"There's absolutely no targeting. This is the kind of back and forth that happens to people" who apply for tax-exempt status, Shulman said at the House Ways and Means subcommittee hearing.
On Tuesday, Republicans expressed anger that Shulman and Miller didn't reveal the screening of conservative groups to Congress, despite lawmakers' repeated inquiries. Miller learned of the situation in early May 2012.
"Mr. Miller, that's a lie by omission," said Sen. Orrin Hatch of Utah, top Republican on the Finance committee. "There's no question about that in my mind. It's a lie by omission and you kept it from people who have the obligation to oversee this matter."
President Barack Obama has forced Miller to resign, and he is leaving office this week.
Shulman said he didn't later tell lawmakers about the targeting because he didn't have full information about the situation.
"I had a partial set of facts," Shulman said. "Sitting there then, sitting here today, I think I made the right decision" to let George, the inspector general, conduct his audit of the targeting.
Shulman said that when he did finally read about the details of the targeting in the inspector general's report, "I was dismayed and I was saddened."
Hatch and Finance panel chairman Max Baucus, D-Mont., both criticized the agency and said they would investigate how and why the improper screening occurred.
"I intend to get to the bottom of what happened," Baucus said.
The IRS is an independent agency within the Treasury Department. Because of that independent status, the official said Treasury deferred to the IRS in its decision about how to make the targeting public.
George, the Treasury inspector general, says he told Shulman on May 30, 2012, that his office was auditing the way applications for tax-exempt status were being handled, in part because of complaints from conservative groups. However, George said he did not reveal the results of his investigation.