CAG Report 2016 Non-production of records by Income Tax Department to C&AG Audit Team

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Comptroller and Auditor General (C&AG) Report No. 03 of 2016 for the year ended March 2015 on Compliance Audit on Direct Tax Department Union Government tabled on 11-03-2016.

As per the report the instances mentioned are those which came to notice in the course of test audit for the period 2014-15 as well as those which came to notice in earlier years but could not be reported in the previous Audit Reports; instances relating to the period subsequent to 2014-15 have also been included, wherever necessary.

Non-production of records by Income Tax Department to C&AG Audit Team

In Income Tax Act, Assessing Officers have been given power for best judgment assessment under section 144. This power has been regularly and adequately used by the Income Tax Officials in cases of erring assessees where books of accounts or records/documents are not produced before them.

C&AG scrutinizes assessment records of the Income Tax Department (ITD) under section 16 of the C&AG’s (DPC) Act, 1971. The objective of the  audit is securing an effective check on the assessment, collection and proper allocation of taxes and examining that regulations and procedures are being observed. It is also incumbent on ITD to expeditiously produce records and furnish relevant information to audit.

 However C&AG in its latest report as above has revealed that Income Tax Department itself not adverse to the idea of non production of its records for audit.

 Latest C&AG report shows the details of non-production of records by ITD during FY 2012-13 to FY 2014-15. Non-production of records has increased in Chhattisgarh, Haryana, Himachal Pradesh, Jharkhand, Kerala, Madhya Pradesh, UT Chandigarh and Delhi significantly over previous years during FY 2014-15.

 ITD did not produce 33,536 records out of 2,78,957 records requisitioned during FY 2014-15, (12.02 per cent) which is less than from FY 2013-14 (13.44 per cent). In particular in six States a total of 265 records were not produced to audit pertaining to same assessee in three or more consecutive audit cycles as under:

Table 2.9

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