Proper utilization of information contained in the audit report submitted under section 44AB of the Income tax Act, 1961. - Income Tax - 1976/1999

INSTRUCTION NO. 1976/1999 Dated: November 3, 1999 Subject:- Proper utilization of information contained in the audit report submitted under section 44AB of the Income tax Act, 1961 - regarding. Attention is invited to Board's Instruction No. 1959 dated 28.1.99 which was issued earlier for proper administration of provisions of section 44AB of Income tax Act, 1961. In the mean time, the Finance Act, 1999, has amended the provisions of section 143(1)(a), doing away with the requirement of processing under that section. Therefore, certain activities namely, lisated at para 2(i), (ii) and (iii) of Instruction No. 1959 dated 28.1.99, previously required to be undertaken at the time of processing of the return u/s 143(1)(a) are to be omitted. 2. In this context, it is suggested that Assessing Officers may take the following steps: (i) Returns liable to be held defective from the point of view of section 44AB should be identified and steps shall be taken to remove the defects in accordance with section 139(9). An identification mark in the form of sticker or rubber stamp should be put on the returns where the Tax Audit Reports are not filed or filed late specifying the period of the dalay so that the levy of penalty for such failure/lapse can be promptly initiated. (ii) The audit report wherever filed separately, should be linked with the return. Audit reports are also required to be examined to see if it contains any credible information on the basis of which case can be picked up for assessment under section 143(3). (iii) While scrutinising audit report attention should also be paid to para 2(vi) (vii) of Instruction No. 1959 dated 28.1.99. In view of revised format of audit report, the Institute of Chartered Accountant of India has since revised its guidance notes. (iv) A "Control Register for tax audit cases under section 44AB", should be maintained by Assessing Officers as per format prescribed in Annexure 'A' to this instruction. The maintenance of this register either manually or on computers would enable Assessing Officers to keep effective check on (i) all cases where tax audit report is mandatory, (ii) cases of non-filing or late filing of tax audit report, and (iii) penalty proceding under section 271B. Point No. (viii) of para 2 of Instruction No. 1959 dated 28.1.99 is modified to this extent. (v) The quarterly progress for Assessing Officers will also include one more annexure in the prescribed format as per Annexure 'B' to this instruction to report progress on tax audit cases under section 44AB. Till the time form of quarterly progress is revised the Assessing Officers will fill up the information in prescribed format and attach with quarterly progress report. 4. The above instructions may be brought to the notice of all Assessing Officers in your region and necessary compliance ensured. The Supervisory Officers should also be asked to monitor the compliance of these instructions on a regular basis. F.No. 228/10/97/ITA.II (Kamlesh C. Varshney) Under Secretary to the Govt. of India. ANNEXURE 'B' QUARERLY REPORT OF TAX AUDIT CASES U/S. 44AB S.No. : PARTICULARS : DURING THE QUARTER : UPTO THE END OF QUARTER : 1. No. of returns received. 2. No. of cases out of (1) where audit u/s. 44AB was required. 3. No. of cases out of (2) in which audit reports have been filed. 4. No. of cases out of (2) above where audit reports were not filed. 5. No. of cases out of (3) above where audit reports were filed beyond the due date. 6. No. of cases in which penalty proceedings were initiated during the quarter. 7. No. of cases where penalty levied. 8. Amount of penalty levied. 9. No. of cases in which irregularities in audit report noticed. 10. No. of cases out of (9) where the action u/s288 was taken. 11. No. of cases out of (3) selected for assessment u/s 143(3).