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TMI BlogRevised Instruction on Internal AuditingX X X X Extracts X X X X X X X X Extracts X X X X ..... e shall be headed by a CIT (Audit) in each Pr.CCIT region. In the metro charges of Delhi, Mumbai, Kolkata and Chennai, there shall be two CsIT (Audit) each. The CIT (Audit) shall have their headquarters at the same station as that of the Pr.CCIT. Each CIT (Audit) will have one JCIT (Audit) [for the purpose of this Instruction, JCIT shall include Addl. CIT]. Each JCIT(Audit) shall have one SAP (Special Audit Party) unit headed by DCIT/ACIT (Audit) and as many IAPs (Internal Audit Party) headed by ITO(Audit) as are mentioned in Cadre Restructuring Plan, 2013. The JCIT will supervise the work of SAPs and IAPs working under him, apart from audit of cases which are categorized and assigned to him for audit. 2.2 In case of AOs (assessment units) of International Taxation, Transfer Pricing, Central Charges, Exemption etc. stationed in the territorial jurisdiction of a Pr.CCIT/CIT(Audit) which is different from the jurisdiction of the Pr.CCIT/CIT(Audit) where the controlling PCIT of such AOs is stationed, the responsibility for Internal Audit of all such assessment units will be of the local CIT(Audit) related to the Pr.CCIT in whose territorial jurisdiction the AOs are located. 2.3 For th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above is only the minimum number of points to be accumulated and each audit unit must try to manage the work in such a way that as many auditable cases as possible are actually audited. 4.3 The CIT (Audit) shall be competent to change the target and norms for SAP/IAP according to the exigency of the availability of manpower and workload, subject to the approval of the Pr.CCIT concerned. Moreover, the CIT (Audit) may also ensure that the annual workload is evenly distributed in different months of the financial year. 4.4 The Internal Audit plan would be flexible and adjustable according to the available workload of high risk cases. The cases for audit would be selected through ITBA system based on the factors like assessed income/loss, or refund granted, or claim of exemption/deduction, or any other criteria as may be decided by the CBDT. The list of auditable cases shall be generated through ITBA on quarterly or monthly basis as may be required. Out of the list of auditable cases so generated, the CIT (Audit) shall identify cases of different category to be audited by JCIT or SAP/IAP every month having regard to norms applicable to them. 4.5 Till such time as the ITBA becomes full ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dited. ( iv ) In multi-station regions, cases from all stations are audited. ( v ) The cases audited are a reasonable mix of corporate and non- corporate cases as also complete and limited scrutiny. ( vi ) Sectors of business that have more potential for audit during the relevant year be preferred. ( vii ) Appropriate number of cases of International tax, Exemption, TDS are subjected to audit. ( viii ) Any other factor that may increase the effectiveness of internal audit. 5.5 In the ITBA environment, the CIT (Audit) shall simply identify and mark the cases in the system itself to be audited by JCIT, SAP and IAPs. The marked cases shall be visible to the audit unit concerned on the system itself. 5.6 In respect of TDS cases, the order u/s 201 may be subjected to audit depending upon the quantum of non-deduction of tax or non-payment. For this purpose, the list of 201 orders shall also be available to the CIT (Audit) in ITBA. The number of TDS cases to be audited will be decided by the CIT (Audit) within the overall target of audit units. 5.7 Till such time as the ITBA becomes fully operational, norms for the auditable cases to JCIT, SAP and IAPs would be as laid down in the Instruc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Report shall also be made available to audit, if requisitioned. 7.2 The Audit unit shall complete the audit work expeditiously and forward the objection, if any, in the form of 'Audit memo' in a format prescribed at Annexure-A to this Instruction. The Audit memo shall be sent to the office of PCIT (for the purpose of this instruction, PCIT shall include CIT) concerned, with a copy each to the CIT (Audit), JCIT (Audit), Range head and the Assessing officer. 7.3 In order to make it convenient to decide the appropriate course of remedial action and facilitate its settlement, the audit objection shall be categorized, depending upon the issue raised by the audit unit concerned, into ( i ) ) Factual, or ( ii ) Legal Question, or ( iii ) Mixed Issues For each mistake, even for the same case in same assessment year, separate audit memo shall be issued for proper monitoring and ITBA system will assign a unique identification number (UIN) to each audit memo. 7.4 The audit memo shall be issued after vetting by JCIT (Audit), if the Revenue effect is more than ₹ 1 crore and if the Revenue effect exceeds ₹ 10 crores, it shall be vetted by the CIT (Audit) before it is issued. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial Range), the JCIT being himself the AO, shall examine and communicate with JCIT (Audit). 8.2.2 Where the objection is not accepted, the JCIT (Audit) shall consider the reply of the Range Head or JCIT (Special Range), as the case may be, and take following steps as may be appropriate: ( i ) If the view of the Range Head/JCIT (Special Range) is acceptable, the objection will be settled as dropped and the decision shall be communicated to the Range Head/JCIT (Special Range) concerned within one month of receipt of his reply. ( ii ) If the view of the Range Head/JCIT (Special Range) is not acceptable to JCIT (Audit), the reasons for disagreement would be communicated to the Range Head/JCIT (Special Range) concerned within one month of receipt of his reply. 8.2.3 If the Range Head/JCIT (Special Range) is still of the view that the objection is not acceptable, he shall refer the matter, within 15 days of receipt of disagreement, to the PCIT. 8.2.4 If the PCIT agrees with the view of Range Head/JCIT (Special Range), he shall take up with the CIT (Audit) within 15 days, and the objection will be treated as settled if the CIT (Audit) agrees with the PCIT. Else, the matter will be referre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view the nature of objection and facts of the case, and take suitable action as deemed fit. 11.2 The PCIT may also call for explanation of the officers who delayed the process of remedial action beyond the time line laid down in this instruction and of those who failed to take remedial action in cases of accepted audit objection in time, causing irretrievable loss of revenue. 11.3 Where a Major Revenue Audit Objection has been accepted by the department in a case which was audited by the internal audit earlier and such objection was not pointed out by the Internal Audit Officer, the CIT(Audit) may call for explanation of such Internal Audit Officer in appropriate cases and may take suitable action as deemed fit. 12. Ledger Cards 12.1 Proper maintenance of record of mistakes committed by a particular officer is an essential step to enforce accountability and take reformative steps. This is to be done by maintaining Ledger Cards. The ledger card in respect of erring assessing officers shall be maintained on the ITBA system and would be available to supervisory officers. 12.2 However, until the time Audit Module in ITBA system is fully functional, the ledger card will continue to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... format as prescribed in the existing Instructions shall continue to be maintained. 15. Reporting system 15.1 All work including correspondence regarding audit shall be done through ITBA system. The statistical and other report as may be required shall be generated from the ITBA system itself. However, for monitoring and control following standard MIS reports are prescribed: ( a ) Statistical report, to ascertain progress, in respect of number of audit objections raised, settled, pending etc. in the format at Annexure-B. ( b ) List of pending audit objections with particulars as may be required out of those prescribed in Annexure-C. For Audit Set-up 15.2 The CIT (Audit) shall be able to generate MIS report in Annexure-B for his jurisdiction or for each audit unit namely JCIT, SAP or IAP. The PCCIT shall be able to generate similar MIS report for his jurisdiction or CIT (Audit) wise, or CIT wise or PCIT wise as may be required. The ADG (Audit) shall be able to generate similar MIS report for all or any of the Pr.CCIT or CCIT or PCIT or any CIT (Audit) in India. For CCIT or PCIT 15.3 The CCIT or PCIT shall be able to generate, as and when required, MIS report in Annexure-B for his ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of Column (10) Objections that are accepted out of (6) Revenue effect in respect of Column (12) 1 2 3 4 5 6 7 8 9 10 11 12 13 Break up for the authorities below should be available till basic unit i.e. AO, IAP etc. PART-II - MAJOR INTERNAL AUDIT OBJECTIONS No. of Objections sending as on 1.4.20....... Revenue Effect of objections in Column (1) Received during the month Received up to the end of month Settled during the month Settled up to the end of month Pending at the end of month (1+4-6) Revenue effect of objections in Col (7) Replies sent but pending Objections (not accepted) out of (6) Revenue effect in respect of Column (10) Objections that are accepted out of (6) Revenue effect in respect of Column (12) 1 2 3 4 5 6 7 8 9 10 11 12 13 Break up for the authorities below should be available till basic unit i.e. AO, IAP etc. Annexure-C List of pending audit Objections Report for the : [PCCIT/CCIT/DGIT/PCIT/CIT(Audit)] drop down Status as on : [normally as on last day of the previous month/any specific date] PART-I - MAJOR INTERNAL AUDIT OBJECTIONS S. No. Unique Audit Objection Number Date of raising of objection Name of the assessee PAN Status of Assessee Spl Range/Circle ..... X X X X Extracts X X X X X X X X Extracts X X X X
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