DRAFT Instruction on Internal Audit

1. Introduction

1.1 The Internal Audit system of the Income-tax Department was

revamped in 2007 by way of instruction No 3 of 2007. The role of
supervisory authorities was further specified by a supplementary Instruction
No. 15 of 2013. The working of the Internal Audit set up has been reviewed,
in the light of the findings of the C&AG Audit report, with a view to ensure
High Revenue cases are compulsorily audited which shall be identified
seamlessly by the Income-tax Business Application (ITBA). Therefore in
supersession of all existing instructions including Instructions No. 3 of 2007
and 15 of 2013, the following instruction is issued for compliance by all
concerned officers.
1.2 There shall be an Internal Audit set up, under the direct supervision
and control of the Principal Chief Commissioner of Income Tax. 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. There are thus 22 CsIT in the internal audit set-up in the
country. The CsIT(Audit) would have their headquarters at the same station
as that of the Pr CCIT. Each CIT(Audit) will have one Addl/JtCIT(Audit).
Each Addl/Jt CIT(Audit) will 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 Addl /
Jt CIT will supervise over the work of SAPs and IAPs working under him,
apart from audit of cases of the category assigned to him for audit.

2. Objective and Scope of Internal Audit

2.1 The three fold objectives were laid down by the Central Board of Direct
Taxes in the Year 1972 as under :
(i) To have a preventive and reforming effect in direction of avoiding
mistakes.
(ii) To play the corrective role by pointing out mistakes and ensuring
remedies without loss of time.
(iii) To improve quality of assessments so as to reduce the criticism of the
working of department by statutory audit and the Public Accounts
Committee.
2.2 In order to achieve the stated objectives, the main task of Internal
audit is :

a. to detect the mistake and errors which may occur during the
assessment work so that suitable/appropriate remedial action is
taken to retrieve the loss caused to the revenue;
b. to allow relief to the assessee in case of overcharge/over assessment.
 c. to see whether or not prescribed Rules and Procedure laid down are
properly followed and to have reformative effect.
The ultimate aim of Internal Audit is to improve the quality of assessments
by reducing the errors and omissions which are subsequently detected by
Receipt Audit.

2.3 The scope of scrutiny by Internal Audit is now coterminous with that
of the Receipt Audit. However, the scope of checking by internal audit is
broadly to verify the following:

(i) The arithmetical accuracy;

(ii) Non application or wrong application of relevant legal provisions;
(iii) Orders passed in conformity with binding judicial pronouncements/
precedence and also Circulars & Instructions issued by the CBDT;

The Audit Officer should not raise vague and ambiguous objections. Cogent
reasons should be given in the Audit Memo by the Audit Officer while
pointing out the mistakes. There must be a mention of under assessment /
over assessment amount as well as tax effect in the Audit Memo.

3. Auditable cases, targets and norms

3.1 There shall be three audit units, the Addl / Jt CIT, the SAP and the
IAP. The minimum number of cases to be audited by each Addl/Jt CIT
(Audit), SAP and IAP per annum shall be as under:

Audit Unit Minimum Annual target

Addl/Jt. 150 Cases
CIT(Audit)
SAP 300 Cases
IAP 500 cases (Corporate charge) or
600 cases (Non Corporate charge) or
550 cases (mixed cases for computing the
achievement of the target, each non-
corporate case shall have a weightage of 1
and corporate case of 1.2)

The number of cases mentioned above is only the minimum number of cases
to be audited but each audit unit must try to manage the work in such a
way that as many auditable cases as possible are actually audited. 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.

3.2 The Internal Audit plan would be flexible and adjustable according to
the available workload. The cases for audit would be selected through ITBA
system based on the factors like assessed income/loss or refund granted or
claim of exemption / deduction or any other criteria as may be decided by
the ADG(Audit),CBDT with the approval of CBDT. The list of auditable cases
shall be generated on quarterly or monthly basis as may be required. Out of
the list of auditable cases so generated, the CIT(Audit) shall identify cases of
different category to be audited by Addl/Jt CIT or SAP or IAP every month
having regard to the norms applicable to them.

3.3 Till such time as the ITBA becomes fully operational, the CIT(Audit)
shall obtain the list of auditable cases in prescribed format from the CIT(CO)
by 5th of the month following every quarter and assign the auditable cases to
Addl/Jt CIT(Audit), SAP and IAPs as per the norms and targets. Once the
ITBA becomes fully operational, the CIT (Audit) shall generate such list of
auditable cases through ITBA.

Category of auditable cases by various units of Internal Audit:

(A) For Additional CIT/Joint CIT (Audit)

SNo Types of cases Corporate

T Non Corporate
Assessed Income/Loss, Assessed Income/Loss,
Amount of Amount of deduction/
deduction/Exemption (In Exemption (In Rs. Crore)
Rs. Crore)
Delhi & Other Delhi & Other Delhi & Other
Mumbai Metros Mumbai Metros Mumbai Metros
1 Asst. Of 25 10 5 10 5 1
Search &
Seizure Cases
2 Asst. Of 25 10 5 10 5 1
Foreign Co.
Cases
3 Asst. Of non S 25 10 5 10 5 1
& S Cases
4 Scrutiny Asst. 25 10 5 10 5 1
With claim of
exemption
under
Chapter-III
and deduction
under
Chapter VIA,
claim u/s
10(23C), 11,
32, 54, and
other section
under which
exemption
from capital
gain claimed
 5 Asst. Of cases 25 10 5 10 5 1
of Other
Taxes

