Special audit ordered on DLF accounts of FY'06
The Income Tax department has ordered a special audit of the accounts of India's biggest real estate firm DLF Ltd for allegedly trying to lower its tax liability by understating sales for 2005-06.
"After noticing the books of accounts of the company there were a number of discrepancies and we could not ascertain the true income and profits of the company," said a senior tax official.
While DLF spokesperson did not reply to repeated queries on the issue, senior company officials, on condition of anonymity, confirmed that a special audit has been ordered on the company's books. The special audit has already been completed and was needed because of the company changing its accounting method, they claimed.
The tax official, however, said that the company's turnover figures in its IT returns filed for the assesment year 2006-07 with the department were lower by more than Rs 500 crore from the project-wise sales figure made public at the time of launching its initial public offer (IPO) in 2007.
As per DLF's prospectus filed with SEBI at the time of launching its IPO, it had said its turnover in fiscal 2006 stood at Rs 1,242 crore and a profit before tax of Rs 359.5 crore.
A special audit is conducted by the IT department for the accounts of any assessee, which is found to be inaccurate under Section 142 (2A) of the Income Tax Act. Under that Act, an assessing officer "in the interest of revenue" can order a special audit of the accounts of a company.
The official said IT department could not complete assessment of tax liability of the company as per scheduled deadline of December 2008 because of the alleged misrepresentation by DLF.
Subsequetly, the assessment has been extended by another 180 days, the offcial added.
The department had appointed Sanjay Satpal & Co, Chartered Accountants as special auditor to give its assessment. The CA firm also did not respond to e-mails and repeated phone calls for its comments.
The Central Board of Direct Taxes (CBDT) also declined to comment on this specific issue, but a spokesperson said that generally in case of a special audit into the accounts of a company, the issues raised in the audit are considered by the assessing officer in his assessment order.
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