Wednesday, December 24, 2014

Re: [aaykarbhavan] Judgments and Infomration, List of Names of CAs issued more than 400 TAR!!!!!!!



Yes absolutely. Who cares!!!!


On Wednesday, 24 December 2014 5:54 AM, "'CA Chitranjan Bharadia' chitranjan@icai.org [aaykarbhavan]" <aaykarbhavan@yahoogroups.com> wrote:


 
Many of them may take excuse that they signed on behalf of their partners, as ICAI allows to sign on behalf of partners, which should be stopped immediately. Limits should be based on individual and not on the basis of firm partners.
 
Thanks with Best Regards
 
CA Chitranjan Bharadia
 
From: aaykarbhavan@yahoogroups.com [mailto:aaykarbhavan@yahoogroups.com]
Sent: 24 December 2014 01:30
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Subject: [aaykarbhavan] Judgments and Infomration, List of Names of CAs issued more than 400 TAR!!!!!!! [2 Attachments]
 
 
 

CAG Report on Certification by CAs & Mistake Committed

Posted In CA CS ICWA | News | 2 Comments » Error! Filename not specified.
Chapter II: Appreciation of Accountants' certifications
2.1       Introduction
Certain assessees7 are required to get their accounts audited by a CA under Section 44AB of the Income Tax Act, 1961 (Act) and submit the report in the Forms prescribed in Rule 6G of the Income Tax Rules, 1962 (Rules). The CAs (also tax auditor) furnish the Tax Audit Report (TAR) in Form 3CA or 3CB and 3CD. In TAR, the CAs are required to furnish various information/details. In addition, the assessee is required to obtain certificates from a CA in the prescribed Forms and furnish them to the AOs to claim various deductions/ exemptions available under the various provisions of the Act. All these reports/certificates are helpful to the AOs in detailed scrutiny of the accounts during the assessment proceedings. It is, therefore, necessary that (a) the AOs collect all the required reports/certificates at the time of assessment and (b) the CAs furnish correct reports/ certificates.
CBDT's Instruction no. 1959 issued in January 1999 provides that cases where the information given in the TAR is incomplete or non-committal, should be taken up by the CIT to see if these reflected any professional negligence on the part of the Accountant signing the TAR whereupon action is to be taken as per Section 288 of the Act.
Section 288 of the Act provides that if any person who is a legal practitioner or an Accountant is found guilty of misconduct in his professional capacity by an authority entitled to institute disciplinary proceedings against him, an order passed by that authority shall have effect in relation to his right to attend before an income tax authority as it has in relation to his right to practice as a legal practitioner or Accountant, as the case may be.
Cases where inadequate/inaccurate information is furnished in Accountant's report and additions is made by the AO or at the instance of the audit, this fact should be brought to the notice of the ICAI for initiating action against the Accountant who had certified inadequate/inaccurate information in TAR.
In a Court case8, it was held that not only 'gross negligence', but 'due diligence' is equally relevant and important criterion in measuring and determining "professional misconduct" in case of a CA. Thus, a CA shall be punishable even if he does not exercise due diligence and it is not necessary for ICAI to prove that there was negligence on the part of the Accountant.
During this performance audit, we came across certain instances:
  1. Where the CAs failed to report full and correct information.
  2. Where the AOs failed to utilize the information available in the reports/certificates submitted to them.
Audit findings on the above issues are discussed under Section A and Section B respectively.
Section A
Cases where CAs failed to report full and correct information
2.2 The present section deals with cases where CAs reported incorrect/ partial information to the AOs. We found 367 cases with tax effect of Z 2,813.11 crore where CAs either in their TAR or various certificates committed mistakes (See Table 2.1).
Table 2.1: Category-wise cases with tax effects
Categories
Cases
Tax Effects (Rs.  in crore)
a.
Allowance of depreciation and amortization
66
457.79
b.
Allowance of brought forward losses/depreciation
46
557.79
c.
Allowance of personal/capital expenditure
42
477.89
d.
Incorrect certification of claims
74
259.72
e.
Incorrect/Incomplete information in TAR/Certificate
132
1,037.61
f.
Irregular allowance of provisions
7
22.31
Total
367
2,813.11
Table 2.2 shows cases where CAs committed mistakes in compliance with various provisions of the Act.
Table 2.2: Category wise mistakes committed by CAs
Categories
Cases
  1. Allowance of exemptions/deductions
128
  1. Charging of tax on Book Profit under Section 115JB
27
  1. Non-adoption of Arm's Length Price
153
  1. Reporting by CAs on Cash payment exceeding Rs. 20,000 per day
308
Total
616
Table 2.3: Cases where assesses did not furnish required Forms/Certificates
Forms/Certificates
Cases
Non furnishing of Form 3CEB on verification of ALP
43
Non furnishing of Form 29B on certification of Book Profit
66
Total
109
7     Corporate, Firms, Association of Persons, Body of Individuals, Charitable Trusts and Institutions etc.
8     C A Rajesh vs. Disciplinary Committee the High Court of Gujarat [2012] 28 taxmann.com 100 (Gujarat)
- See more at: CAG Report on Certification by CAs & Mistake Committed
 
