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TMI BlogSELECTION OF ASSESSEE/TAXPAYERS FOR AUDITX X X X Extracts X X X X X X X X Extracts X X X X ..... yers should be selected on the basis of assessment of the risk to revenue. This process, which is an essential feature of audit selection, is known as Risk Assessment . It involves the ranking of assessees and taxpayers according to a quantitative indicator of risk known as a risk parameter . 5.2 Method of selection based on risk assessment: The selection of assessees and taxpayers would be done based on the risk evaluation method prescribed by the Directorate General of Audit. The risk evaluation method would be separately communicated to the Audit Commissionerates during the month of May/ June of every year. The risk assessment function will be jointly handled by National Risk Managers (NRM) situated in the Directorate General of Audit and Local Risk Managers (LRM) heading the Risk Management section of Audit Commissionerates. The Risk Management section of Audit Commissionerate would ensure availability of assessee/taxpayerwise data for a period of last three years, which would facilitate risk assessment and preparation of the list of assessees/taxpayers to be audited in the current year. 5.2.1 Basing on the risk methodology, a list of units will be communicated t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that Audit Groups may be deployed to cover large, medium and small units as discussed in Para 2.6. While deploying officers due care should be taken, so that the staff is proportionately allocated to attend the audit work related to Central Excise Units and Service Tax assessees/taxpayers based on revenue profile of the Commissionerate. iii. The composition of Audit Groups to cover large, medium and small units would be as discussed in chapter 2 iv. The indicative duration for conduct of Audit that is inclusive of desk review, preparation and approval of Audit plan, actual Audit and preparation of Audit report wherever necessary, for each category would be as discussed in chapter 4 v. Given that there are around 249 working days in a year, the number of Audits that can be conducted approximately in a year are as follows: a. 31 large units (calculated at 8 days per unit) by one Audit Group c. 42 medium units (calculated at 6 days per unit) by one Audit Group and d. 62 small units (calculated at 4 days per unit) by one Audit Group The number of working days for audit are for the purpose of calculations and may vary as per the size of the assessee and the workloa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be dependent upon (i) the available manpower in the Audit Commissionerate and (ii) the assessee/taxpayer base, turnover and duty paid by each assessee/taxpayer in the jurisdiction of the Audit Commissionerate. It may be noted that threshold limits may vary from one Audit Commissionerate to another Audit Commissionerate in view of varying number of assessees/taxpayers and quantum of value of clearances / services and duty paid by each assessee/taxpayer. The Audit Commissionerates would obtain the requisite data from EDW / ACES / EASIEST for categorization of assessees/taxpayers into large / medium / small within their Commissionerate. The categorization would be done based on the methodology prescribed by the Directorate General of Audit. The methodology for categorization would be communicated to the Audit Commissionerates by Directorate General of Audit during the month of March / April every year. ix. The Audit Commissionerates shall consult Zonal units of Directorate General of Audit while finalizing the Annual plan of Audit coverage with the available manpower at the beginning of the financial year. The scheduling can be reviewed half yearly for necessary adjustments, if any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prehensive audit is required to be conducted only when the said assessee is also selected for audit, based on the risk evaluation method. 5.4.2 Co-ordination of audit ofan assessee and tax payer having multipleregistrationsin the same premises : There may be a special situation, where there are multiple registrations of an assessee / tax payer in the same premises , i.e., if a tax payer having a service tax registration falling in the jurisdiction of an exclusive service tax Commissionerate under a Service Tax CC Zone, is also having a Central Excise registration in the same premises, registered with a Central Excise Commissionerate of a different Central Excise CC Zone, both such registrants should be audited simultaneously, coordinated by the CC Zone, in whose jurisdiction, the highest duty/taxpaying assessee/taxpayer falls, irrespective of whether the assessee/taxpayer is covered under risk based selection or not ( by exchanging information from desk review to MCM). The auditors from both the PCC/CC Zones may be advised to be involved in the co-ordinated audit. 5.5 Audit of Multi Locational Units (MLUs)/ Multi Locational Service Providers (MLSP)/ACP importers ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... endents and 3-6 Inspectors. The indicative duration for conduct of audit that is inclusive of desk review, preparation and approval of Audit plan, actual audit and preparation of audit report is 8 to 10 working days. Based on the recommended duration, the number of units that could be audited in a year would be 25 LTUs (calculated at 10 days per Audit) by one audit group. The audit groups from LTU Audit Commissionerate s Circles would necessarily conduct the audit of LTUs and wherever additional manpower assistance is required the same can be sought from other LTUs or the jurisdictional Central Excise/Service Tax Audit Commissionerate. Further, audit of the LTU should be conducted in a coordinated manner i.e., the audit of Head Office and group units should be conducted simultaneously. To enable this, the audit dates should be decided in consultation with the LTU. The total number of assessees/taxpayers to be audited and selection of individual assessees/taxpayers for audit would be done as per the risk evaluation method recommended by the Directorate General of Audit. 5.8 Accredited status for deferring frequency of audit A segment of assessees/taxpayers, could be given an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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