(B) For Dy. CIT/Asst. CIT (Audit) - SAP

S.No Types of cases Corporate

T Non Corporate
Assessed Income/Loss, Assessed Income/Loss,
Amount of Amount of
deduction/Refund/TDS (In deduction/Refund/TDS (In
Rs. Crore) Rs. Crore)
Delhi & Other Non Delhi & Other Non
Mumbai Metros Metro Mumbai Metros Metro
1 Asst. Of Above Above Above Above Above Above
Search & 25 10 1 10 1 0.5
Seizure Cases
2 Asst. Of Above Above Above Above 1 Above Above
Foreign Co. 10 1 1 1 0.5
Cases
3 Asst. Of non S Above Above Above Above 1 Above Above
& S Cases 10 5 1 1 0.5
4 Scrutiny Asst. Above 1 Above Above Above 1 Above Above
With claim of 1 0.5 1 0.25
exemption
under
Chapter-III
and deduction
under
Chapter VIA,
claim u/s
10(23C), 11,
32, 54, and
other section
under which
exemption
from capital
gain claimed
5 Asst. Of cases Above Above Above Above 1 Above Above
of Other Taxes 10 5 0.5 1 0.25
6 Refund Above Above Above Above Above Above
(IT/CT) 10 5 1 1 1 0.5
(C) For ITO (IAP) -
S.No Types of cases Corporate
T Non- Corporate
Assessed Income/Loss, Assessed Income/Loss,
Amount of Amount of
deduction/Refund/TDS deduction/Refund/TDS
(In Rs. Crore) (In Rs. Crore)
Delhi & Other Non Delhi & Other Non
Mumbai Metros Metro Mumbai Metros Metro
1 Asst. Of Below Below Below Below Below Below
Search & 25 10 1 10 1 0.5
Seizure Cases
2 Asst. Of Below Below Below Below 1 Below Below
Foreign Co. 10 1 1 1 0.5
Cases
3 Asst. Of non S Below Below Below Below 1 Below Below
& S Cases 10 5 1 1 0.5
4 Scrutiny Asst. Below 1 Below Below Below 1 Below Below
With claim of 1 0.5 1 0.25
exemption
under
Chapter-III
and deduction
under Chapter
VIA, claim u/s
10(23C), 11,
32, 54, and
other section
under which
exemption
from capital
gain claimed
5 Asst. Of cases Below Below Below Below 1 Below Below
of Other Taxes 10 5 0.5 1 0.25
6 Refund (IT/CT) Below Below Below Below 1 Below Below
10 5 1 1 0.5
7 TDS cases All orders passed by AO(TDS).

Note: The other Metros include Chennai, Kolkata, Bangalore, Ahmedabad,

Pune and Hyderabad.

4. Planning

4.1 The Audit Plan/calendar of compliance audit of Circles and Wards is

prepared in the office of C&AG for each financial year well in advance. The
CIT(Audit) shall obtain such Audit Plan/calendar from Local C&AG office
once the same is finalized. The CIT(Audit) shall prioritize the work of Internal
Audit of different Circles/Wards in accordance with such audit
Plan/calendar of C&AG so that internal audit plan is aligned to C&AG plan
to the extent possible. For this purpose, deployment of manpower available
may be re-arranged by the CIT(Audit) by deputing more than one IAP to
such Circles/ Wards which are going to be audited by Revenue Audit Party
in early part of the audit Plan/calendar.
4.2 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, the cases completed in last
year may be audited.
(ii) In the second quarter of the financial year, the cases completed in last
year as well in current year may be audited.
(iii) In the third and fourth quarters of the financial year, the cases
completed in current year may be audited.

5. Audit Procedure and classification

5.1 The Assessing Officer shall make the cases available for audit on
requisition from the Internal Audit unit. For the purpose of audit of search &
seizure assessments, the Appraisal reports shall also be shown to Audit
Unit, if so requisitioned.
5.2 The Audit unit shall complete the audit work expeditiously and
forward the objection, if any, in the form of Audit Memo in a format
prescribed at Annexure-A to this Instruction. The Audit Memo shall be sent
to the O/o PrCIT/CIT concerned with a copy each to the CIT(Audit), Addl
CIT(Audit), Range head and the Assessing officer.
5.3 In order to make it convenient to decide an appropriate course of
remedial action and facilitate its settlement, the audit objection shall be
categorized, depending upon the issue(s) raised by the audit unit concerned
in to
(i) Factual mistake, or
(ii) Legal question, or
(iii) Mixed issues
In case more than one issue is raised in an audit memo, each issue has to
be so categorized.
5.4 The audit Memo shall be issued after vetting by Addl CIT(Audit), if the
Revenue effect is more than Rs 1 Cr but less than Rs 10 Cr. In case Revenue
effect is more than Rs10 Cr, the objection shall be vetted by the CIT(Audit).
5.5 The Internal Audit Objections shall be classified, on the basis of
quantum of Revenue effect, into major or minor objection. Consistent with
C&AG parameters, presently the objections with the revenue effect of Rs
4,00,000 or more in respect of Corporation Tax and Income Tax and Rs
40,000 or more in respect of Other Taxes, shall be classified as Major audit
objection. The remaining IAP objections shall be classified as minor. All
pending objections as on the date of issue of this Instruction shall be
reclassified accordingly. In future whenever there is any change in the
classification of major and minor objections by C&AG the internal objections
shall also be re-classified accordingly.