 
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CAG Report on Certification by CAs & Mistake Committed
Chapter II: Appreciation of Accountants' certifications 2.1       Introduction Certain assessees7 are required to get their accounts audited by a CA under Secti...
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Review of Accredited Clients Programme (ACP) – Reg.

Posted In Custom Duty | Notifications | No Comments » Error! Filename not specified.
Circular No. 18/2014-Cus
Dated the 22nd December, 2014
Subject : Review of Accredited Clients Programme (ACP) – Reg.
Attention is invited to Board's Circular No.42/2005-Cus. dated 24.11.2005 and Circular No.29/2010-Cus dated 20.08.2010 on the Accredited Clients Programme (ACP).
2. Board has received a number of representations from the ACP clients whose ACP status has either been withdrawn or not extended on account of them having been served a show cause notice in terms of the amended para 7(iii) of the said Circular dated 24.11.2005. Board observes that on account of such withdrawal or non-extension of the ACP status, the imports of the affected ACP clients are no longer facilitated which reduces the overall facilitation levels. This matter was also discussed during the All India Conference of Chief Commissioners of Customs held in October, 2014 and a view emerged that there is justification to review the ACP to allow a graded re-entry.
3. Board has reviewed the ACP on the basis of the representations received and the recommendation of the Chief Commissioners of Customs. Accordingly, it is decided that as a trade facilitation measure the ACP status of ACP clients which has either been withdrawn or not extended on account of them having been served a show cause notice in terms of the amended para 7(iii) of the said Circular dated 24.11.2005 may be restored as follows:
(i)   Restored after 3 months if the entity pays the duty demanded with interest and 25% penalty within 30 days of the Show Cause Notice or if the entity's application is allowed to be proceeded with by the Settlement Commission.
(ii)   Restored after 6 months if the entity pays the duty demanded with interest.
The restoration of the ACP status in terms of (i) and (ii) above would be subject to the condition that if another case of the type mentioned in paragraph 7(iii) of the said Circular dated 24.11.2005 is booked within the 3 months or 6 months period, as the case may be, against the said entity the period of exclusion would be 1 year. If another (or more) case(s) is booked during the 1 year period, the exclusion period would be 3 years.
  1. Board has also decided that the ACP status would not ordinarily be denied to an entity if, in the category of cases specified above, the Customs/Central Excise duty or Service Tax involved is up to Rs. 50 lakhs and Rs. 25 lakhs, respectively.
5. Board also desires that outstanding disputes with ACP clients that are pending in adjudications and appeals shall be expeditiously finalized. Furthermore, in order to encourage greater participation in the ACP, the Risk Management Division (RMD) shall suo moto identify importers eligible for the ACP and approach them to enroll in the programme on 6-monthly basis.
6. Board's Circular No.42/2005-Cus. dated 24.11.2005 and Circular No.29/2010-Cus dated 20.08.2010 stand modified to the aforementioned extent.
7. Chief Commissioners of Customs / Customs and Central Excise are requested to issue suitable trade notice/ Public notice for guidance of trade/staff.
8. Difficulty faced, if any, may be brought to the notice of the Board.
 F.No.450/90/2010-Cus.IV
Yours faithfully
(P.K. Khetan)
OSD (Cus.IV)
- See more at: Review of Accredited Clients Programme (ACP) - Reg.
 
