Expeditious settlement of audit objections timely submission of replies to Half Margin Notes of Audit Parties instructions regarding. - Income Tax - 189

CIRCULAR NO. 189 DATED 12.12.1988 Expeditious settlement of audit objections timely submission of replies to Half Margin Notes of Audit Parties instructions regarding. In the course of oral evidence on para 2.20 of the C ACs Report, 1986, the Public Accounts Committee expressed grave concern over the alarming increase in the pendency of outstanding audit objections from year to year. The delay in the settlement of audit objections came up for adverse criticism in this context. The need for gearing up the departmental machinery for the effective control, supervision and monitoring of the audit objections was emphasized by the PAC. It was also desired that ways and means should be devised for achieving a more effective and well coordinated system for the expeditious settlement of audit objections. 2. It was observed by the Public Accounts Committee that one of the main reasons for such a large pendency was that the time limits and the procedure laid down by the Board for dealing with Receipt Audit Objections were not being adhered to by the field officers, especially at the half margin (Audit Memo) stage. It was also pointed out that though several instructions had been issued by the Department laying down the procedure for dealing with Receipt Audit objections, 1 proper monitoring and control for ensuring the compliance of these Instructions was not being exercised. 3. In this context, attention is invited to Board's Instruction No.159 dated 16.4.1970 and DIT(A)'s letter No.Audit-9/73/DIT dated 6.8.1973 wherein the procedure for dealing with Receipt Audit objections has been laid down. Whenever any irregularity mistake is observed by a Receipt Audit Party, it issued an Audit Memo (also called half Margin Note), stating the objections in regard to individual cases. As per the above said instructions the assessing officer should furnish a reply to the Audit memo expeditiously and, in any case, within three days from the date of its receipt. The date of receipt of the memo and the date of reply should be entered in the prescribed register of requisitions. The reply should be only in regard to the facts and figures given in the Audit Memo (Half Margin Note) and no argument regarding the validity of the objection should be entered into at that stage, on the last day of the Local Audit, the Audit Party normally forwards a draft Audit Inspection Report to the assessing officer for his perusal and discussion. The assessing officer, whose Ward/Circle is to be Inspected, should so arrange his work that he is able to spare 2 to 3 days for dealing exclusively with the draft report of the Revenue Audit Party and should endeavour to discuss all the points with the Audit Party on the spot and satisfy the Audit about the Department's point of view. 4. It is, however, observed that the prescribed procedure and time limit laid down in the abovesald instructions are not being adhered to by the field officers. At the half Margin and the draft Audit Inspection Report stage, relies invariably given by the assessing officers are that the objection "will be looked into" etc. You will kindly appreciate that such replies only delay the settlement of audit objections and must be avoided. Instead, if prompt replies to the audit objections are given on receipt of the half margin Note or the draft Audit Inspection Report (as envisaged in the above said Instructions), a large number of objections could be settled at the Initial stage itself, before the same are included in the LAR or are converted into Draft Paras. 5. In order to ensure the compliance with the abovesaid Instructions, it is desired that Che following procedure should henceforth be adopted: i. Whenever, Inspection of any ward/circle is taken up by a Receipt Audit Party, the concerned D.C. (Range)/CIT should wlthlin a fortnight of such audit, call for a report from the concerned assessing officer(s). This report should contain details of the Audit memos etc. sent by the Receipt Audit as well as details of the replies given by the assessing officer. In case any default/delay on the part of the assessing officer in the following the abovestated departmental instructions is noticed, reasons for this lapse should be ascertained and appropriate steps should be taken to expedite the reply. Necessary guidance, if required, may also be given by the concerned DC (Range)/CIT at this stage in case any controversial law point has been raised or any other difficulty is experienced by the assessing officer in taking the appropriate action. ii. Within one month of the completion of the audit of any ward/circle, the concerned DC (Range)/CIT should send a report to the DC (Audit) giving details of the Audit Memos etc. received and the replies given stating the reasons for the delay in the replies, if any, and the action taken in such cases. Any controversial point of law raised by Audit, which could not be satisfactorily replied, should also be highlighted. iii. The DC (Audit) should personally monitor those cases in which the abovesaid departmental Instructions have not been followed and in consultation with the DC (Range)/CIT, ensure that appropriate action is taken and the requisite replies are sent to the Audit. In case of persistent or repeated lapses on the part of an assessing officer, the DC (Audit) should bring the same to the notice of the concerned CIT for taking necessary action against him, under intimation to the DI (Audit). iv. The CsIT should personally ensure that the Performae Report, sent under their signatures in all Draft para cases, are complete and coreect in all respects. In column 2 of Proformace Report, Part "6", the requisite details regarding the Audit memo and the LAAR should be given clearly stating the reasons for the delay in sending replies, if any. In order to make a correct assessment of the number of mistakes detected by Revenue Audit Party vis a vis the number of files actually requisitioned by them, it will be necessary to keep a proper record of the files called for and examined by them on completion of Audit, the Assessing officer shall report to the Range DC, with copy to DC Audit, the i. Number of files requisitioned during the camp by the Audit Party. ii. Number of files actually made available to the Audit Party. iii. Number of files in which mistakes were pointed out. This should be done within 7 days of the completion of the Audit Inspection.