6. Examination of Objections

The procedure for dealing with internal audit objection is outlined below.
6.1 Major Internal Audit Objection
6.1.1 The PCIT/CIT concerned shall examine major audit objection
and communicate to the CIT (Audit), within a month of receipt of
objection, as regards its acceptance or otherwise.
6.1.2 The CIT(Audit) shall consider the reply to the objections which
are not accepted by the PCIT/CIT and take following steps as may be
appropriate:
(i) If the view of the PCIT/CIT is acceptable, then the objection will be
settled as dropped and the decision communicated to the PCIT/CIT
concerned within a month of receipt of his reply.
(ii) If the view of the PCIT/CIT is not acceptable, the reasons for
disagreement would be communicated to the PCIT/CIT concerned
within a month of receipt of reply.
6.1.3 If the PCIT/CIT is still of the view that the objection is not
acceptable, he shall refer the matter, within a month of receipt of
disagreement, to the CCIT concerned for a final view in the matter and
the internal objection shall be dealt with accordingly.

6.2 Minor Internal Audit Objection

6.2.1 In respect of Minor audit objection, the Range head shall
communicate his/her acceptance or otherwise of the minor audit
objection to the Addl/JCIT(Audit) within one month of receipt of such
objection.
6.2.2 The Addl/JCIT(Audit) shall consider the reply to the objections
which are not accepted by the Range Head and take following steps as
may be appropriate:
(i) If the view of the Range Head is acceptable, the objection will be
settled as dropped and the decision is communicated to the Range
Head concerned within a month of receipt of his reply.
(ii) If the view of the Range Head is not acceptable, the reasons for
disagreement would be communicated to the Range Head concerned
within a month of receipt of reply.
6.2.3 If the Range Head is still of the view that the objection is not
acceptable, he shall refer the matter, within a month of receipt of
disagreement, to the jurisdictional PCIT/CIT for a final view in the
matter and the objection shall be dealt with accordingly.

7. Remedial Action:
7.1 In respect of an accepted internal audit objection, if the PCIT/CIT is of
the view that the relevant order under audit requires revision u/s 263 as
remedial action, he shall call for the relevant records and proceed
accordingly. In other cases, he shall communicate his decision not to invoke
section 263 to the Assessing Officer.
7.2 In cases where the PCIT/CIT has decided not to invoke his revision
jurisdiction u/s 263, the Assessing Officer shall examine an appropriate
course in respect of facts of each case and take a suitable action as per his
independent application of mind on the facts of each case.
7.3 The remedial action in cases of accepted objections must be initiated
within six months of receipt of such objections and concluded in a time
bound manner as per Income Tax Act, 1961.

8. Settlement of audit objections:

8.1 The internal audit objection which is accepted, shall be treated as

settled once the required remedial action has been completed in the case.
8.2 The major internal audit objection shall be settled by the CIT(Audit)
after considering the reply of the PCIT/CIT concerned. The reply shall be
initially examined by the Addl/Jt CIT (Audit) and shall be put up to the
CIT(Audit) with his comments.
8.3 The minor audit objection shall be settled by the Addl/JCIT(Audit)
after considering the reply of the Assessing Officer submitted through the
Range head concerned.
8.4 Pr CCIT shall review the progress of settlement of internal objections
in the CCIT Regions under his administrative control on quarterly basis and
take necessary steps to achieve Action Plan targets for the year in this
regard. He shall submit a report within a fortnight of each quarterly review
to the Member (A&J), CBDT.

9. Calling for Explanation:

Where the Internal Audit Objection has been accepted, the PCIT/CIT shall
call for an explanation of Officer/staff concerned in appropriate cases and
take suitable action, keeping in view the nature of objection, facts of the
case.
The PCIT/CIT shall also call for explanation of the officers who delayed the
process of remedial action beyond the time line laid down in this instruction
and of those who failed to take remedial action on time, causing irretrievable
loss of revenue.

10. Ledger Cards

10.1 It is observed that there is continuous rise in detection of major

irregularities by the C&AG from year to year. Proper maintenance of record
of mistakes committed by a particular officer is an essential step to enforce
accountability and take reformative steps. This was being done by
maintaining Ledger Cards.
10.2 The work of audit is now proposed to be done on ITBA system,
wherein the Audit Memo, all subsequent communications and its settlement
are to be recorded in the system. Moreover, each user shall have user an ID
and password and will be identified by his Employee number. A record of
mistakes committed by a particular officer shall thus be available in the
system irrespective of his current posting. Accordingly, formal system of
maintaining Ledger Cards shall be dispensed with.

10.3 However, until the time Audit Module in ITBA system is fully
functional, the ledger card will continue to be maintained in the offices of
the PCIT/CIT concerned as well as the CIT(Audit) in the format as in
existence prior to this Instruction coming into force.

11. Monitoring by CBDT

The Addl Director General (Audit), under the Pr DGIT(Admn & TPS), shall
monitor the functioning of the Internal Audit set up of the Department and
shall be the coordinating agency for all CsIT(Audit). The ADG(Audit) shall
also carry out Review and Inspection of internal Audit set up of any Pr CCIT
as approved by the Pr DGIT(Admn & TPS).