 
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Review of Accredited Clients Programme (ACP) - Reg.
Board has received a number of representations from the ACP clients whose ACP status has either been withdrawn or not extended on account of them havi...
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S. 254(2): If the Tribunal accepts that a mistake has crept in the order, interests of justice is served if the entire order is recalled (suo moto by the ITAT) & appeal re-heard. Appeals should not be disposed off in "light hearted" and "casual manner"
During the pendency of the Appeal before the High Court, the Tribunal passed an order on the Miscellaneous Application and revived the appeal filed before it for hearing afresh on merits in relation to withdrawal of deduction u/s 36(1)(viia). However, as the assessee had not asked for recall of the ground challenging the exercise of powers u/s 263 by the CIT, the same was not recalled. HELD by the High Court:
(i) We are not happy in the manner in which the Tribunal has decided the Miscellaneous Application. If the Tribunal was required to devote so much time for assigning reasons in more than five paragraphs in a lengthy eight page order on the Miscellaneous Application so as to correct an obvious mistake by exercising powers under section 254(2) of the IT Act, then, interest of justice would have been sub-served and better had the Tribunal revived the entire Appeal and not partially. If there was a mistake with regard to the claim of deduction, we do not think that the tribunal was justified in directing partial revival of the Appeal…… We do not think that interest of justice and equity is served by non consideration of vital materials by the last fact finding authority, namely the Income Tax Appellate Tribunal. That the Tribunal was required to recall its earlier orders and for the reasons which have been assigned by it would indicate that it failed to apply its mind at the initial stage to the grounds raised in the Appeal and in their entirety. It omitted from consideration crucial documentary material as well. In such circumstances, such partial revival of the Appeal would not meet the ends of justice.
(ii) We modify the order passed on the Miscellaneous Application and direct that the Appeal shall now be heard on its own merits and in accordance with law, permitting the Assessee to raise all grounds that are to be found in the Memo of Appeal. … This direction issued by us in the exercise of our further appellate and inherent powers should serve as a reminder to the Tribunal that the matters of vital importance affecting the interest of public should not be disposed of in a light hearted or casual manner. The record must be perused in its entirety and properly and minutely. That is the function and which the judicial body is required to perform and oblige to carry out as well. In these circumstances and the unsatisfactory and unhappy manner in which the Miscellaneous Application has been dealt with and decided that we have directed the revival of the Appeal.

Measures for classifying/declassifying a borrower as non-cooperative borrower

Posted In RBI / FEMA | Notifications | No Comments » Error! Filename not specified.
RBI/2014-15/362
DBR.No.CID.BC.54/20.16.064/2014-15
December 22, 2014
All Scheduled Commercial Banks
(Excluding RRBs)
All-India Term-Lending and Refinancing Institutions
(Exim Bank, NABARD, NHB and SIDBI)
Dear Sir / Madam
Non-Cooperative Borrowers
Please refer to our circular DBOD.BP.BC.No.97/21.04.132/2013-14 dated February 26, 2014 on 'Framework for Revitalising Distressed Assets in the Economy – Guidelines on Joint Lenders' Forum (JLF) and Corrective Action Plan (CAP)' which inter-alia, provides for specific prudential measures and reporting requirements in respect of Non-Cooperative Borrowers. The definition of a Non-Cooperative Borrower as contained therein is hereby modified to read as under:
A non-cooperative borrower is one who does not engage constructively with his lender by defaulting in timely repayment of dues while having ability to pay, thwarting lenders' efforts for recovery of their dues by not providing necessary information sought, denying access to assets financed / collateral securities, obstructing sale of securities, etc. In effect, a non-cooperative borrower is a defaulter who deliberately stone walls legitimate efforts of the lenders to recover their dues.
2. In this connection, we advise that banks/FIs should take the following measures in classifying/declassifying a borrower as non-cooperative borrower and reporting information on such borrowers to Central Repository of Information on Large Credits (CRILC):
  1. The cut off limit for classifying borrowers as non-cooperative would be those borrowers having aggregate fund-based and non-fund based facilities of Rs.50 million from the concerned bank/FI. A non-cooperative borrower in case of a company will include, besides the company, its promoters and directors (excluding independent directors and directors nominated by the Government and the lending institutions). In case of business enterprises (other than companies), non-cooperative borrowers would include persons who are in-charge and responsible for the management of the affairs of the business enterprise.
  2. It would be imperative on the part of the banks / FIs to put in place a transparent mechanism for classifying borrowers as non-cooperative. A solitary or isolated instance should not be the basis for such classification. The decision to classify the borrower as non-cooperative borrower should be entrusted to a Committee of higher functionaries headed by an Executive Director and consisting of two other senior officers of the rank of General Managers/ Deputy General Managers as decided by the Board of the concerned bank/FI.
  3. If the Committee concludes that the borrower is non-cooperative, it shall issue a Show Cause Notice to the concerned borrower (and the promoter/whole-time directors in case of companies) and call for his submission and after considering his submission issue an order recording the borrower to be non-cooperative and the reasons for the same. An opportunity should be given to the borrower for a personal hearing if the Committee feels such an opportunity is necessary.
  4. The order of the Committee should be reviewed by another Committee headed by the Chairman / CEO and MD and consisting, in addition, of two independent directors of the Bank/FI and the order shall become final only after it is confirmed by the said Review Committee.
  5. Banks/FIs will be required to report information on their non-cooperative borrowers to CRILC under CRILC-Main (Quarterly Submission) return as advised vide circular DBS.OSMOS.No.14703/33.01.001/2013-14 dated May 22, 2014 on 'Reporting to Central Repository of Information on Large Credits (CRILC)'. As mentioned in this circular, the quarterly CRILC Main report is required to be submitted within 21 days from the close of the relevant quarter.
  6. Boards of banks/FIs should review on a half-yearly basis the status of non-cooperative borrowers for deciding whether their names can be declassified as evidenced by their return to credit discipline and cooperative dealings. Removal of names from the list of non-cooperative borrowers should be separately reported under CRILC with adequate reasoning/rationale for such removal.
  7. If any particular entity as mentioned in (a) above is reported as non-cooperative, any fresh exposure to such a borrower will by implication entail greater risk necessitating higher provisioning. Banks/FIs will therefore be required to make higher provisioning as applicable to substandard assets in respect of new loans sanctioned to such borrowers as also new loans sanctioned to any other company that has on its board of directors any of the whole time directors/promoters of a non-cooperative borrowing company or any firm in which such a non-cooperative borrower is in charge of management of the affairs. However, for the purpose of asset classification and income recognition, the new loans would be treated as standard assets. This supersedes the instructions contained at paragraph 8.1(b) of the aforementioned circular dated February 26, 2014.
  8. It is reiterated that as the CRILC data is collected under the provisions of the RBI Act, non-adherence to reporting instructions attracts penal provisions under the Act.
Yours faithfully
(A.K. Pandey)
Chief General Manager
- See more at: http://taxguru.in/rbi/measures-classifyingdeclassifying-borrower-noncooperative-borrower.html#sthash.xqfmwNPo.dpuf

