In its pre-budget memorandum 2014 Institute of Chartered Accountants (ICAI) has suggested that the provision of Excise/Service tax audit by Chartered Accountant be introduced, similar to the Tax Audit Under Income Tax Act 1961 and VAT audit under various states.
ICAI has further suggested that Excise/Service Tax Audit in line with the Income-Tax Audit be introduced for traders/ manufacturers/ service providers having a turnover of goods/services of more than 1 crores. The Tax-audit under section 44AB of the Income-tax Act, 1961 is a very powerful tool to unearth frauds, ensuring compliance and checking revenue leakage. A similar audit in the area of indirect taxes would capture a major portion of the businesses and check significant revenue leakage.
ICAI has also submitted The Preliminary draft of audit report under Excise / service tax alongwith its pre-budget memorandum 2014.
Source- Pre-Budget Memorandum – 2014 on Direct Taxes by The Institute Of Chartered Accountant Of India, New Delhi
MANDEEP SINGH SAB,
ACHHA SAVL KIYA, GOVT. SHOULD ANSWER THIS QUESTION OF YOURS
How can ICAI say that section 44AB is powerful tool to unearth frauds. As per information received by me trough RTI from various income tax offices all over india.
95% CASES ARE AUDITED BY CA’s IN WHICH AO MADE ADDITIONS MORE THAN
2LAC. HARDLY 5% CASES ARE NON-AUDITED IN WHICH ADDITION MADE MORE
THAN 2 LAC.
Its totally wrong to say that audit u/s 44AB is powerful tool to unearth frauds but actually it is a strict hurdle to widen genuine tax base.
ICAI (Financials) in above statement says “Tax-audit under section 44AB of the Income-tax Act, 1961 is a very powerful tool to unearth frauds, ensuring compliance and checking revenue leakage”. But on the other hand CBDT has failed to provide information about “Total of Section wise Wrong Claims” required to be reported in TAR uploaded to e-filing portal for the Asst. Year 2013-14 against RTI Application filed by Tax Advocates throughout India.
As per Circular for introduction of Tax Audit & E-Filing Project Agreement of CBDT, the main object of Tax Audit U/s 44AB & uploading of the same to e-filing portal is to enable the assessing authority to conclude quality assessment. Because, AO not being a CA can not make additions in scrutiny process unless such wrong claims reported in TAR. Even holding AO is capable enough to assess wrong claims in scrutiny process, he has to invoke special audit in Income-Tax Act & see that such wrong claims are reported in special audit report & conclude assessment
MANDEEP JI, I FULLY AGREE WITH YOUR VIEWS,
BASIC CONCEPT OF AUTHORISING “ACCOUNTANT” TO CONDUCT “TAX LAW AUDIT” BOTH IN INCOME-TAX ACT AND DIRECT TAXES CODE AMOUNTS TO CONTRAVENTION LIABLE FOR ACTION UNDER ARTICLE 129 READ WITH ARTICLE 142(2) OF INDIAN CONSTITUION IN VIEW OF LATEST SC VERDICT IN THE CASE OF BAR COUNCIL OF INDIA VS A.K.BALAJI READ WITH HC VERDICT A.K.BALAJI VS GOVT. OF INDIA. INCOME-TAX ACT/DIRECT TAXES CODE BEING “LAW”, ADVOCATES ALONE ARE ENTITLED TO PRACTICE, PLEAD AND ACT BEFORE THE ASSESSING OFFICERS OF TAX DEPTT. ON DATE “PRACTICE OF ALL INDIAN TAXATION LAW” SQUARELY FALL WITHIN THE PURVIEW OF NON-LITIGIOUS MATTER AND PRACTICE OF THE SAME BY NON-ADVOCATES HAS BEEN SUBJECT TO REVIEW AS PER ABOVE SC VERDICT. THEREFORE I SUGGEST MY ADVOCATE FRIENDS TO ISSUE SECTION 80 CPC NOTICE TO MINISTRY OF FINANCE, GOVT. OF INDIA, IN THE ABOVE MATTER.
I HERE BELOW FURNISH NAME & ADDRESS OF PERSON IN MINISTRY OF FINANCE TO WHOM SECTION 80 CPC NOTICE HAS TO BE SERVED ABOUT PRACTICE OF INCOME-TAX LAW BY ACCOUNTANTS
SMT.RASHMITA JHA,
DIRECTOR (V&L),
CBDT, ROOM NO.253A,
NORTH BLOCK,
NEW DELHI-110001
Tel No.: 011-23092786
E-Mail : umasingh@nic.in
Introducing tax audit on excise and service tax will increase the expenses for the manufacturers and service providers. Already corrupt excise or service tax audit officers demand money from 25000 to 40000 after completing the audit. If you include tax audit, then it is a real headache and we have shell out more money on the same, therefore, avoid tax audit in excise and service tax.