12. Registers to be maintained by :

(i) O/o PCIT /CIT- draft register annexed at Annexure E

(ii) O/o CIT(Audit)- All earlier register annexed at Annexure F
(iii) O/o Assessing Officer- Annexure F
(iv) Addl.CIT(Audit)/DCIT(SAP)/ITO(IAP)- Annexure F

Note: The proforma of such registers may be provided to Pr.

DGIT(Systems) so as the same can be incorporated in ITBA so that in
future the registers can be maintained and accessed online. Till then, the
manual registers may be maintained.

13. Reporting system :

(i) Monthly reports:

a. The CIT (Audit) to submit Monthly Statement both in respect

Internal Audit and Revenue Audit in the Proforma at Annexure-
B(i) and B(ii) to the Pr.CCIT by the 5th of the succeeding month
with a copy to each CCIT/DGIT/PCIT/CIT and to the
ADG(Audit).

b. The Pr.CCIT to submit Monthly Statement both in respect

Internal Audit and Revenue Audit in the Proforma at Annexure-
B to the ADG(Audit) by the 10th of the succeeding month with
a copy to CIT (A&J).
 c. The CIT (Audit) to submit Monthly D.O. to Pr. CCIT with a copy
to ADG (Audit) by the 10th of the succeeding month.

(ii) Quarterly Progress Reports:

a. The CIT(Audit) to submit QPR (Audit Statement-IA) to the

Pr.CCIT-as per proforma prescribed in Annexure-C.
b. The CIT (Audit) to submit QPR (Audit Statement-I for Internal
Audit and Audit Statement-II for Revenue Audit) to the
ADG(Audit) by 20th of the month following the end of the quarter-
as per proforma prescribed in Annexures-D-i and D-ii.
(also redrafted proforma with some changes in Part B and Part C
of QPR is annexed at D-iii and D(iv) for discussion.)

(iii) Biannual report :

Report by CIT (Audit) to the Pr. CCIT with a copy to each

CCIT/DGIT in respect of repeated/common errors noticed in the
preceding two quarters by 15th April and by 15th October.

(iv) Annual report :

Annual Report para 7.6 (b)of Audit Manual-page 26 and page 87

and also quality audit cases.

Proforma of Statement XVI required to be submitted by ADG(Audit)

to C&AG (Annexure G)- CIT(Audit) to submit details in this
Profroma by 30th September of the following year

The CIT (Audit) shall furnish a list of cases to the Pr.CCIT, where
Major revenue audit objections were accepted in the preceding year
but the Internal Audit had failed to point out the mistake in their
audit, by the 30th April of the year.

The proforma of such reports may be provided to Pr. DGIT(Systems) so as

the same can be incorporated in ITBA so that in future the reports can be
generated and accessed online. Till then the reports will be submitted
manually.

Note: The Role and procedure of Internal Audit wing in respect of

System audit, CIT centric audit, Audit of TPO and audit of CIT(A) need
to be discussed, finalized and incorporated accordingly.
The gist of Instructions related to audit as per Audit Manual 2003 and
2011 has been digitalized separately and the same may be perused for
incorporation in proposed Instruction, so as the proposed Instruction
may be issued in supersession of all earlier instructions

This may be brought to notice of all officers working under your jurisdiction
for compliance.

Hindi version of the Instruction will follow.

 Annexure-A

AUDIT MEMO

Office of the
-----------------
-----------------
Dated:-...
Audit Memo No. CIT (Audit)/Station/F.Y. /Audit Memo No./Dispatch
No.

Name of the assessee

Address
PAN
Status
Ward/Circle
Assessment Year
Date of assessment
order/Appeal
Order/Rectification order
Date of Internal Audit
Amount of under assessment
/ over assessment
Amount of tax effect
Category
Factual/Legal/Mixed
Major/Minor*

Audit Objection

---------------------

--------------------

Name & Signature of the officer

Copy to:- 1) The Pr. CIT/CIT concerned

2) The CIT (Audit) concerned
3) The Addl./JCIT-Range concerned
4) The Addl./JCIT (Audit) concerned
5) The Assessing Officer

Note: *For Major Audit Objections, replies to CIT (Audit) through PCIT/CIT
concerned
For Minor Audit Objections, replies to Addl. CIT (Audit) through Range
Head concerned

Name & Signature of the officer

 Annexure B(i)

Pr. CCIT /CCIT/DGIT CHARGE____________

MONTHLY INTERNAL AUDIT OBJECTIONS PENDING REPORT
FOR________20_______

PART-I - MAJOR AUDIT OBJECTIONS

Objections - up to the end of the month Objections - during the

preceding the month Month
(a) (b) (c) (d) (e) (f) (g) (h) (i) (j) (k)

No. of Receiv Settle Replie Balan Reven Recei Settl Repl Bala Reven
Objecti ed up d up s sent ce ue of ved ed ies nce ue
ons to the to the but (a+b- effect durin duri sent at effect
pendin end of end of not c) up for g the ng duri the for
g as on the the settle to the objecti mont the ng end objecti
1.4.20. prece prece d up end of ons in h mon the of ons in
...... ding ding to the the Col. th mon the Col. (j)
mont mont end of prece (e) th mont
h h the ding but h
prece mont not (e+g-
ding h settl h)
mont ed
h
PART-II - MINOR AUDIT OBJECTIONS

