Short assessment of rent causes Rs 9.37 crore loss to Chandigarh

Chandigarh, March 13

Failure of the Estate Office to adhere to the prescribed procedure for increasing rent in respect of shops/booths at Sector 17-E resulted in a short assessment of rent amounting to Rs 9.37 crore for the period 1992-2022.

This irregularity was pointed out by the Comptroller and Auditor General (CAG) of India in a report submitted to UT Administrator Banwarial Purohit recently.

According to the audit report, the UT Administration leased out government shops (SCOs)/booths in Sector 17-E for a period of five years. The lease was renewable after every five years with an increase of 20 per cent in rent. The rent of these SCOs was increased to Rs 14,000 per month in 1992. Further, the rent of five booths carved out of three SCOs was fixed on a pro rata basis. However, the same was challenged by the lessees in the High Court and the Supreme Court. The Supreme Court in 1999 ordered that the rent of the SCOs/booths would not be further enhanced, without framing the rules.

As per the directions of the court, the UT Administration framed “Leasing out of Government Built-up Shops/Booths on Monthly Rent Basis in Chandigarh Scheme, 2000, and thereafter, rents were to be fixed from March 1, 1992, when the rent for these SCOs was fixed at Rs 14,000 per month”.

During a scrutiny of records of the Estate Office for 2018-19, the audit noticed that while reassessing the rent in case of 18 shops and five booths in Sector 17-E, the Estate Officer fixed the rent of shops/booths, contrary to instructions under Clause 9 & 10 of the scheme, by ignoring the prescribed stages for increase in rent and revised the lease rent by directly applying 50 per cent increase on the base rent, i.e. Rs 14,000.

The audit worked out that the failure of the Estate Officer to follow the provisions of the scheme and exercise suitable checks on the calculations resulted in loss of revenue due to a short assessment of rent to the tune of Rs 3.71 crore.

In response to audit observation, the department, while admitting the audit observation related to fixation of rent, carried out a detailed review of all cases in respect of 18 SCOs and five booths (for the period from March, 1992, to May, 2022).

Accordingly, the Estate Office re-checked and worked out a short assessment of rent amounting to Rs 9.37 crore for the period 1992-2022 in respect of 18 SCOs and five booths. The Estate Office had issued demand notices (May 2022) for the recovery of outstanding dues to three allottees/tenants and stated that the demand notices in respect of the remaining allottees/tenants would be issued shortly.

Estate Office reviewed cases

• In response to audit observation, the Estate Office carried out a review in respect of 18 SCOs and five booths from March, 1992, to May, 2022.
• The office rechecked and worked out a short assessment of rent amounting to Rs Rs 9.37 crore for the period.
• Demand notices (May 2022) were issued for the recovery of dues to three allottees/tenants

Audit findings

The audit found the Estate Officer fixed the rent contrary to instructions under Clause 9 & 10 of the scheme, by ignoring the prescribed stages for increase in rent and revised the lease rent by directly applying 50 per cent increase on the base rent, ie Rs 14,000.