New Delhi: In a startling revelation, official auditor CAG on Friday said the government has a huge tax demand of Rs 1.96 lakh crore, of which 84 percent cannot be realised due to various reasons like death, insolvency and liquidation of company.

"Out of Rs 1.96 lakh crore, the arrear demand reported by DIT (Department of Income Tax) Recovery, a major portion, i.e, 84.3 percent amounting to Rs 1.65 lakh crore was categorized as unrealisable demand by the Department," said the report tabled in the Parliament.

According to a report of the Comptroller and Auditor General (CAG) of India, even the huge tax arrears pending against Pune-based stud farm owner Hassan Ali Khan, his associate Chandrika Tapuriah, and late stock broker Harshad Mehta cannot be realised.

The three account for about 75 percent of the total tax demands of Rs 1.16 lakh crore pending against individuals.

"Hassan Ali Khan (Rs 50,345.73 crore), Chandrika Tapuriah (Rs 20,540.83 crore) and Harshad Mehta (Rs 15,944.38 crore) accounted for 74.57 per cent of the total tax demands pending against individuals," the CAG report said.

It pointed out that 12 individuals account for 90 percent of the pending tax demand of Rs 1.16 lakh crore in individual cases. Of these, Hassan Ali account for 43 percent.

The report further said that Rs 65,816.58 crore of tax arrears are pending against corporate assesses.

In case of corporates, 28 companies account for 37 percent of the total tax arrears.

CAG further said that while direct tax collections worth Rs 4.35 lakh crore was collected by the government in 2009-10, the uncollected portion of tax demand was Rs 2.29 lakh crore in March 2010, equivalent to 54 percent of the total direct tax collections.

"The arrears of demand also registered a steep hike in last five years," it said.

It said that it was noticed that in 1,54,198 cases, involving an outstanding demand of Rs 4,543.83 crore, where the demand was not transferred to the Tax Recovery Officers in spite of non-recovery for more than one year.

"We recommended that the Department may ensure preparation of a robust and reliable data base of arrear demand by reconciling the data maintained by different wings of the Department, towards effective monitoring and follow up of arrears," it said.

"We recommended that the Department may ensure correct and timely credit of TDS/TCS to the assessed by introducing reconciliation with concerned agencies to avoid mismatches resulting in creation of wrong demand," it said.

It added that it was noticed that in 189 cases, involving an arrear demand of Rs 315.05 crore, where the AOs failed to give effect to revision order and appellate order, and delayed in filing claim before official liquidator.

"Ministry may consider working out appropriate modalities for improving liaison between AOs and TROs under supervision of the higher authorities to ensure better co-ordination and speedy disposal of cases," it added.