Objections - up to the end of the month Objections - during the

preceding the month of report Month
(a) (b) (c) (d) (e) (f) (g) (h) (i) (j) (k)

No. of Receiv Settle Replie Balan Reven Recei Settl Repl Bala Reven
Objecti ed up d up s sent ce ue of ved ed ies nce ue
ons to the to the but (a+b- effect durin duri sent at effect
pendin end of end of not c) up for g the ng duri the for
g as on the the settle to the objecti mont the ng end objecti
1.4.20. prece prece d up end of ons in h mon the of ons in
...... ding ding to the the Col. th mon the Col. (j)
mont mont end of prece (e) th mont
h h the ding but h
prece mont not (e+g-
ding h settl h)
mont ed
h
 Annexure B(ii)

Pr. CCIT /CCIT/DGIT CHARGE____________

MONTHLY REVENUE AUDIT OBJECTIONS PENDING REPORT
FOR________20_______

PART-I - MAJOR AUDIT OBJECTIONS

Objections - up to the end of the month Objections - during the

preceding the month Month
(a) (b) (c) (d) (e) (f) (g) (h) (i) (j) (k)

No. of Receiv Settle Replie Balan Reven Recei Settl Repl Bala Reven
Objecti ed up d up s sent ce ue of ved ed ies nce ue
ons to the to the but (a+b- effect durin duri sent at effect
pendin end of end of not c) up for g the ng duri the for
g as on the the settle to the objecti mont the ng end objecti
1.4.20. prece prece d up end of ons in h mon the of ons in
...... ding ding to the the Col. th mon the Col. (j)
mont mont end of prece (e) th mont
h h the ding but h
prece mont not (e+g-
ding h settl h)
mont ed
h
PART-II - MINOR AUDIT OBJECTIONS

Objections - up to the end of the month Objections - during the

preceding the month of report Month
(a) (b) (c) (d) (e) (f) (g) (h) (i) (j) (k)

No. of Receiv Settle Replie Balan Reven Recei Settl Repl Bala Reven
Objecti ed up d up s sent ce ue of ved ed ies nce ue
ons to the to the but (a+b- effect durin duri sent at effect
pendin end of end of not c) up for g the ng duri the for
g as on the the settle to the objecti mont the ng end objecti
1.4.20. prece prece d up end of ons in h mon the of ons in
...... ding ding to the the Col. th mon the Col. (j)
mont mont end of prece (e) th mont
h h the ding but h
prece mont not (e+g-
ding h settl h)
mont ed
h
 Annexure-C

AUDIT STATEMENT NO. 1A

Due date in Pr. CCIT office

20th of month of the following quarter.

CIT (Audit) Charge*..

* In metro charges where there is more than one CIT (Audit)

To be submitted to Pr. CCIT

Part- F

1. Major Audit Objections (above Rs 4 lakh in Income-tax and above

Rs. 40,000 in other taxes)

Objec
tions
CI pendi
Arrear Total
T Balance ng
CCIT audit Current objections
c Objection objectio for
charg objections audit for
h s settled ns to be more
e as on objections settlemen
ar settled than
01.04.2014 t
ge 6
mont
hs
Total Reve Tota Reve Total Rev Tota Rev To Rev
nue l nue enu l enu tal enu
effec effec e e e
t t effec effe effec
t ct t
CCIT
I

CCIT
II

CCIT
III
 2. Minor Audit Objections (below Rs 4 lakh in Income-tax and below
Rs. 40,000 in other taxes)

Objec
tions
pendi
CI Arrear Total
Balance ng
CCIT T audit Current objections
Objection objectio for
charg ch objections audit for
s settled ns to be more
e ar as on objections settlemen
settled than
ge 01.04.2014 t
6
mont
hs
Total Reve Tota Reve Tota Rev Tota Rev To Rev
nue l nue l enu l enu tal enu
effec effec e e e
t t effec effe effec
t ct t
CCIT I

CCIT
II

CCIT
III
Part- G Performance of Addl. CIT (Audit)/JCIT (Audit)

i. Major Audit Objection (above Rs 4 lakh in Income-tax and above Rs.

40,000 in other taxes) raised by Addl. CIT (Audit)/JCIT (Audit) and their
settlement (all taxes)

Arrear Audit Current Audit

S.No. Particulars Total
Objections Objections
No. of Revenue No. of Revenue No. of Revenue
Mistakes effect Mistakes effect Mistakes effect
(Rs. in (Rs. in (Rs. in
lakh) lakh) lakh)
1. Pending as on - -
1st April
2. Objections - -
raised in the
quarter
3. Objections - -
raised in
current year
upto quarter
end
4. Total for
disposal upto
quarter end
(1+3)
5. Objection
settled during
the quarter
6. Objection
settled upto
quarter end
7. Balance (4-6)

ii. Minor Audit Objections (Below Rs 4 Lakh in Income-tax and below Rs.
40,000 in other taxes) raised by Addl. CIT (Audit)/JCIT (Audit) and
their settlement (all taxes)

Arrear Audit Current Audit

S.No. Particulars Total
Objections Objections
No. of Revenue No. of Revenue No. of Revenue
Mistakes effect Mistakes effect Mistakes effect
(Rs. in (Rs. in (Rs. in
lakh) lakh) lakh)
1. Pending as on - -
1st April
2. Objections - -
raised in the
 quarter

