The government plans to reinstate the scheme of establishing tax ombudsman for faster disposal of cases and better recovery of arrears demand.

The scheme is already operational in Kolkata. It will be launched soon in Chennai, Mumbai and Delhi, according to income-tax department sources.

The tax ombudsman practice was discontinued in India in the 1960s. According to sources, the tax ombudsman will act as the primary base for redressal of tax litigation before any party prepares to go in for legal redressal. This scheme, in line with the banking ombudsman scheme, will speed up tax recovery.

In order to step up recovery of arrears demand, the central board of direct taxes last year took a decision to review all cases with recoverable arrears where legal stay had extended beyond 180 days.

Despite this, in the recovery of concealed income, the income tax department has recorded a 13 time increase by achieving recoveries to the tune of Rs 274 crore (Rs 2.74 billion) for March 31 this year against a mere Rs 13 crore (Rs 130 million) last year, said an official source.

The impetus on the recoverable arrears follows the announcement in the last Budget which estimated that around Rs 54,000 crore (Rs 540 billion) were stuck as arrears.

However, the department has decided to recover around Rs 15,000 crore (Rs 150 billion) with proposals to open tax cases stuck in scams and liquidation cases lying with special courts or appellate tribunals.

Last year, the investigative wing of the income tax department--which usually confined itself to searches and seizures-- envisaged a much bigger role for itself. The core committee requisitioned the expertise of the investigation department to nab absconding persons and fix their assets.

This is being done in cases where demand has been raised but recovery cannot be done as concerned companies or personnel are not available.