Income Tax – Audit – take action against erring accountants - CBDT
CAG has pointed out that in many cases the information available in the tax audit reports is not being properly analyzed during assessment proceedings thereby defeating the very purpose of providing for audit of accounts in the I.T. Act i.e. to ensure that correct deductions are claimed by the assessee.
So CBDT directs that
(i) the tax audit reports as well as other statutory audit reports should be critically examined along with connected records and other available evidence and the information as available in these reports should be effectively utilized while finalizing assessment of cases selected under scrutiny.
(ii) In case of e-filed returns as well as annexure-less returns, tax audit reports and other statutory audit reports should be requisitioned and thoroughly examined during assessment proceedings in cases under scrutiny.
(iii) With effect from 10th August, 2006, the 'Accountants' are required to indicate in Form 3CD as to whether a certificate has been obtained from the respective assessees regarding payments relating to any expenditure/ taking or accepting of loans or deposits or repayment of the same through account payee cheque/bank draft.
(iv) Instead of simply relying on the said certificates given by the assessees, the assessing officers should undertake a test check of such transactions while completing the assessments under scrutiny.
(v) Results of such test check should also be kept on record.
(vi) In case, any violation is noticed, follow up action as per the I.T. Act including invoking of penal provisions should be taken.
(vii) In cases where any factual misrepresentation by the Accountants is observed, suitable action should be taken against them as provided u/s 288 of the I.T. Act, 1961.
CBDT Instruction No. 9/2008, Dated: July 31, 2008