Press Information Bureau
Government of India
Ministry of Finance
18-August-2018 12:50 IST

CBDT issues Circular on amendment of Tax Audit Report

Section 44AB of the Income-tax Act, 1961 (‘the Act’) read with Rule 6G of the Income-tax Rules, 1962 (‘the Rules’) requires prescribed persons to furnish the Tax Audit Report along with the prescribed particulars in Form No. 3CD. The existing Form No. 3CD was amended vide Notification No. GSR 666(E) dated 20th July, 2018 with effect from 20th August, 2018.

Representations have been received by the Central Board of Direct Taxes (CBDT) that the implementation of reporting requirements under the proposed Clause 30C (pertaining to General Anti-Avoidance Rules (GAAR)) and proposed Clause 44 (pertaining to Goods and Services Tax (GST) compliance) of the Form No. 3CD may be deferred.

On consideration of the matter, the CBDT has decided, vide Circular No. 6/2018 dated 17th August, 2018, that the reporting under the proposed Clause 30C and proposed Clause 44 of the Tax Audit Report shall be kept in abeyance till 31st March, 2019. The Circular has been uploaded on the Departmental website www.incometaxindia.gov.in

The CBDT has issued instructions on the issue of irregularities in appellate orders issued by Commissioners of Income-tax (Appeals).

Attention has been drawn to the earlier Instruction No. 20/2003 dated 23.12.2003 issued by the CBDT.

In the said instruction, the CBDT directed that appellate orders should be issued by the CIT(A) within 15 days of the last hearing.

The CBDT reiterated the instruction vide letter F. No. 279/Misc.53/2003-ITJ dated 19.06.2015 and directed that there should be strict compliance.

The instructions of the CBDT are also applicable to orders passed by the CIT (Administrative)/ CCIT as regards matters within their purview under different sections of the Income Tax Act.

The Directorate of Organisation and Management Services (DOMS) has also issued the Manual of Office Procedure.

The Manual prescribes that all appellate orders should be despatched either by registered post or through a notice server without waiting for the appellant to file an application in this regard.

The CBDT has stated that any delay in uploading of appeal orders on ITBA or violation of the instructions regarding dispatch of appeal orders gives rise to suspicions about backdating of orders and/ or malafide intent on the part of officer/ officials concerned.

Text of CBDT’s Instruction dated 8th March 2018 regarding Irregularities in Appellate Orders

F.No. DGIT(Vig.)/HQ/SI/Appeals/2017-18/9959
Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes

New Delhi-110001

Dated: 8th March, 2018

Subject: Irregularities in Appellate Orders — instructions — reg.

CBDT has issued Instruction No. 20/2003 dated 23.12.2003 directing for issue of appellate orders within 15 days of the last hearing. The Instruction was reiterated vide CBDT letter F. No. 279/Misc.53/2003-ITJ dated 19.06.2015 for strict compliance. The instructions are also applicable to orders passed by the CIT (Administrative)/ CCIT as regards matters within their purview under different sections of the Income Tax Act. The idea behind such stipulations was to alleviate undue hardship to the assessee and to have a smooth interface with the assessee.

2. Further, the Manual of Office Procedure issued by the Directorate of Organisation and Management Services mandates immediate dispatch of appeal order either by registered post or through a notice server without waiting for the appellant to file an application in this regard. Delay in uploading of appeal orders on ITBA or violation of the instructions regarding dispatch of appeal orders gives rise to suspicions about backdating of orders and/ or malafide intent on the part of officer/ officials concerned.

3. Even as the orders are dispatched by the office staff working in the office of CIT (Appeals), it is the responsibility of the CIT (Appeals) to ensure that the CBDT instructions are followed by his office staff in letter and spirit. Violation of CBDT instructions by office staff reflects adversely on the supervisory capabilities of the Officer for not being able to control/ motivate a handful of staff to follow CBDT instructions. Such supervisory failure is also violative of Rule 3(2)(i) of the CCS (Conduct) Rules, 1964.

4. Many technical and legal lapses have also been noticed during vigilance inspections of CIT (Appeals). For instance in some cases the Assessing Officers made additions towards unsecured loans and/ or share application money after detailed inquiries and bringing clear facts on record that either the creditor was not traceable or had no or meagre source of income or could not produce bank account details or could not explain the source of deposits just before advancing loan. The CsIT (Appeals) gave relief primarily on legal grounds without considering the facts on record and without making any further inquiry in the matter. In one case, the CIT (Appeals) accepted the explanation that cash deposits in bank account which were added by the Assessing Officer as unexplained, represented the business receipts of the assessee, despite the fact that no books of accounts were maintained by the assessee for this business activity. In some other cases, the additions were deleted in a summary manner solely on the ground that opportunity of cross examination was not given to the assessee. The CIT (Appeals) could have given the opportunity of cross examination to the assessee rather than summarily deleting the additions in such cases since it has been held by Hon’ble Apex Court in a number of cases that the scope of power of CIT (Appeals) is coterminous with that of the Assessing Officer.

5. In one case it was found during vigilance inspection that the CIT (Appeals) had not been passing the appellate orders but was showing disposal in statistical statements on a regular basis. This was not noticed by the Chief Commissioner of Income Tax who was supposed to inspect the work done by the CIT (Appeals). Such a situation would not have arisen if the Chief Commissioner of Income Tax concerned had conducted inspection of the CIT (Appeals) as mandated by CBDT Instruction No. 16/2008 dated 04.11.2008.

6. In view of discussion in the preceding paragraphs, it is once again reiterated that the CIT (Appeals) should abide by the instructions of CBDT regarding timely issue and dispatch of appellate orders in letter and spirit. It is also important to note that the Apex Court has held that CIT (Appeals) has plenary powers in disposing of an appeal. These powers must be used by CIT (Appeals) judiciously while passing appellate orders.

7. The Chief Commissioners of Income Tax should keep in mind that in the matters of corruption, unless otherwise evidenced, the vicarious liability of a supervisory officer can become absolute, if the supervisor who has the right, ability or duty to control the activities of a subordinate does not take steps to prevent the acts of misdemeanor by the subordinate. Failure of the Chief Commissioners of Income Tax to conduct regular inspections of the CIT (Appeals) working under them or failure to keep a watch on the quality and quantity of orders would be viewed adversely by the CBDT.

8. This issues with the approval of Chairman, CBDT.

(Rakesh Gupta)

ADG (V) HQ–I, CBDT

New Delhi