TIOL-DDT 2662 · the untouched capture
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<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN" "http://www.w3.org/TR/html4/loose.dtd"> <html> <head> <title>Untitled Document</title> <meta http-equiv="Content-Type" content="text/html; charset=iso-8859-1"> </head> <body> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="3"><s><strong><font size="2"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="3"><s><strong><font size="2"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=23157"><img src="http://www.taxindiaonline.com/RC2/image/stories/limca_book2015_1.jpg" alt="DDT in Limca Book of Records - Third Time in a row" width="300" height="148" hspace="5" border="0" align="right" ></a></font></strong></font></strong></font></strong></font></strong></font></strong></s></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></s>TIOL-DDT 2662</font><br> 13 08 2015<br> Thursday</strong></font></p> <p align="center"><strong><em><font color="#FFFFFF" size="2" face="Georgia, Times New Roman, Times, serif"" style="background-color:#006A00" sans-serif span="span">CAG audits CBDT Internal Audit </font></em></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>INCOME</strong> Tax Department (ITD) is subjected to Internal Audit of assessment and accounting functions. Internal audit of assessment work in ITD is undertaken by the Additional Commissioners of Income Tax (Addl. CsIT), Special Audit Parties (SAPs) and Internal Audit Parties (IAPs) of ITD and internal audit of accounting and financial matters is undertaken by Internal Audit wing of Principal Chief Controller of Accounts (Pr. CCA) of Central Board of Direct Taxes (CBDT). </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Internal Audit of assessment functions in ITD has evolved over the years and has assumed significance as an independent function with no overlapping between assessment and audit functions. A new Internal Audit System was introduced in ITD with effect from 1 June 2007 providing for a separate audit structure in the ITD to perform the audit work assigning well-defined roles to various authorities for effective functioning and management of Internal Audit. The roles of Supervisory Authorities have been defined in Central Board of Direct Taxes (CBDT) Instruction Number 3 of 2007 and Number 15 of 2013.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CAG conducted Performance Audit on "Functioning of Internal Audit in Income Tax Department" with the objective to derive the following assurance: </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(a) whether Internal Audit is effective in providing reasonable assurance to the CBDT and Senior Management regarding achievement of objectives relating to compliance, assessment and other inter-related activities, as determined by CBDT; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(b) whether internal audit is playing an effective role in enhancing the quality of assessments and </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(c) whether there is effective and efficient follow-up mechanism of internal audit findings and recommendations. </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CAG covered the work done by the Internal Audit wing of ITD and of Pr. CCA, CBDT during the financial years 2010-11 to 2013-14 and up to the date of audit (December 2014). CAG also examined the control issues relevant to CIT (Audit) charges and monitoring mechanism at the level of DIT (Audit) as well as Regional Supervisory Authorities administering the CIT (Audit) charges. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CAG presented its report to Parliament this week. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CAG found: </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Action Plan was not prepared in 17 CIT (Audit) charges. The Audit Manual, 2011 has not prescribed a standard format for drawing up of Action Plan at field level. Planning is constrained, as information of auditable cases is not being received from administrative CsIT on monthly basis. The list of auditable cases were not received on a regular basis in 19 CsIT (Audit) charges from administrative CsIT under Pr. CCsIT/CCsIT of 12 regions. The Register of Auditable Cases is not being maintained in 12 CsIT (Audit) charges. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. Out of 7,00,398 cases assigned, Internal Audit examined only 5,73,457 cases resulting in shortfall in coverage of 1,26,941 cases. The practice of selection of high risk units is not in place. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. Internal audit memos were not issued timely in seven CsIT (Audit) charges. Internal Audit Reports are not being drawn up for issue to administrative CsIT in timely manner in 15 regions. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. Inadequate follow up of Internal Audit objections resulted in time barring of 1,553 cases involving tax effect of Rs. 392.65 crore in 11 CsIT (Audit) charges. Intra-Departmental Meetings were not held for follow-up and settlement of internal audit objections. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. The annual target of audit of minimum number of cases, as prescribed by the CBDT, was not met by Additional CsIT (Audit), Special Audit Parties (SAPs) and Internal Audit Parties (IAPs) </font></p> </blockquote> <p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Audit Recommendations and CBDT Reactions: </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. CBDT may consider reviewing the monetary norms fixed for IAPs to ensure mandatory scrutiny of top 100 cases in each administrative CIT as present prescribed norms make the 100 cases fall under the purview of Addl. CsIT and SAPs. </font></p> <blockquote> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Ministry stated (June 2015) that targets and monetary norms now have been re-examined and target of auditable cases by Addl. CIT has been enhanced from 50 to 150 to cover internal audit of top 100 cases by experienced officer in May 2015. </font></em></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. CBDT may consider revising the scope of functioning of Internal Audit in consonance with changes in scope of assessment in recent years in order to ensure Internal Audit of high risk assessment units such as Large Taxpayers Units, International Taxation Units including Transfer Pricing Offices etc. </font></p> <blockquote> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Ministry stated (June 2015) that high risk assessment units such as Large Taxpayer Unit and International Taxation Unit are subject to Internal Audit. It was further stated that the decision to audit transfer pricing assessment by the C&AG has been taken accordingly and these cases would also be subject to Internal Audit shortly. </font></em></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. CBDT may consider introducing centralised monitoring mechanism to watch timely issue of Internal Audit objections and Internal Audit Reports to ensure effective control. </font></p> <blockquote> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Ministry stated (June 2015) that systems to monitor and effective control are already in place. Pr. CCsIT (CCA) and DIT (Audit) periodically monitor performance at state and central level. </font></em></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. CBDT may consider making intra-departmental meeting for settlement of objections and follow up as part of Annual Action Plan and monitor it on regular basis. </font></p> <blockquote> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Ministry stated (June 2015) that the intra-departmental meeting for settlement of objections and follow up has been made part of Central Action Plan of first quarter of 2015-16. </font></em></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. CBDT may consider finding out the reasons for delay in settlement of audit objections and where necessary instruct the AOs to expedite the measures for settlement of audit objection. </font></p> <blockquote> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Ministry stated (June 2015) that delay in settlement is due to lack of requisite manpower both in internal audit division and assessment charges. </font></em></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6. CBDT may consider monitoring actual deployment of human resources positioned under Addl. CIT, SAPs and IAPs in order to determine the overall shortages and effective utilisation of available manpower. </font></p> <blockquote> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Ministry stated (June 2015) that the issue of additional manpower for internal audit is under consideration of CBDT. </font></em></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">7. CBDT may consider utilising the Information Technology to aid functioning of the CsIT (Audit) and DIT (Audit) for effective planning, programming, monitoring and control of Internal Audit. </font></p> <blockquote> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Ministry stated (June 2015) that the functionality to the ITD module has been rolled out. Initiatives have already been taken by the DGIT(Systems) in November 2014 to use information technology in the internal audit mechanism followed in the ITD. </font></em></p> </blockquote> <p align="justify"><em><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">Source: CAG Report No. 25 of 2015</font></em></p> <p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><strong><em><font color="#FFFFFF"" style="background-color:#006A00"sans-serif span="span">Importer loses case in Supreme Court after 28 years of litigation - all because of a wrong plea taken in the High Court </font></em></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>YESTERDAY</strong>, the Supreme Court decided an interesting Customs case. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The appellant imported a printing machine in 1987 and claimed exemption under a notification, which prescribed a condition that the machine should have a printing capacity of more than 30,000 copies. The appraiser of Customs noticed that the machine's output was shown as 36,000 copies in the invoice while the leaflet pertaining to the machine showed it as 25,000 copies. The machine was ordered to be kept in the warehouse. Even after repeated requests, the Customs did not release the machine and so the appellant approached the High Court in writ petition. The High Court ordered release of the machine in an interim order. The writ petition was kept pending. The importer got his machine and started using it. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">After 14 years, in 2002, the writ came up for hearing in the High Court. It must be noticed that the Department had not issued any Show Cause Notice in all these 14 years, even though there was no stay of adjudication proceedings. The Department could have initiated the adjudication proceedings which for some reason it did not. At this stage the importer could have even withdrawn the writ petition - it had used the machine for 14 years. Even if the department were to issue a Show Cause Notice at this stage, it would have been time barred. But it committed virtual legal hara-kiri - it insisted on the High Court to decide the issue on merits. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The helpless High Court observed, </font></p> <blockquote> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">"The long pendency of this petition for 14 years and the peculiar stand taken by the petitioners prevented us from remitting this matter to the adjudicating authorities under the Act to determine the disputed questions of fact. Left with no other alternative, we are constrained to decide this matter on merits on appreciation of evidence."</font></em></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now comes the shock - the High Court decided the issue against the importer and held that the importer was not eligible for the exemption as it has not discharged the burden of proving that it was entitled. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The importer is before the Supreme Court contending that the High Court had no jurisdiction to decide the issue as the Customs Act provides for complete adjudication machinery to adjudicate this issue; the issue is time barred and even on merits, the High Court was not correct. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Supreme Court was not impressed and observed, </font></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">After inviting the High Court to decide the matter on merits and finding that the decision has gone against the appellant, contrary argument is nothing but a desperate attempt to chicken out of the situation which is appellant's own creation. This kind of somersault, taking completely reverse stand before us, cannot be countenanced. We, therefore, reject the contention of the appellant that High Court was not competent to decide the issue in exercise of its writ jurisdiction . </font></em></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Supreme Court held that the <em>powers of the High Court under Article 226 of the Constitution, while issuing appropriate writs, are very wide. Even if there is an alternate remedy that may not preclude the High Court from exercising the jurisdiction in a particular case. In the face of alternate statutory remedies, when the High Court declines to exercise the jurisdiction under Article 226 of the Constitution, it is a self imposed restriction only. In the instant case, what is pertinent is that it is the appellant which not only made a prayer in the writ petition for deciding the issue in question, even at the time of hearing, it is the appellant which pressed for the decision with the submission that existence of alternate remedy should not deter the Court to render the decision on merits. In such a situation, the objection, if any, to the maintainability of the writ petition could have been taken by the respondent and it does not behove the appellant to raise this objection in the present appeal after pleading in the High Court that the matter be decided on merits. </em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Even on merits, the Supreme Court agreed with the view taken by the High Court on merits that burden of proof was on the appellant to establish that the machine imported by it generates more than 35,000 composite impressions or copies per hour, which the appellant failed to do.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In trying to avoid litigation and get a final decision at the end of 14 years, the importer not only had to continue litigation for another 13 years at a higher court, but lost the game at end of it all. Even if the writ petition was dismissed by the High Court, the importer would have still won the case, at least on limitation. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Look before you litigate!</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We bring you this case today.</font></p> <p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Please see <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=24400" target="_blank">Breaking News </a></font></strong></p> <p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><strong><em><font color="#FFFFFF"" style="background-color:#006A00"sans-serif span="span">Customs Duty on Steel Increased </font></em></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>GOVERNMENT</strong> has increased the Customs duty on steel by a complicated amendment to Sl. Nos.329A 330 and 334 and inserting new Sl. Nos333A and 333B in the table to Notification No. 12/2012- Customs, dated the 17th March, 2012. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Though the steel industry is not very much excited, the Steel Minister is. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Steel Minister Narendra Singh Tomar tweeted: </font></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Heartfelt gratitude to Hon'ble Shri Narendra Modi and Shri Arun Jaitley for the decision to increase import duty in keeping with the immediate needs of the steel industry.