THE TAX AUDIT REPORT U/S.44AB CERTIFIED BY THE CA ,ASSESSE WAS NOT MAINTAINED BOOKS OF ACCOUNTS AND RELATED RECORDS. CERTIFIED THE CA ALL OR PROBLEMS ARE SOLVED THE GOVERNMENT.ONCE A MATTER WE DO NOT UNDERSTAND TAX PRACTITIONER FILLED THE RETURN HE WAS INCOME OFFERED AT 8% AND THE CA FILLED THE RETURN LESSTHEN OF INCOME AT 2%, THE GOVERNMENT ACCEPTED THE RETURN. MORE THEN CAS MAKING CERTIFICATE IS VERY FRAUDE AND GOVT.LEAKAGE REVENUE GOES TO THE CAS. THE GOVERNMENT CARFULLY ANALISE THE MATTER AND TREATED ALL ARE AT PAR
Books maintained for all taxation acts are CASH BOOK, LEDGER etc. All business including service providers obtain USELESS audit certificate from Chartered Accountant u/s 44ab of income tax act since 1984 without evaluating its output. When all assesses obtain certificate regarding financial accounting entries.
Then what is need of certificates under different acts as given below.
1) SERVICE TAX———–Same books maintained as like for audit u/s 44ab.
2) CENTRAL EXCISE——– -DO-
3) VAT ACT—————- -DO-
WHY GOVT. PUTTING UNNECESSARY FINANCIAL BURDEN UNDER DIFFERENT ACTS REGARDING AUDIT OF ACCOUNTS.
IF ICAI WANTS FORMS SHOULD BE INTRODUCED FOR AUDIT, AS LIKE FORM 3CD IN INCOME TAX THAN THERE IS NO ROLE CA’s BECAUSE IT IS AN INTERPRETATION OF LAWS & ONLY Advocate should be authorised to conduct “LAW AUDIT”
I DO NOT UNDERSTAND WHY ICAI (FINANCIALS) ROAM AROUND MINISTRY AND GOVT. DEPTT. WITH BAG OF CERTIFICATES & REPORTS FOR INSERTION. THIS IS NOT PREVAILING IN ANY COUNTRY THROUGHOUT THE WORLD. IN USA ALL SUBMISSIONS ARE MADE BY WAY OF AFFIDAVITS. CHARTERED ACCOUNTANTS CERTIFICATES ARE NOT ACCEPTED AS PROOF FOR FINANCIAL SUPPORT IN US UNIVERSITIES FOR ADMISSION OF STUDENTS VISTING US FOR PERSUING MS COURSE, INSTEAD AN AFFIDAVIT FOR FINANCIAL SUPPORT SHOULD BE SUBMITTED BY THE SPONSOR’S OF THE APPLICANTS.
WHEN IN DEVELOPED COUNTRY’S SUCH PROCEDURE IS FOLLOWED, WHY IN INDIA LIKE THIS, CAUSING STRICT HURDLE FOR VOLUNTARY COMPLIANCE
In the span of these 30 years after the introduction of tax audit U/s 44AB of Income-Tax Act by only CAs, ICAI has kept the Govt. in Dark Room by way of self apprisal through their journals & News Papers and other publications.
On date, Assessee, Non-CA Tax Professionals & CAs should join hands to upload ITR in Tax Audit cases as per the software provided by the vendors to avoid repetitive job of filling Tax Audit Report. It is indicated in the e-filing portal of Income-Tax Deptt. that in future, Cost Audit Report and Report under Central Excise & Service Tax has to be uploaded. Ie, in future following persons with pass word for their respective DSC should join hands to upload Tax Audit cases
1. Assessee
2. Non-CA Tax Professional (Here DSC not required on date)
3. Chartered Accountant
4. Cost & Management Accountant
5. Auditor Under Central Excise & Service Tax
6. State VAT Auditor (If added in future)
This may cause further strict hurdle for voluntary compliance in Income-Tax Act. Finance Ministry should evaluate the utility of tax audit report already uploaded to e-filing protal U/s 44AB of Income-Tax Act for the Asst. Year 2013-14, before considering the above suggestion of ICAI (Financials). Before taking any such decisions, Deptt. of Revenue should not forget transparancy tool RTI is in force.