1

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

16

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

17

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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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

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

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

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

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

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

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

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

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.

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.

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

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

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

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).

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

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.

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.

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.

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

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.

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

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.

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

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.

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.

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