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Income tax scrutiny

Nazia (Asst Manager - Finance) (139 Points)

13 September 2013

Dear experts

What is the procedure for an employee to represent the company for scrutiny hearing. I know very well Power is require for Auditor / other outsiders, but for employee is any authorization letter or power required??

ITO was insisting tat auditor should represent. Is scrutiny under CASS something to worry?

pls guide. thanking you in anticipation.

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7 Replies

CA LOVELY ARORA (C.A. B.Com (H) Graduate) (2151 Points)
Replied 13 September 2013

Dear Nazia Mam,

the auditor is required/asked to be present before A.O. because he did the audit, not the employee of the company. And, yes, both i.e. auditor as well as company's representative is required to be there... for representing on behalf of company, the employee just needs a power of attorney on the letterhead of the company for representing on its behalf... nothing much is officially required as such....

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Nazia (Asst Manager - Finance) (139 Points)
Replied 13 September 2013

Thank you so much for your valuable reply.

I understand auditor will be welcomed by ITOs more happily. But I just wanted to be clear whether the employee also has equal rights & powers in terms of representing the company & the procedure for the same. Because as the company's Finance Manager I know much better about my company & its transactions than the external auditor.

Thanks again.

One more question, is scrutiny under CASS something to really worry???

CA LOVELY ARORA (C.A. B.Com (H) Graduate) (2151 Points)
Replied 13 September 2013

Dear Mam,

yes, the employee has also rights to represent the company.... but as said by you also, they might not entertain an employee only, without the auditor/CA of the company... it might be true that you know much better than the external auditor... but A.O. needs auditor/CA of company for some other better purpose... which is different from the operations of the company..
anyhow, better would be to go with your auditor and take POA from the company on the letterhead and consult the whole matter with your CA before going in front of A.O.

And there is not much to worry in CASS... but as always advised by all, better be prepared and be alert always.. just be alert, no worries...

Best Regards,
CA Lovely Arora
ca.lovelyarora @ gmail.com

CA Himanshu Bansal (Risk Manager) (2345 Points)
Replied 13 September 2013

Yes you can also represent your company, Power of attorney has to be taken from the directors of the company in your name for the case.

Under CASS, the system of Income tax department selects cases on the basis of some specific undisclosed criteria. The scrutiny under CASS is similar to any other case taken up.They will ask you for complete set of financials, ledgers, bank account statements, etc. Questionaires will be presented to you for answers in writing, which the ITO will scrutinise,make queries about expenses claimed, valuations like those of closing stock.,etc.