Circular for Modification of Instruction with Fresh Guidelines and Procedures for dealing with Revenue Audit objections issued

The guidelines and procedure for attending to objections raised in the course of audit of assessment work by the Comptroller and Auditor General of India (Revenue Audit) are laid down in the Instruction No of 2006 issued by the Central Board of Direct Taxes (CBDT).  The Instruction inter-alia mandates the initiation of remedial action in case the Revenue Audit Objection is not accepted by the Department.

The Board has considered the effect of such remedial action and its ultimate fate in appeal and decided to modify the existing instruction for dealing with remedial action on Revenue Audit objections that are not accepted by the Department.  A Circular (Circular No. 8/2016) has been issued today deleting para 4 and para 5 of the Instruction and replacing them with fresh guidelines and procedures for dealing with Revenue Audit objections.

The modified Instruction will avoid creation of un-collectible demand and reduce litigation with the assessee in such cases where the Department itself finds the Revenue Audit objection not acceptable. It is another step in the direction of a non-adversarial tax regime.

Also ReadHC restricts remedial action on audit objection – tones down rigour of Instruction No. 9/2006

GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF REVENUE
CENTRAL BOARD OF DIRECT TAXES
NEW DELHI

(INCOME TAX)

CIRCULAR NO. 8/2016, Dated: March 17, 2016

Sub: Modification of Instruction 9/2006-reg.

Instruction 9 of 2006 lays down the guidelines and procedure for attending to Revenue Audit Objections. The Instruction inter-alia mandates the initiation of remedial action in case the Revenue Audit Objection is not accepted by the Department. The Board has considered the effect of such remedial action and its ultimate fate in appeal. Accordingly, to mitigate the effects of the Instruction, para 4 and para 5 of the Instruction are deleted with immediate effect and replaced by the following:

4. Remedial Action:

(i) An Audit objection should be accepted and remedial action should be taken in a case where the audit objection relating to an error of facts or an issue of law is found to be correct.

(ii) Appropriate remedial action should invariable be initiated within two months of the receipt of the Local Audit Report, and necessary orders should be passed within six months thereafter.

(iii) Where the PCIT/CIT does not accept the Audit objection, he may record his reasons for doing so and inform the AG accordingly within two months from the date of receipt of the LAR. No remedial action needs to be taken in such cases.

5. Second appeal in cases involving Revenue Audit Objection:

The adverse order of the first appellate authority in cases involving revenue audit objections should be carefully scrutinised by the PCIT/CIT, and appeal should not be preferred if the order is justified either in law or on facts. Reasons for not filing appeal may be recorded by the PCIT/CIT.

F.No.246/95/2013-A&PAC-I

(J K Chandani)
US (A&PAC)-II, CBDT, New Delhi

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