The pendency of Revenue Audit objections awaiting settlement and of Internal Audit objections awaiting rectification - Income Tax - 552/CBDT

INSTRUCTION NO. 552/CBDT Dated : June 7, 1973 The pendency of Revenue Audit objections awaiting settlement and of Internal Audit objections awaiting rectification has assumed disconcerting proportions and an all-out effort is necessary, as indicated below, to bring down such pendency: (A) Revenue Audit:-(i) According to the DI(IT A)'s latest review for the month of March, 1973, there was a balance of 2204 important Revenue Audit objections pending as on 1.4.73 and out of this there were 1423 pending for over 3 months, from which 925 were pending with the Accountants General and the remaining 498 with the Department. As many as 296 of the pending Revenue Audit objections relate to the period prior to 1.4.71. For these pending important Revenue Audit objections (which involve tax effect of Rs.10,000 and above in income-tax cases and Rs. 1,000 and above in other tax cases) a time limit of 4 months for settling them was laid down in the D.I.'s. letter No.Aud(Genl)(1)DIT/61 dated 11.9.61 read with Board's letter No.14/2/61-IT dated 26.4.61. (ii) As regards minor Revenue Audit objections the Cs.I.T. were furnished with Board's circular letter No.233/1/73-A PAC issued in March, 1973, lists of such pending Revenue Audit objections in respect of which rectifications had not been made within six months from the date of receipt of local audit reports received during the period 30th November, 1971 to 31st May, 1972; the Commissioners were requested to ensure completion of rectifications by 15th April 1973 and inform the D.I. It is hoped that there has been compliance and a report from the D.I. in the matter will be received soon. (iii) As per Board's letter F.No.5/6/69-IT(Audit) dated 16.4.70 there is a time limit of 3 months for settling these minor objections and this should be adhered to in future. More recently, with the concurrence of the C AG, instructions have been issued vide No.499 F.No.246/17/72-A PAC dated 20.1.73 that Revenue Audit objections may generally be treated as settled when rectificatory action has been taken without waiting till the collection of relevant demand; in these instructions the Commissioners were asked to revise and deal with the pendency of Revenue Audit objections accordingly. This should be attended to in consultation with the Accountants General concerned so that the pendency of both important and other Revenue Audit objections is speedily liquidated and improvement is reflected in the future reports sent by Commissioners. (iv) Lastly, with regard to important Revenue Audit objections pending for want of replies from Accountants General vide sub-para (i) above, list of such Revenue Audit objections awaiting replies from the Accountants General over a period of two months may be sent to the Board so that the matter may be taken up with the Director of Revenue Audit for getting replies expedited by the Accountants General. (B) Internal Audit- It is seen from the D.Is. review of internal audit for the month of March, 1973 that there were as many as 96,155 internal audit objections pending on 1.4.73 for rectification and the revenue involved in these objections was about Rs.31.47 crores. A time limit of 3 months stands fixed for rectifications on IAP's objections vide D.I's.No.M-6/7/72-DIT dated 26.6.72 and No.M-6/11/72-DIT dated 4.1.73. In these instructions of the D.I., it was also indicated that the IAPs should, in cases covered by their objections, themselves draw up draft rectification orders and put up the same directly to the ITO concerned for formal orders so that the delay on the part of the ITO's personal staff in carrying out the rectifications is avoided. The P.A.C. took adverse notice of large pendency of internal audit objections awaiting rectifications vide extracts from paras 2.27 -30 from their 51st Report (1972-73 ) with Ministry's reply printed herewith as Annexure 'A', they have repeated such criticism in their more recent 88th Report (1972-73) vide extracts printed as Annexure B. It is regretted that large pendency of rectifications has been allowed to be built up by not complying with the time limit of 3 months as indicated above. 2. The strength of the Department's audit organisation has recently been increased with Board's No. F. 66/83/72-Ad.VII dated 6.12.72. The procedures for handling Revenue Audit and Internal Audit objections have also been streamlined and detailed in the Board's Instructions No.484 and 485 dated the 12th and 13th December, 1972 issued from F.No.246/76/72-A PAC. With the increased strength and streamlined procedures, there should be a turn for better. It is imperative that before the next P.A.C. meets, may be in October 1973, there is appreciable reduction in the pendency of Revenue Audit objections (important and minor) and Internal Audit rectifications. The Board, therefore, desire that the Commissioners should take vigorous steps under personal supervision to reduce the pendency under both heads as on 1.6.73 by 10 per cent., 20 per cent and 50 per cent in the months of June, July and August respectively and send a compliance report so as to reach the Board by 15th of the following months, in order that the P.A.C. may be briefed accordingly. 3. The observations of the P.A.C. in their 88th Report reproduced in the Annexure B (printed below) with regard to Internal Audit objections should be noted and complied with; the pendency of Internal Audit rectifications as on 1.6.73 according to the schedule indicated in the preceding para should stand reduced by 50 per cent by 31st August 1973 and it should be completely liquidated by the 31st March, 1974 and even for internal audit rectifications arising after 1.6.73, the time limit of 3 months prescribed should be strictly followed.