovable and
movable property etc.
The assessee has not deposited the said amount. This resulted in
non-recovery of
property tax amounting to Rs.1,36,77,487/- including interest
(as detailed in
Annexure ‘F’). Vigorous action may be taken against the assessee
to recover the
property tax.
MCA/RS/DP-32(S)/16-17
-
47
3.7 Short deposit of Property tax due to wrong application of
rates -
Rs.1.06 crore.
Bye law 5 of the Delhi Municipal Corporation (Property Taxes)
Bye-laws -
2004 provides that any vacant land or building shall be deemed
to be used for
agricultural purposes, if such land or building is situated in
the agricultural or
rural zone in accordance with the provisions of the master plan
for Delhi in force
and if
such land is used in accordance with the science or practice
of
farming, including cultivation of the soil for the growing of
crops and the
rearing of animals to provide food, wool and other agricultural
products or
such building is used solely or partly for the storage of crops
or food, wool
or other agricultural products, or for sheltering animals, as
aforesaid.
Provided that no vacant land which is appurtenant to a farmhouse
shall be
construed as agricultural land, and such land shall be liable to
property tax.
Further, Assessment & Collection department of erstwhile MCD
vide letter
No. Tax/SR/GP/2005/ 457 dated 19.02.2005 categorized farm houses
& vacant
land as under:-
MCD zone in which farm house is located
Category of farm house
Category of vacant land
South & Central Zones
West & Najafgarh Zones, Civil Lines, Shahdara (North),
Shahdara
(South),
Narela Zone & Rohini Zone
C
D
E
F
G
H
A review of assessment file & self-assessment property tax
forms of ‘Grand
Meadows’ at village Samalkha, New Delhi disclosed that the
property is built on a
farm land. The Total area of the land is 15066 sqm.. The farm
house has a total
covered area 3990 sqm. (upto 2014-15) and 4993 sqm.
(2015-16).
The assessee has been paying property tax for the covered area
and vacant
land by taking the unit area value Rs.100/sqm. instead of
applicable rate of
Property tax amounting to Rs.1.06 crore was deposited short due
to wrong application of rates.
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48
Rs.320/sqm. for the constructed portion and Rs.200/sqm. for
vacant land for the
period 2005-06 to 2017-18.
The Assessing Officer vide assessment orders dated 19.01.2015
and
16.03.2016 assessed the properties under category ‘H’ allotted
for rural areas
whose unit area value is Rs.100/- per sqm. In this case there is
conversion of farm
house to a commercial property i.e. motel which is solely being
utilized for
commercial purpose including the vacant land portion. Since the
property is a
farm house originally and as per the classification category ‘C’
for the farm house
and ‘F’ for the vacant land is to be assigned as per assessment
& collection
department’s letter No. TAX/SR/GP/2005/457 dated 19.02.2005.
This resulted in
short deposit of property tax amounting to Rs.1,06,60,478/- (as
detailed in
Annexure ’G’). The Assessment & Collection department (HQ)
did not take any
action to recover the property tax from the assessee.
The irregularity was brought to the notice of the Assessment
& Collection
department, SDMC in January, 2017. Assessment & Collection
department (HQ),
SDMC submitted (20.07.2017) that after redevelopment of farm
house as motel, it
is no more a farm house on redevelopment into motel and the
categorization as
farm house shall no more exists and such building shall be
valued as any other
commercial property in rural area.
The reply of the department is not acceptable as there is
conversion of
farm house to a commercial property (motel). As such question of
reclassifying it
as agricultural land is not acceptable. Further in a similar
situation A&C
department, NDMC has adopted a policy for uniform treatment and
transparency
for the purpose of property tax that a motel in the jurisdiction
for NDMC shall be
treated as a hotel (i.e. hotel below three star), it is
recommended that necessary
action may be taken to make a transparent policy for the
assessment of motels.
MCA/RS/DP-30(S)/16-17
-
49
3.8 Short deposit of property tax due to wrong application of
Unit Area
Value – Rs.81.57 lakh.
A review of assessment file & self-assessment property tax
forms of Motel
‘Dusit Devrana’ situated at village Samalkha, New Delhi
disclosed that this motel
was built on farm land measuring 15175 sqm.. The Assessing
Officer, Assessment
& Collection department, SDMC finalized the assessment of
property on
28.03.2013 under Unit Area Method as under:-
S. No.
Floor Covered Area
Category rate (Rs.)
per sqm.
Structure Factor
Age Factor
Use Factor
Annual Value
(Rs.)
1. Bas./GF (F. House)
269 320 1 0.8 1 68,864 p.a. w.e.f. 1.4.2004
2. V Land 15066.7 200 0.3 1 1 9,04,002 3. - - - - - Total
AV 9,72,866 p.a. w.e.f. 1.4.2005
4. Bas./GF/FF (Motel)
3728 100 1 1 2 7,45,600
5. V Land (Motel)
12117.86 100 0.3 1 1 3,63,536
Total AV 11,09,136 p.a. w.e.f. 29.3.2010 (dt. Of com. Cert.
applied on)
The Assessing Officer, SDMC issued notice on 01.12.2015 after
scrutiny of
Property Tax Return (PTR) for the year 2015-16. The
representative of the
assessee attended the office on 19.01.2016 and requested to
decide the
assessment of addition carried out in the property under unit
area method. The
Assessing Officer, SDMC fixed the Annual Value of the property
on 17.03.2016
under Unit Area Method.
S. No.
Floor Covered Area
(Sqm.)
Category rate (Rs.)
per sqm.
SF AF UF OF Annual Value (Rs.)
1. Bas/GF/ FF (old)
3728 100 1 1 4 1 14,91,200
2. Addition 1222 100 1 1 4 1 4,88,800
3. V land