Careful examination of objections raised by Audit. - Income Tax - 1046/CBDT

INSTRUCTION NO. 1046/CBDT Dated : March 15, 1977 Attention is invited to Board's Instruction No. 828*, dated 24-2-1975 (F. No. 236/272/74-A PAC.II). In these instructions, personal responsibility was cast on the Commissioners of Income-tax for a careful examination of objections raised by Audit and issue of instructions for initiation of most appropriate remedial action in cases where the revenue effect exceeded Rs. 25,000 in income-tax and Rs. 5,000 in other direct tax cases. The IACs were made responsible for similar action in income-tax cases with a revenue exceeding Rs. 10,000 but less than Rs. 25,000 and in other direct tax cases with a revenue effect exceeding Rs. 1,000 but less than Rs. 5,000. On the basis of a study made by the DI (IT Audit) it is noticed that the above instructions are not followed strictly in as much as : (1) In a fairly large number of cases the CsIT/IACs are not issuing timely instructions; (2) no reasons had been given for not issuing instruction; (3) in a large number of cases rectifications are still being carried out almost mechanically u/s 154 of the I.T. Act, 1961 and the corresponding provisions of the other Direct Taxes Acts, without examining whether such action was the most appropriate on the facts and in the circumstances of the case; (4) some of the CsIT do not appear to be devoting adequate attention to early settlement of audit objections; and (5) some of the CsIT are not reporting correct figures of important irregularities pointed out by Audit requiring their personal attention. 2. The Board have noticed a fairly large number of cases of objections involving considerable revenue where remedial action has been unduly delayed although the mistakes pointed out were obvious. It has also been noticed that internal audit has also been raising a large number of objections involving substantial revenue, in respect of which appropriate remedial action is not initiated in time. It is, therefore, reiterated that Instruction NO. 828 dated 24-2-1976 issued vide 236/272/74-A PAC.II, should be strictly followed by all the CsIT/IACs. These instructions will, hereafter, also apply to objections raised by the Internal Audit Parties and the CsIT/IACs will be responsible for issuing instructions to the ITOs for initiation of appropriate remedial action within one month of the receipt of objections from the IAC (Audit). The monetary limits will be the same as prescribed in respect of Revenue Audit objections. 3. The IAC (Audit) should ensure that the objections raised by Internal Audit Parties with a revenue effect of Rs. 25,000/- Rs. 10,000 in income-tax cases and Rs. 5,000/1,000 in the other direct tax cases are forwarded within a week to the CsIT/Range IACs. Necessary follow up action should be taken to ensure the early settlement of such objections.