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Fresh GST Bank Attachment Without New Grounds Invalid | HC

GST successive bank attachment

Case Details: Gujral Sons vs. Union of India [2026] 185 taxmann.com 871 (Delhi)

Judiciary and Counsel Details

  • Nitin Wasudeo Sambre & Ajay Digpaul, JJ.
  • Nikhil Gupta, Rochit Abhishek, Prince Nagpal, Devang Dwivedi & Jiten Yadav, Advs. for the Petitioner.
  • Kshitij Chhabra, SPC, Madhav Anand, Shikhar Gupta, Shubham Mishra, Gaurav Mani Tripathi, Ankush Bhardwaj, Ms Anushka Mishra, Advs., Atul Tripathi, SSC, Santosh Kumar Rout, SC & Ashish Rawat, GP for the Respondent.

Facts of the Case

The petitioner was subjected to provisional attachment of its bank accounts by issuance of Form GST DRC-22 under Section 83 of the CGST Act and the Delhi GST Act during proceedings under the said enactments. The initial attachment remained operative and, upon expiry of the statutory period, lapsed by efflux of time. Subsequently, even after the completion of assessment proceedings by the order-in-original and during the pendency of appellate proceedings, the jurisdictional authorities issued a fresh provisional attachment on the same set of facts without any new material or change in circumstances. The petitioner contended that the successive invocation was impermissible after the expiry of the earlier attachment and the completion of assessment. The matter was accordingly placed before the High Court.

High Court Held

The High Court held that re-imposition of provisional attachment under Section 83 of the CGST Act and Delhi GST Act on an identical factual basis, after expiry of the earlier attachment by statutory efflux of time, was unsustainable. It was observed that once the assessment had concluded by order-in-original, any further exercise of power under Section 83 required fresh material or changed circumstances, which were absent in the present case. It was further held that failure to act within the validity period of the earlier attachment could not justify its revival in the absence of new grounds. Accordingly, the impugned attachment was held to be arbitrary and liable to be quashed, and relief was granted, including the defreezing of the petitioner’s bank accounts.

List of Cases Reviewed

List of Cases Referred to

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Deferred Tax on Assets Held for Use vs Sale Under Ind AS

Deferred Tax on Assets

1. Query

Omega Energy Limited (hereinafter referred to as “the Company”) owns a power generation plant, including a critical turbine with a carrying amount of Rs. 120 crore as at the end of the reporting period. For tax purposes, the written-down value of the turbine is Rs. 70 crore, resulting in a significant temporary difference.

Under the applicable tax framework, the manner of recovery of the asset gives rise to materially different tax consequences. If the turbine is used over its remaining useful life, the benefits are realised through tax depreciation, and the applicable tax rate is 25%. However, if the turbine is sold, the resulting gain is subject to a capital gains tax rate of 15%, and the tax base is recomputed without allowing certain deductions that are otherwise available under the use model.

Historically, the Company has always intended to recover the asset through use. However, during the current year, the Company entered into a non-binding arrangement with a third party for a potential sale of the turbine as part of a broader restructuring plan. While management believes that the sale is probable, the transaction is contingent upon regulatory approvals and financing arrangements, which are yet to be finalised. At the same time, the turbine continues to be actively used in operations, and no formal plan for its disposal has been approved by the Board.

Given these circumstances, the Company is facing uncertainty in determining the appropriate manner of recovery for the purpose of measuring deferred tax. Specifically, the Company seeks guidance on whether the deferred tax liability should be measured based on recovery through use, recovery through sale, or some form of probability-weighted approach considering both possible outcomes.

2. Relevant Provisions

Ind AS 12 – Income Taxes

Para 51 of Ind AS 12

The measurement of deferred tax liabilities and deferred tax assets shall reflect the tax consequences that would follow from the manner in which the entity expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

Para 51A of Ind AS 12

In some jurisdictions, the manner in which an entity recovers (settles) the carrying amount of an asset (liability) may affect either or both of:

(a) the tax rate applicable when the entity recovers (settles) the carrying amount of the asset (liability); and

(b) the tax base of the asset (liability).

In such cases, an entity measures deferred tax liabilities and deferred tax assets using the tax rate and the tax base that are consistent with the expected manner of recovery or settlement.

3. Analysis

The core issue in this case lies in determining the “expected manner of recovery” of the turbine at the end of the reporting period. Paragraph 51 does not permit a mechanical or purely hypothetical assessment; instead, it requires management to exercise judgment based on the facts and circumstances that exist at the reporting date.

Although the Company has initiated discussions for a potential sale, the arrangement remains non-binding and is subject to significant uncertainties, including regulatory approvals and financing. Further, there is no formal commitment or approved plan to dispose of the asset, and the turbine continues to be used in the Company’s operations.

In this context, the expectation of recovery through sale does not yet appear to have sufficient certainty or substance to override the existing pattern of recovery through use. The standard emphasises the manner in which the entity “expects” to recover the asset, implying a realistic and supportable expectation rather thanmere possibility.