</font></em></p> <p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><img src="http://www.taxindiaonline.com/RC2/image/stories/ddt_2262hindi.JPG" alt="Legal Corner Icon" width="450" height="55" hspace="5" border="0" align="center"></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A similar exercise was done in June this year and the Steel Minister had then tweeted that it was a solid initiative towards fulfilling the government's goal of ‘Make in India' - <strong>See <a href="http://www.taxindiaonline.com/RC2/NewsDesc.php?MpoQSrPnM=MjM4OTQ=" target="_blank">DDT 2622</a></strong>. </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/notDesc.php?MpoQSrPnM=MTgzOTg=" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Notification No. 45/2015-Customs, Dated: August 12, 2015 </font></strong></a></p> <p align="center"><strong><em><font color="#FFFFFF" size="3" face="Georgia, Times New Roman, Times, serif"" style="background-color:#006A00"sans-serif span="span">Anti Dumping Duty on Flax Fabric - Reimposed; no resurrection </font></em></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>PROVISIONAL</strong> anti dumping duty was imposed on import of Flax fabric, falling under the heading 5309 of the First Schedule to the Customs Tariff Act, 1975 originating in, or exported from, the People's Republic of China and Hong Kong by Notification No. 30/2009-Cus., dated 26-3-2009. The Notification itself affirmed, <em>The anti-dumping duty imposed under this notification shall be effective upto and inclusive of the 25th September, 2009. </em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So, after 26.09.2009, there was no anti dumping duty on this product. But the Government by Notification No. 142/2009-Cus dated 21.12.2009 resurrected it with effect from 26.03.2009. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And this had expired on 25.03.2014 and there was nobody to wake the babu out of his slumber.They woke up after a month and a half and extended the life of this notification till 25.03.2015 by Notification NO. 17/2014-Cus(ADD),dated 9th May 2014. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Nothing happened on 25.3.2015, but dumping continued and so now they have re-imposed the anti dumping duty for another five years, but thankfully not with retrospective effect.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We must thank the Board for avoiding the temptation to resurrect dead notifications.</font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/notDesc.php?MpoQSrPnM=MTgzOTU=" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Notification NO. 39/2015-Cus.,(ADD), Dated: August 12, 2015 </font></strong></a></p> <p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><strong><em><font color="#FFFFFF"" style="background-color:#006A00"sans-serif span="span">China's Currency War - Triple Whammy for India - ASSOCHAM </font></em></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> back to back depreciation of Yuan by China's Central Bank for two days in a row, is the portent full-fledged currency war between competing and powerful economies of the world, according to ASSOCHAM. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">ASSOCHAM states further: </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>Ironically, this war would catch Emerging Economies like India in the middle,; </em></font></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The sharp currency depreciation, the steepest by over two decades, will have a three-fold impact for India. </font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">For one, there is going to be a lot more volatility around the rate of rupee, as is seen today with the Indian currency touching its lowest since September, 2013 forcing intervention by the Reserve Bank. </font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Secondly, Indian exports which are already under a huge pressure in major markets of the world, would see further erosion in their competitiveness as the Chinese would become much more aggressive in their desperate moves to shore up their economy. </font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Thirdly, if the Indian rupee is not able to keep pace with Yuan in losing value, China will further dump goods into the Indian market, making the trade deficit further widen. </font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">"Both the RBI and the Finance Ministry should keep a very close watch and take immediate and swift actions to ensure that Indian economy does not suffer the collateral damage of the currency war among the major economies. </font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Chances are that the US may react in a manner which may further queer the pitch. </font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In a single shot, China has increased the external risks for India and other EMs. </font></em></p> <p align="justify"><em><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">As we are about to upload this, it is informed that China has again devalued its Yuan yesterday - third day in a row - the currency war is on. </font></em></p> </blockquote> <p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><strong><em><font color="#FFFFFF"" style="background-color:#006A00"sans-serif span="span">Customs Commissioner in CBI Net</font></em></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Commissioner and Deputy Commissioner in Delhi's ICD are the latest catch of the CBI. They are accused of illegally releasing about 75 crore rupees of drawback in spite of a DRI directive to stop the payment.</font></p> <p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Please also see our today's <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=24401" target="_blank">TIOL - COB( WEB)</a></font></strong></p> <p><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Tomorrow with more <strong>DDT</strong></font></p> <p><strong><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a nice day.</font></strong></p> <p><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Mail your comments to</font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> <a href="mailto:vijaywrite@tiol.in"><strong>vijaywrite@tiol.in</strong></a></font></p> </body> </html>