TMI BlogRevised Instruction on Internal AuditingX X X X Extracts X X X X X X X X Extracts X X X X ..... ol of the Pr.CCIT. The Audit structure shall be headed by a CIT (Audit) in each Pr.CCIT region. In the metro charges of Delhi, Mumbai, Kolkata and Chennai, there shall be two CsIT (Audit) each. The CIT (Audit) shall have their headquarters at the same station as that of the Pr.CCIT. Each CIT (Audit) will have one JCIT (Audit) [for the purpose of this Instruction, JCIT shall include Addl. CIT]. Each JCIT(Audit) shall have one SAP (Special Audit Party) unit headed by DCIT/ACIT (Audit) and as many IAPs (Internal Audit Party) headed by ITO(Audit) as are mentioned in Cadre Restructuring Plan, 2013. The JCIT will supervise the work of SAPs and IAPs working under him, apart from audit of cases which are categorized and assigned to him for audit. 2.2 In case of AOs (assessment units) of International Taxation, Transfer Pricing, Central Charges, Exemption etc. stationed in the territorial jurisdiction of a Pr.CCIT/CIT(Audit) which is different from the jurisdiction of the Pr.CCIT/CIT(Audit) where the controlling PCIT of such AOs is stationed, the responsibility for Internal Audit of all such assessment units will be of the local CIT(Audit) related to the Pr.CCIT in whose territorial ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Audit Unit Minimum Annual Target JCIT 200 points SAP 400 points IAP 720 points (for computing the achievement of the target, each non-corporate case shall have a weightage of 1 and corporate case of 1.2) 4.2 The audit of regular or complete scrutiny case shall be counted 1 point whereas audit of 'limited scrutiny' case shall be 0.5 point as the scope of audit is also limited as mentioned in para 3.3 above. The target mentioned above is only the minimum number of points to be accumulated and each audit unit must try to manage the work in such a way that as many auditable cases as possible are actually audited. 4.3 The CIT (Audit) shall be competent to change the target and norms for SAP/IAP according to the exigency of the availability of manpower and workload, subject to the approval of the Pr.CCIT concerned. Moreover, the CIT (Audit) may also ensure that the annual workload is evenly distributed in different months of the financial year. 4.4 The Internal Audit plan would be flexible and adjustable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Limited Scrutiny (Y/N) API Nature of business Turnover PCIT Station 5.4 A combined list for the Pr.CCIT in descending order of API shall be normally generated on quarterly basis. However, the CIT (Audit) may decide to get the list generated as per requirement. Once a list of all auditable cases is arranged in descending order of API, cases for audit may be assigned by CIT (Audit) to JCIT, SAP and IAPs. While assigning the cases to audit units, the CIT (Audit) may take into consideration, the following factors: ( i ) Preference for audit is given to high risk cases ( ii ) The target of minimum number of cases to be audited by audit unit has to be evenly distributed over the year. ( iii ) At least some cases from all assessment units (AOs) should be audited. ( iv ) In multi-station regions, cases from all stations are audited. ( v ) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it), if required. 5.11 However, the Board may prescribe different criteria for generation of list of auditable cases in respect of the orders for which it is not possible to apply API, like Transfer Pricing, TDS, TRO etc, based upon information available in ITBA, in addition to or in supersession of the API based criteria, depending upon the requirement from time to time. 6. Planning 6.1 The CIT (Audit) shall prioritize the work of Internal Audit of different Circles/Wards in accordance with audit Plan/calendar of C AG with the stated objective of conduct of internal audit before the revenue audit is taken up. 6.2 In view of the 31st December being the revised time barring date for assessments, the Internal Audit units may take up the work of audit of cases in the following manner: ( i ) In the first quarter of the financial year: assessments made in previous FY current FY. ( ii ) In remaining quarters of the Financial year: assessments made in current year 7. Audit Procedure and classification of mistakes 7.1 The Assessing Officer shall make the assessment records available for audit on requisition from the Internal Audit unit. In post-ITBA sc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure for dealing with internal audit objection is outlined below. 8.1 Major Internal Audit Objection 8.1.1 The PCIT concerned shall, on the basis of report from Assessing Officer, examine major audit objection and decide whether or not, it is acceptable within a month of receipt. 