Threshold limits for reporting of fraud by the auditor

ICAI Press Release – Companies (Amendment) Bill, 2014. – (22-12-2014)
The Companies Act, 2013 had specified a new reporting requirement for the statutory auditors of companies. Under Section 143(12) of the Companies Act, 2013 the auditor was required to report on frauds/ suspected frauds in certain situations laid down in the section. Considering the challenges for the auditors in reporting under this section, ICAI had made several representations to the Ministry of Corporate Affairs (MCA) from time to time.
The Ministry has been proactive in considering the views and suggestions of ICAI and actively reviewed some of the issues stemming from the new Companies Act taking into account the interest of the stakeholders at large. ICAI had strongly represented to MCA on Fraud Reporting submitting that concept of materiality should be introduced and certain threshold limits should be specified for reporting on fraud by the auditor.
The Companies (Amendment) Bill 2014 was passed by Lok Sabha on December 17'14. The Government has brought out a significant amendment pertaining to Section 143 (12) – Fraud Reporting. It was one of the strong concerns of ICAI as the provisions in the Act required that a fraud involving a minimal amount should also be reported to the Government.
CA.K.Raghu, President, ICAI said "ICAI welcomes the amendment issued by the Government. Now, the auditor would be required to report fraud to the Government above the mandated threshold limit. Any fraud below the threshold limit would have to be reported to the Audit Committee/ Board."
Further, the amendment also provides for the companies whose auditors have reported frauds under this sub-section to the audit committee or the Board but not reported to the Central Government, shall disclose the details about such frauds in the Board's report.
Raghu added "Indeed, this amendment is a major achievement for ICAI and CA profession as the views and suggestions submitted by ICAI have been considered and incorporated in the Companies (Amendment) Bill, 2014. The Hon'ble Finance Minister acknowledged the views of ICAI in the Lok Sabha. We would soon come out with the Guidance Note on Fraud Reporting for our members." (Source- ICAI)
- See more at: Threshold limits for reporting of fraud by the auditor
 
 
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Threshold limits for reporting of fraud by the auditor
ICAI Press Release - Companies (Amendment) Bill, 2014. - (22-12-2014) The Companies Act, 2013 had specified a new reporting requirement for the stat...
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