3. Objections - -
raised in
current year
upto quarter
end
4. Total for
disposal upto
quarter end
(1+3)
5. Objection
settled during
the quarter
6. Objection
settled upto
quarter end
7. Balance (4-6)

Part- H Performance of Special Audit Parties (SAP)

i. Major Audit Objections (above Rs. 4 Lakh in Income-tax and above

Rs. 40,000 in other taxes) raised by SAP and their settlement (all taxes)

Arrear Audit Current Audit

S.No. Particulars Total
Objections Objections
No. of Revenue No. of Revenue No. of Revenue
Mistakes effect Mistakes effect Mistakes effect
(Rs. in (Rs. in (Rs. in
lakh) lakh) lakh)
1. Pending as on - -
1st April
2. Objections - -
raised in the
quarter
3. Objections - -
raised in
current year
upto quarter
end
4. Total for
disposal upto
quarter end
(1+3)
5. Objection
settled during
the quarter
6. Objection
settled upto
quarter end
7. Balance (4-6)

ii. Minor Audit Objections (Below Rs 4 Lakh in Income-tax and below

Rs. 40,000 in other taxes) raised by SAP and their settlement (all taxes)

Arrear Audit Current Audit

S.No. Particulars Total
Objections Objections
No. of Revenue No. of Revenue No. of Revenue
Mistakes effect Mistakes effect Mistakes effect
(Rs. in (Rs. in (Rs. in
lakh) lakh) lakh)
1. Pending as on - -
1st April
2. Objections - -
raised in the
quarter
3. Objections - -
raised in
current year
upto quarter
end
4. Total for
disposal upto
quarter end
(1+3)
5. Objection
settled during
the quarter
6. Objection
settled upto
quarter end
7. Balance (4-6)
Part- I Performance of Internal Audit Parties (IAP)

i. Major Audit Objections (above Rs 4 Lakh in Income-tax and above

Rs. 40,000 in other taxes) raised by IAP and their settlement (all
taxes)

Arrear Audit Current Audit

S.No. Particulars Total
Objections Objections
No. of Revenue No. of Revenue No. of Revenue
Mistakes effect Mistakes effect Mistakes effect
(Rs. in (Rs. in (Rs. in
lakh) lakh) lakh)
1. Pending as on - -
1st April
2. Objections - -
raised in the
quarter
3. Objections - -
raised in
current year
upto quarter
end
4. Total for
disposal upto
quarter end
(1+3)
5. Objection
settled during
the quarter
6. Objection
settled upto
quarter end
7. Balance (4-6)

ii. Minor Audit Objections (Below Rs 4 Lakh in Income-tax and

below Rs. 40,000 in other taxes) raised by IAP and their settlement
(all taxes)

Arrear Audit Current Audit

S.No. Particulars Total
Objections Objections
No. of Revenue No. of Revenue No. of Revenue
Mistakes effect Mistakes effect Mistakes effect
(Rs. in (Rs. in (Rs. in
lakh) lakh) lakh)
1. Pending as on - -
1st April
2. Objections - -
raised in the
quarter
3. Objections - -
raised in
current year
upto quarter
end
4. Total for
disposal upto
quarter end
(1+3)
5. Objection
settled during
the quarter
6. Objection
settled upto
quarter end
7. Balance (4-6)
 Annexure-D-i

PROFORMAE OF STATEMENTS AND REPORTS

INTERNAL AUDIT QUARTERLY PROGRESS REPORT FOR THE

QUARTER ENDING

AUDIT STATEMENT NO. 1

Due date in office of the Addl. Director General (Audit), New Delhi

20th of month of the following quarter.

Pr. CCIT Charge..

CIT (Audit) Charge*..
* In metro charges where there is more than one CIT (Audit)

To be submitted to ADG (Audit)

Part- A Administrative

S. No. Particulars No. sanctioned No. working

1. Addl./JCIT
(Audit)
2. SAPs
3. IAPs

Part-B Performance of audit wing vis--vis Action Plan Target

S.No Particular Addl./JCIT(Audi Special Audit Internal Audit

. s t) Parties (SAPs) Parties (IAPs)
1. Action
Plan
target for
the year
2. Action
Plan
target for
the
quarter if
any
3. No. of
cases
audited
during the
quarter
4. No. of
cases
 audited
upto the
quarter
end
No. of Revenu Revenu Revenu
No. of No. of No. of
5. objections e effect e effect e effect
Mistake Mistake Mistake
raised (Rs. in (Rs. in (Rs. in
s s s
during the lakh) lakh) lakh)
quarter

No. of Revenu Revenu Revenu

No. of No. of No. of
6. objections e effect e effect e effect
Mistake Mistake Mistake
raised (Rs. in (Rs. in (Rs. in
s s s
upto the lakh) lakh) lakh)
quarter
end

PART B Revised in Annexure D(iii) (attached to mail

separately)
Part-C

1. Major Audit Objections (above Rs 9 lakh in Income-tax and above

Rs. 30,000 in other taxes)

Arrear Audit Current Audit

Sr. No. Particulars Total
Objections Objections
No. of Revenu No. of Reven No. of Revenue
Mistak e effect Mistak ue Mistak effect
es (Rs. in es effect es (Rs. in
lakh) (Rs. in lakh)
lakh)
1. Pending as on 1st - -
April
(Arrear objections)
2. Objections raised - -
in the quarter
3. Objections raised - -
in current year
upto quarter end
4. Total for disposal
upto quarter end
(1+3)
5. Objection settled
during the quarter
6. Objection settled
upto quarter end
7. Balance (4-6)

