Physical presence

Can anybody tell does INS checks prior to interview the physicall presence or they investigate during the interview. If they check it prior to interviewing, how they do it. Any ideas.

INS doesn't check, because INS no longer exists.
USCIS checks.
You have to provide evidence that you were physically present in the US. You have to list your trips abroad on the N-400, and they can easily check that with the data in their systems.

How can they check with their data on their system? Based on what? Is it based on the passport stamps or something else?

Based on your A# and passport #.
They scan the GC when you enter the US, and they also get the passenger manifest from the airlines, nowadays even electronically.

I don't quite agree with JoeF. I'd heard that airlines didn't agree to provide BCIS the passenger menifests. Also I was talking to few friends of mine and one mentioned about his relative who came to USA after 5-6 years, he had green card and he entered with no problem eventhough he stayed outside USA for all this 5-6 years.

I don't know if BCIS really has this tracking GC holders technology working even at this moment. It may be just a scare!

"I'd heard that airlines didn't agree to provide BCIS the passenger menifests."

Huh? Another rumor.
It is in the law. If an airline refuses to give CIS the data, they just won't be allowed to fly to the US anymore. It's as simple as that...

"Also I was talking to few friends of mine and one mentioned about his relative who came to USA after 5-6 years, he had green card and he entered with no problem eventhough he stayed outside USA for all this 5-6 years."

And what does that show us? It only shows that the officers at the POE don't always check their databases.
And when asked, what did the person say about the duration of the stay abroad? If the person lied, he is now in even deeper problems. Can you say "blackmail"?

"I don't know if BCIS really has this tracking GC holders technology working even at this moment."

They have.

"It may be just a scare!"

So, you are willing to put your future in the US in danger, just because you refuse to believe that CIS follows the rules laid out in the immigration law? Is it so convenient to close your eyes and pretend things are not happening? Silly...

Today I am watching Stolen passports/Terrorism hearing at Capitol and DHA inspector general said that they i mean have no record yet in place when people exit the US. Not only that he also mentioned that eventhough they get a piece of I-94 when the person leaves the US still they don't put that info from that I-94 for that person in any computer record.

He also mentioned that is the us-visit program that will be used to record entries only and they only have one port with the pilot system that is piloting the system where they are tracking the exit of the people.

At that Dana Rohrbacher, Rep (R) from CA was really furious that how come we are allowing people to come in and don't know when they leave since we have no exit record system.

"Today I am watching Stolen passports/Terrorism hearing at Capitol and DHA inspector general said that they i mean have no record yet in place when people exit the US. Not only that he also mentioned that eventhough they get a piece of I-94 when the person leaves the US still they don't put that info from that I-94 for that person in any computer record."

Oh my, talk about a clueless bureaucrat...
A typical clueless immigration official.
It takes a while to enter the I-94s, but they have done that for years. They had my exit date in their computers when I checked something with CSC back in 1997.
And, they now get the passenger manifests from the airlines, electronically. That is mandated by law. So they have the information in a computer record...

The only point where the guy was right is that the US-VISIT system currently captures entries only. Capturing exits via the system is not practical, since it would result in even longer lines. But that's why they have the requirement to get the passenger manifests.

I wonder how come DHS inspector general can be clueless in front of the congressional committee after taking the oath.

JoeF: These passenger manifests were mandated in the Patriot Act, right??

"I wonder how come DHS inspector general can be clueless in front of the congressional committee after taking the oath."

Lack of preparation...

The passenger manifests have been around for a lot longer. The electronic transmission was mandated by the Patriot Act. Before that, the airlines only needed to give legacy INS a printout (and INS probably just stored that in some warehouse...)