8.1.2 Where the audit objection is accepted, remedial action shall be initiated. If the audit objection is not accepted, the reasons for the same shall be communicated to the CIT (Audit). 8.1.3 Where the objection is not accepted, the CIT (Audit) shall consider the reasons in the reply of PCIT and take following steps as may be appropriate: ( i ) If the view of the PCIT is acceptable, the objection will be settled as dropped and the decision shall be communicated to the PCIT concerned within one month of receipt of his reply. ( ii ) If the view of the PCIT is not acceptable, the reasons for disagreement shall be communicated to the PCIT concerned within one month of receipt of his reply. 8.1.4 If the PCIT on consideration of the response of CIT(Audit) is still of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Assessing Officer. 9.2 In respect of an accepted minor objection, if the Range head is of the view that the matter may require examination by PCIT for invoking revision jurisdiction u/s 263 , he shall refer the matter to the PCIT and the procedure as in 9.1 above shall follow. 9.3 In cases where the PCIT has decided not to invoke his revision jurisdiction, or the Range head has decided not to refer the matter to PCIT, the Assessing Officer shall examine an appropriate course of action, in the light of facts of each case and take a suitable action as per his independent application of mind on the facts of each case. 9.4 In case the Assessing Officer decides to choose section 154 as the appropriate remedial measure in 9.3 above, he shall initiate the action with the approval of the Range head. 9.5 The remedial action in cases of accepted objections must be initiated within three months of receipt of such objections and concluded within six months of initiation of the proceeding as per Income-tax Act, 1961. 10. Settlement of audit objections: 10.1 The accepted major internal audit objection shall be settled by the CIT (Audit) once the required remed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l CsIT(Audit). The ADG (Audit) shall also carry out review and inspection of internal Audit set up of any region with the approval of the Pr.DGIT(Admn.). 13.2 For preparing list of audilablc cases in respect of the orders for which it is not possible to apply API, like International Tax, Exemption, Transfer Pricing, TDS etc. as discussed in para 5 above, the ADG(Audit) shall decide appropriate criteria. After the criteria are tested and used for some time, ADG (Audit) may suggest appropriate method to work out risk factors and automatic preparation of list through ITBA. 13.3 The CIT (Audit), in consultation with the Pr.CCIT, shall devise suitable training programs from time to time for officers and staff engaged in the audit work. The training may be arranged through DTRTI or otherwise in the form of Workshops Seminars. The ADG (Audit) shall monitor uniformity and improvement in training programs by different CsIT (Audit). 13.4 In order to reduce the incidence of errors, the CIT (Audit) shall prepare a list of common/repeated errors noticed in the audit in preceeding two quarters in April and October every year to the ADG (Audit) who in turn shall compile and classif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is required to be generated through ITBA. 15.5 Until such time as Audit Module in ITBA becomes functional, the reports as per existing guidelines shall continue to be sent. This may be brought to notice of all officers working under your jurisdiction for compliance. Abbreviations used in this Instruction PDGIT Principal Director General of Income-tax PCCIT Principal Chief Commissioner of Income-tax DGIT Director General of Income-tax CCIT Chief Commissioner of Income-tax PCIT Principal Commissioner of Income-tax and includes Commissioner of Income-tax ADG Additional Director General of Income-tax JCIT Joint Commissioner of Income-tax(Audit) and includes Additional Commissioner of Income-tax (Audit) Range head Additional or Joint Commissioner of Income-tax heading the Range AO Assessing Officer Annexure-A AUDIT MEMO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lumn (10) Objections that are accepted out of (6) Revenue effect in respect of Column (12) 1 2 3 4 5 6 7 8 9 10 11 12 13 Break up for the authorities below should be available till basic unit i.e. AO, IAP etc. PART-II - MAJOR INTERNAL AUDIT OBJECTIONS No. of Objections sending as on 1.4.20....... Revenue Effect of objections in Column (1) Received during the month Received up to the end of month Settled during the month Settled up to the end of month Pending at the end of month (1+4-6) Revenue effect of objections in Col (7) Replies sent but pending Object ..... X X X X Extracts X X X X X X X X Extracts X X X X
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