2. Minor Audit Objections (below Rs 9 lakh in Income-tax and below

Rs. 30,000 in other taxes)

Pr.
CCIT Arrear Audit Current Audit
Particulars Total
charge Objections Objections
*
No. of Reven No. of Reven No. of Revenu
Mistak ue Mistake ue Mistak e effect
es effect s effect es (Rs. in
(Rs. in (Rs. in lakh)
lakh) lakh)
1. Pending as on 1st - -
April
2. Objections raised in - -
the quarter
3. Objections raised in - -
current year upto
quarter end
 4. Total for disposal
upto quarter end
(1+3)
5. Objection settled
during the quarter
6. Objection settled
upto quarter end
7. Balance (4-6)

Part CI and CII- Revised in Annexure D(iv) (attached to mail

separately)

Part- D

Objections to be classified

Audit objection raised in

No. of objection Revenue effect
S. No. financial year pending for
(Rs. in lakhs)
settlement
1. 2015-2016
2. 2014-2015
3. 2013-2014
4. 2012-2013
5. 2011-2012 and earlier years

Note: the financial year mentioned in various columns may be changed

accordingly as per the year of reporting

Part- E

Date of report sent to CCIT (CCA) by CIT (Audit) on repeated/common errors

noticed in audit [as per Instruction no. 15/2013 para 3.1(iv) (Due dates 15th
April and 15th October)] .
 Annexure-D-ii

AUDIT STATEMENT No. II

Due date in office of the Addl. Director General (Audit), New Delhi
20th of month of the following quarter.
Pr. CCIT Charge..
CIT (Audit) Charge*..
* In metro charges where there is more than one CIT (Audit)

To be submitted to ADG (Audit)

Part-A

1. Major Revenue Audit Objections (above Rs 4 lakh in Income-tax/ CT

and above Rs. 40,000 in other taxes)

Arrear Audit Current Audit

Sr. No. Particulars Total
Objections Objections
No. of Revenu No. of Reven No. of Revenue
Mistak e effect Mistak ue Mistak effect
es (Rs. in es effect es (Rs. in
lakh) (Rs. in lakh)
lakh)
1. Pending as on 1st - -
April
(Arrear objections)
2. Objections raised - -
in the quarter
3. Objections raised - -
in current year
upto quarter end
4. Total for disposal
upto quarter end
(1+3)
5. Objection settled
during the quarter
6. Objection settled
upto quarter end
7. Balance (4-6)

Year-wise pendency of No. of Revenue effect (Rs. In

8 objections Objections lakhs)
a) 2015-16
b) 2014-15 and earlier
year

Analysis of pending arrear objection No. of Revenue effect (Rs. In

9 Objections lakhs)
a)No. accepted but yet to be dropped
by AG
b) Pending with CBDT
c)Accepted but remedial action
pending
d)Pending for other reasons
 Part-B

2. Minor Revenue Audit Objections (below Rs 4 lakh in Income-tax/CT

and below Rs. 40,000 in other taxes)

Pr.
CCIT Arrear Audit Current Audit
Particulars Total
charge Objections Objections
*
No. of Reven No. of Reven No. of Revenu
Mistak ue Mistake ue Mistak e effect
es effect s effect es (Rs. in
(Rs. in (Rs. in lakh)
lakh) lakh)
1. Pending as on 1st - -
April
2. Objections raised in - -
the quarter
3. Objections raised in - -
current year upto
quarter end
4. Total for disposal
upto quarter end
(1+3)
5. Objection settled
during the quarter
6. Objection settled
upto quarter end
7. Balance (4-6)

Year-wise pendency of No. of Revenue effect (Rs. In

8 objections Objections lakhs)
a) 2015-16
b) 2014-15 and earlier
year

Analysis of pending arrear objection No. of Revenue effect (Rs. In

9 Objections lakhs)
a)No. accepted but yet to be dropped
by AG
b) Pending with CBDT
c)Accepted but remedial action
pending
d)Pending for other reasons
 Annexure- E

Register of Audit Objections to be maintained in the O/o the Pr.

CIT/CIT
Financial Year 20___ - 20___

S Aud Det Recei Na PA A. Amo Amo Concer Whet Rem Date Dat Fin
. it ails ved me N Y. unt unt ned her edial of e of al
N Me of on of of of Assessi revisi Actio initia settl Rev
o mo the the und tax ng on n tion eme enu
No. IAP Ass er effec officer u/s take of nt e
/ esse asse t 263 n by reme Effe
SAP e ssm requi AO, dial ct
ent red if actio
/ove any n
r
amo
unt
 ANNEXURE-F

Format of Internal Audit Statement (IAS) of Auditable cases:

CIT Charge / Addl. CIT / JCIT

Income Tax Circle / Ward
Statement of the month of
Name of the AO .

