INCOME TAX
REVISION OF INSTRUCTION NO.9/2006 ON
RECEIPT/REVENUE AUDIT OBJECTIONS.
INSTRUCTION NO.16/2013
DATED 31-10-2013
Reference
is invited to Board's Instruction No. 9 of 2006 dated 7.11.2006 on
Receipt/Revenue Audit Objections (hereinafter Instruction). It is a matter of
concern that despite a comprehensive procedure prescribed through the
Instruction for action at different stages of Audit Objections, settlement
track record is unsatisfactory and remedial action is delayed. There is also a need
to provide that Internal Audit should normally precede Revenue Audit. It has,
therefore, been decided to fine tune the procedure and strengthen the role of
supervisory authorities and CIT (Audit) as detailed below:
Role
of CCIT (CCA) /CCIT/DGIT:
- CCIT/DGIT
will review the performance of settlement of audit objections of his
region on a monthly basis and submit a report in the annexed Proforma to
CCIT (CCA) by the 5th of succeeding month.
- Review
should, inter alia, cover adherence to the timelines for submission of
replies as per Central Action Plan & taking of remedial actions
wherever called for, in terms of para 4 of the Instruction. Steps should
be taken to minimize the deviations from the prescribed timelines. The
progress in the matter of calling for explanation and suitable action
against erring officers/staff in terms of para 7 of the Instruction should
also be evaluated and monitored.
- CCIT
(CCA)/DGIT would submit a consolidated report of his region in the annexed
Proforma to the DIT (Audit) by the 10th of the succeeding month with a
copy to CIT (A&J).
- The
statistics have to be periodically updated and it should be ensured that
figures relating to audit objections in CAP II and the quarterly Report to
DIT (Audit) do not differ.
- The
input in half yearly report submitted by CIT (Audit) to the CCIT/DGIT in
respect of repeated/common errors noticed in the audit in preceding two
quarters should be utilised to educate and alert the Assessing Officers so
that such mistakes do not occur. Supervision would be exercised in a
manner so as to facilitate zero error assessments.
Role
of Administrative CslT/DsIT:
- CsIT/DsIT
should ensure that internal audit of cases precedes the Revenue Audit. He
should inform CIT (Audit) on receipt of intimation of the programme of the
Local Audit so that CIT (Audit) can organise to get the Internal Audit of
the charge completed on priority.
- The
Register prescribed for maintaining records requisitioned by the RAP
should be inspected by the CIT/DIT concerned to ensure that the records
are not withheld on flimsy grounds.
- A
copy of the LAR received by the CIT/DIT should be immediately made
available to CIT (Audit).
- The
decision regarding acceptability or non-acceptability of audit objections
listed in Local Audit Report is to be of the CIT in terms of para 2.5 of
the Instruction. CIT should ensure that each objection is replied through
separate letter as the bunching of replies to objections in one letter, is
one of the major reasons identified for discrepancy in figures of replies
sent by the Department and as available with the C&AG. Bunching also
has an inherent danger of some case remaining unattended in absence of the
placement of the copy of the common letter in the relevant file. Copy of
each reply sent should also be marked to CIT (Audit) so that a central
data bank of Revenue audit objections is maintained to speed up the
process of reconciliation with C&AG.
- The
timelines in para 3.2 and para 4 of Instruction need to be observed
scrupulously for efficient control over timely appropriate remedial
action. A copy of correspondence for approval of remedial action must be
kept in the main file. In terms of para 4.3 of the Instruction,
appropriate remedial action is required to be initiated within two months
of the receipt of LAR and necessary orders are to be passed within 6
months thereafter. CsIT/DsIT must exercise supervision to ensure that the
orders are passed within the stipulated 6 months and are not delayed till
the time barring dead line.
- CsIT/DsIT
will hold a monthly meeting to review the progress of settlement of
objections.
- A
close coordination would also be maintained with the office of the
C&AG in their area and quarterly meeting be held with them to
reconcile pendency and expedite settlement of cases.
- Pendency
of cases where Statement of Facts is sent by the office of C&AG, as
they are not prepared to drop the audit objections, should be monitored.
Role
of CIT (Audit):
- CIT
(Audit) would maintain separate record of Major and Minor Revenue audit objections
intimated and settled.
- Based
on analysis of copies of LARs received, CIT (Audit) will submit a
half-yearly report to the CCIT (CCA) in respect of repeated / common
errors noticed in the audit in preceding two quarters. The report shall be
submitted by the 15th October & 15th of April with a copy to every
CCIT/ DGIT.
- CIT
(Audit) would facilitate holding of quarterly meetings of CsIT/DsIT with
the office of the C&AG in his area to facilitate early settlement of
cases.
3.
In supersession of the monetary limits specified in para 3.2(a) and 7.2 of
Instruction and adopting a consistent approach with C&AG, the definition of
Major audit objection, for the purposes of Revenue Audit, is henceforth revised
as one where the revenue effect is Rs. 2,00,000 or more for the purposes of
Corporation Tax and Income tax .
4.
The phrase "CIT (Audit) in Metropolitan charges" as occurring in para
7.1(b) and (c) of Instruction should be construed as 'CIT (Audit) concerned'.
5. Instruction
no. 9 of 2006 is amended and supplemented with effect from November 15,
2013 to the extent indicated above.
6.
This may be brought to the notice of all officers working under your
jurisdiction for compliance.
[F.NO.246/95/2013-A&PAC-I]
Annexure I