CA vs CAG
IN its Report No. 32 of 2014 (Performance Audit), submitted to Parliament recently, the CAG observed,
The CAs are regarded as facilitators for the Income Tax Department (lTD) in administering the provisions of the Act correctly. The Tax Audit Reports (TARs)/certificates issued by them serve as a valuable reference guide to the Assessing Officers (AOs) while making assessments .
CAG found cases where the CAs failed to report full and correct information in 367 cases leading to short levy of taxes of Rs. 2,813.11 crore.
Some of the important audit findings:
a. Tax auditors failed to give correct information relating to allowance of depreciation in 66 cases involving short levy of tax of 457.79 crore
b. Tax auditors did not report correct information regarding brought forward loss/depreciation resulting in irregular brought forward loss/depreciation allowance in 46 cases involving short levy of tax of 557.79 crore.
c. In 42 cases personal/capital expenditure was incorrectly allowed as the tax auditors did not report the amount in their tax audit reports which resulted in short levy of tax of 477.89 crore.
d. CAs have certified wrong information/claims for various exemptions and deductions in 74 cases having tax effect of 259.72 crore.
e. CAs gave incorrect/incomplete information in TARs/certificates in 132 cases having a revenue impact of 1,037.61 crore.
Audit also found in another 616 cases where CAs committed mistakes viz. in allowance of exemption/deductions, charging of tax on Book Profit under Section 115JB, adoption of Arm's Length Price and reporting on cash payments exceeding Rs. 20,000 per day.
Regarding monitoring of work of CAs and ensuring quality tax audit, ICAI issued guidance to its members for limiting the tax audit assignments in a financial year. There is a limit of 45 tax audits that a CA can undertake in a Financial Year. (It is 60 from FY 2014-15). Audit found that 18.87 per cent of CAs (12,435 CAs) for AY 2013-14 issued more tax audit reports than prescribed by ICAI. One CA took up 2471 TARs in AY 2013-14.Audit also found cases where CAs did not mention their membership numbers. lTD did not refer any case for professional negligence to ICAI for taking action against erring CAs in terms of Section 288 of the Act. Audit found that non-adherence to various provisions of the Act by CAs led to deny proper dues to the Government.
CAG even mentioned the names and addresses of several Chartered Accountants who failed in their professional duties.