Recovery of tax arrears from Pune businessman Hassan Ali Khan, an accused in cases of money laundering, is not possible despite attaching his known movable and immovable assets, the Finance Ministry has told a Parliamentary panel.

The Department of Revenue has informed the Public Accounts Committee (PAC) that as per the existing guidelines, recovery through sale of attached properties can be made only after the decision of appeal filed before the Income Tax Appellate Tribunal.

"Further, the attached assets are inadequate to recover the entire dues," it said.

In cases related to the security scam also, the recovery is not possible as it pertains to persons notified under the Special Court (TORTS) Act, 1992 and no recovery can be made directly from these persons, the department said.

It was responding to questions raised by PAC members in an earlier meeting called to discuss the CAG report on Direct Taxes.

The department was asked to explain specific reasons for low collection of arrear demand during the last five years.

The Ministry said that approximately 45 per cent of the arrear demand pertains to money laundering and security scam cases in Hassan Ali Khan Group, Harshad Mehta Group, Ketan Parekh Group and Dalal Group.

A special cell has been set up in the Directorate of Recovery to monitor cases where the recovery demand is not under any kind of dispute.

The Ministry said a "wide ranging exercise" initiated at the field level in the category 'assesses not traceable' has lead to 112 assesses.

In the category 'no assets/inadequate assets for recovery', 357 bank accounts pertaining to 65 such assesses have been located.