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Latest news-for finance n accounts-5.8.13

SIVASIVA (FCA, Future CA) (4935 Points)

05 August 2013

Income-tax department gets more teeth to conduct special audit

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CS,CA F,Numrologi TusharSampat (CS CA F Numerologist Astrologer Graphologist Face reader Vastu Expert) (85930 Points)
Replied 05 August 2013

Pls mention the source and the basis of this post.

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SIVASIVA (FCA, Future CA) (4935 Points)
Replied 05 August 2013

When DLF Commercial Projects Corporation - a partnership firm in which India's largest real estate firm, DLF, held 74% - filed its income-tax returns in September 2009, declaring a loss of 20.1 crore, the assessing officer could not understand certain transactions. One such transaction was 3,717 crore received as advances by DLF Commercial from its parent, on which it paid no interest and invested this amount in more than 100 firms. The assessing officer ordered a 'special audit' - a relook at the company's accounts by an auditor appointed and paid for by the I-T department. DLF Commercial objected to this special audit in the Delhi High Court, and won the decision in October 2012. In recent years, several frontline companies have challenged the I-T department's special audit in court - Nokia India, Hero MotoCorpBSE 1.45 % and Sahara India are three other examples. But the ability of corporates to resist such an oversight audit might be weakened following a widening in the scope of the law. Effective from June 1, the I-T department can order such audits on six counts, against two counts earlier (see graphic). Accounting professionals say that while this gives more teeth to the I-T department to order special audits, it also raises the spectre of harassment if these powers were used more as a rule than as an exception. "This move is surely a weapon in hands of I-T department to gather exhaustive facts of transactions and would lead to more instances of special audit," says Himanshu Parekh, partner-global international corporate tax with KPMG. "These (six) provisions should be reviewed at the earliest by the I-T department and the government should bring in appropriate control measures so that the assessing officer cannot misuse these provisions by calling for a special audit without adequate justification." Previously, an assessing officer could call on a special audit only on two counts: a company's accounts were complex or there was a revenue loss to the exchequer. In most cases, companies went to court, and won. When asked why the company opposed the special audit, a DLF spokesperson replied: "Our stand has been validated through the Delhi High Court judgement." The court order shows that DLF argued that a day before the special audit was ordered, the assessing officer had written an internal note stating that DLF Commercial had clarified the "apparent complexities noticed". DLF accessed this document through a right to information (RTI) request. source: economictimes.

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