S.No. Name of PAN Status Assessment Date of Total

the Year Assessment/ Income/Loss
Assessee rectification
/Appeal
effect/revision

The Norms of Auditable cases for Internal Audit shall be as per Instruction
No. 3 of 2007 dated 16.04.2007. The Internal Audit Statement is required to
be prepared separately in the following categories:
Category-A Search and Seizure cases
Category-B Foreign Cases
Category-C Non Search and Seizure Cases (Scrutiny Cases)
Category-D Cases with claim of deduction u/s 10, 10A, 10B, 10C,
10(23C), 11, 32, 54 and Chapter VI-A.
Category-E Other Taxes cases,
Category-F TDS Cases
 7.3 Registers to be maintained by Range Addl./JCIT and
Assessing Officers
The following register is to be maintained by the Range Addl. CIT/JCIT office
Addl./JCITs Register of internal Audit Objections.
Sr Name IT Date Assessm Gist Accep Tax Last Date Actu D & Date
No of the Circl of ent year of ted or effec date of al CR of
assess e/ Audit /date of Obje not t as for rectifi Tax ent Colle
ee / ward Mem Assessm ctio accep per acti cation ry ction
PAN o ent n ted audi on /
t u/s Reass
obje 263 essme
ctio / nt
n 147
/
154
etc
1 2 3 4 5 6 7 8 9 10 11 12 13

The following register is to be maintained by the Assessing Officer

AOs Register of Internal Audit Objections.

Sr Name IT Date Assessm Gist Accep Tax Last Date Actu D Date
No. of the Circl of ent year of ted or effec date of al & of
in assess e/ Audi /date of Obje not t as for rectifi Tax C R Colle
the ee / ward t Assessm ctio accep per acti catio ent ction
reg PAN Mem ent n ted audi on n/ ry
iste o t u/s Reass
r of obje 263 essm
Ad ctio / ent
dl/ n 147
JCI /
T 154
etc
1 2 3 4 5 6 7 8 9 10 11 12 13
 7.4 A separate movement register should be maintained by the assessing
officers to record details of the files of the auditable cases dispatched
to the IAPs to enable verification at a later stage whether a particular
file had been sent to the IAPs or not. The Range Addl./JCIT should
verify maintenance of the register from time to time.

7.5 Registers to be maintained by the Audit Wing

The following registers are to be maintained by the Audit wing.

a Format of Register of auditable cases

COMMISSIONER OF INCOME TAX (AUDIT)

REGISTER OF AUDITABLE CASES

AUDIT PARTY:

S. CIT Name War P A. Date Secti Retur Total Refu Type of Whet
Char of the d/ A Y. of on ned incom nd scrutin her
N
ge asses N asses unde Incom e/ amou y the
o. Circ
see smen r e nt selectio case
le loss
t whic /loss n: is
deter (if
order h (Rs.) CASS/ one
mined appli
/ order AIR of
in the cable
order passe INPUTS Top
assess )
grant d / 100
ment
ing of
order CCIT
refun CIT
APPRO
d Char
VED
ge
/REFU
(Yes/
ND
No)
CASE/

OTHER
S

1 2 3 4 5 6 7 8 9 10 11 12 13

b Format of Register of audit objections raised and settled

 COMMISSIONER OF INCOME TAX (AUDIT)

REGISTER OF AUDIT OBJECTIONS RAISED & SETTLED

AUDIT PARTY:

S. Nam A.Y CIT AO Audit Date Date Gist Tax effect Status of settlement
e of . Cha Cha Objecti of of of of audit of objection
N
the rge rge on No. Audi Audi Audi objection
o. Asse t t t
ssee Me Me Obje Maj Mino Date Tax Tax
mo mo ctio or r of effect effect
Rece n settle
(Majo (Mino
ived ment
r) r)
in
CIT
s
offic
e

1 2 3 4 5 6 7 8 9 10 11 12 13 14
 Annexure-G
STATEMENT XVI

F.Y. 2015-16

(a) Manpower deployed for Internal Audit.

Manpower deployed during the F.Y. 20_-20_ was as under:

No. of Addl. CsIT/JCsIT :

No. of Dy. CsIT / ACsIT :

No. of ITOs :

(b) The number and tax effect of Internal Audit and Major & Minor
objections raised, settled and pending for each of the five years from 2011-
12 to 2015-16:

Year Opening No. added Total No. Balance No.

balance of during the Settled and Pending and
cases and year and amount amount
Amt. Involved amount involved in involved in
in crores. involved in crores crores
crores

2011-2012
2012-2013
2013-2014
2014-2015
2015-2016

(c) Year-wise break up of Pendency as on 31st March, 2015.

Year in which No. of cases Amount (Rupees in

objection raised Crores)

2011-2012 & earlier

year
2012-2013
2013-2014
2014-2015
2015-2016
Total
(i) Number of audit objections both major and minor raised by
the assessing officers as on 31.03.2016 without settlement
alongwith amount involved in crores of rupees .

(ii) Number of Major objection out of (i) above alongwith

amount involved in crores in rupees. (Current)

(iii) Number of Major objection disposed of and pending during

the last five year i.e. 2011-12 to 2015-16:

Financial No. of cases No. of cases % age of No. of

for disposal disposed of disposal of pending cases
Year and amount and amount total No. of and amount
involved in involved in cases involved in
crores crores crores

2011-2012

2012-2013

2013-2014

2014-2015

2015-2016

(iv) Year wise analysis of the age of the pending item at the end of viz. I
year old, 2 year old etc. (alongwith value in crores.)

Year in which objection No. of cases Amount (Rupees in

raised crores)

2011-2012 & earlier year

2012-2013

2013-2014

2014-2015

2015-2016

Total