AUDIT OF DIRECT TAXES

DAY 1

Session 1

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Constitutional ProvisionConstitutional Provision

Under Article 149 of the Constitution and under the C&AG (duties, powers and conditions of service) Act, 1971, the Comptroller and Auditor General of India audits receipts from various direct taxes.

Audit mandate

Under article 151(1) of the Constitution Report of Comptroller and Auditor of General relating to to the accounts of the Union shall be submitted to the President who causes it to be laid before the Parliament

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Audit mandate Section 16 of the CAG’s DPC Act, 1971 enjoins

upon the CAG the duty of audit of all receipts which are payable in the consolidated fund of Union and of each state and UT.

Audit of receipts embraces the audit of all tax and non tax receipts of the Central and State Governments.

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Audit mandate

The right of access to any record relating to assessees is available to the C & A G of India under Section 138(1) of the Income Tax Act, 1961 read with Notification No. SO 2048 dated 23.6.1965

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Function of Audit in the area of receipts

To satisfy itself by such test checks as may be necessary that the internal procedure adequately provides for and actually secures:The collection and utilization of data necessary for the

computation of tax demand or refund under law The prompt raising of demands in the manner required

by law

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Function of Audit in the area of receipts

The correct accounting and allocation of collections and their credit to the Consolidated Fund

That proper safeguards exist to ensure that there is no omission or negligence to levy or collect taxes or issue refunds

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Function of Audit in the area of receipts

That claims of tax payers are pursued with due diligence and not abandoned or reduced except with adequate justification and proper authority

That double refunds, fraudulent or forged refund orders or other losses of revenue through fraud, default or mistake are promptly brought to light and investigated

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Function of Audit in the area of receipts

Audit should not Substantiate itself for the revenue official and try to suggest additions

While it is the duty of audit to see that no irregularities with reference to law and rules are found to be committed, Audit should not enmesh itself in legal controversies regarding the interpretation of a particular provision of the law

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Function of Audit in the area of receipts

•      Audit should see whether any interpretation given by the revenue authorities in respect of a particular provision of the Act is in accordance with authoritative interpretation given either by High Court/Supreme Court.

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