Paragraph 51A becomes particularly relevant because the tax consequences differ significantly depending on whether the asset is used or sold. This makes it critical to identify a single, most likely manner of recovery, as the standard does not envisage the use of probability-weighted or blended tax rates. Instead, the deferred tax liability must be measured using the tax rate and tax base corresponding to the expected mode of recovery.

Accordingly, unless and until the Company has sufficient evidence to demonstrate that recovery through sale is the expected outcome, such as a binding agreement, Board approval, or a high degree of certainty regarding completion, the deferred tax liability should continue to be measured based on recovery through use.

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SEBI Extends Debenture Trustee Segregation Deadline to Oct 2026

SEBI debenture trustee deadline extension

Circular No. HO/(201)2026-DDHS-POD1 I/10421/2026, Dated 28.04.2026

The Securities and Exchange Board of India (SEBI) has granted an additional six months to Debenture Trustees for complying with Regulation 9C, which mandates segregation of non-SEBI regulated activities.

1. Revised Compliance Timeline

  • Original Deadline – As per circular dated November 25, 2025
  • Revised Deadline – October 27, 2026

2. Requirement under Regulation 9C

Debenture Trustees are required to:

  • Segregate non-SEBI regulated activities
  • Conduct such activities through separate business units or entities

3. Reason for Extension

The extension has been granted due to:

  • Operational and implementation challenges
  • Representations made by industry participants

4. Continuity of Existing Framework

  • All other provisions of the SEBI circular dated November 25, 2025
  • Remain unchanged

5. Regulatory Impact

The extension provides:

  • Additional time for structural and operational realignment
  • Opportunity to ensure full compliance without disruption
  • Continued focus on conflict-of-interest mitigation and governance

6. Conclusion

SEBI’s decision reflects a pragmatic approach, balancing regulatory objectives with industry readiness, while ensuring that segregation norms are implemented effectively.

Click Here To Read The Full Circular

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IGST Refund Subject to Deduction of Higher Drawback | HC

IGST refund

Case Details: Kunal Housewares (P.) Ltd. vs. Union of India [2026] 185 taxmann.com 541 (Bombay)

Judiciary and Counsel Details

  • G. S. Kulkarni & Firdosh P. Pooniwalla, JJ.
  • Devashish K. Trivedi & Garvit Khandelwal, Advs. for the Petitioner.
  • Jitendra B. Mishra, Ashutosh Mishra, Maya Majumdar & Rupesh Dubey, Advs. for the Respondent.

Facts of the Case

The petitioner engaged in the export of various stainless steel items, effected zero-rated supplies and paid IGST on such exports. The petitioner thereafter sought refund of the IGST so paid under the zero-rated export mechanism. The jurisdictional officers under CGST withheld the refund on the ground that the petitioner had already availed a higher duty drawback by selecting ‘Column A’ in the shipping bills, thereby rendering the claim ineligible for a full IGST refund. The petitioner contended that it was entitled to a refund of IGST notwithstanding the drawback option exercised and disputed the withholding of the amount. The matter was accordingly placed before the High Court.

High Court Held

The High Court held that IGST refund on zero-rated exports cannot be granted in a manner that results in impermissible double benefit when the higher duty drawback has already been availed. It was observed that under Section 54 of the CGST Act and the Maharashtra GST Act, Section 16 of the IGST Act and Rule 96 of the CGST Rules, a refund is admissible only where the rates under Column A and Column B of the shipping bills are identical or where the excess drawback component is neutralised. The Court reasoned that availing higher duty drawback while simultaneously claiming full IGST refund would amount to duplication of export incentives since pre-GST levies stand subsumed under the GST regime. It further held that the petitioner could not be granted the full refund unless the differential drawback was repaid or adjusted, and directed that the refund be allowed only after deducting the differential drawback amount along with 7% interest calculated from the date of the shipping bill.

List of Cases Reviewed

List of Cases Referred to

The post IGST Refund Subject to Deduction of Higher Drawback | HC appeared first on Taxmann Blog.

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[Opinion] Section 80P(2)(d) on Interest from Co-op Banks Under ITA 2025

Section 80P interest cooperative banks

CA Deepak Gunashekar – [2026] 185 taxmann.com 948 (Article)

1. Introduction – The Cooperative Taxation Paradigm

The taxation of cooperative societies in India has historically been guided by the foundational principle of mutuality and a legislative intent to foster grassroots collective enterprises. The cornerstone of this protective fiscal framework has been Section 80P of the Income-tax Act, 1961, which provides comprehensive deductions in respect of the income generated by cooperative societies.

At the heart of an immense judicial dispute is a highly specific, yet ubiquitous, financial transaction. A primary cooperative society (such as a housing or credit society) generates surplus funds and deposits them into a cooperative bank, subsequently earning interest. Under the plain reading of Section 80P(2)(d) of the 1961 Act, any income by way of interest or dividends derived by a cooperative society from its investments in “any other co-operative society” is fully deductible from its gross total income.

However, this harmonious ecosystem was fractured by the insertion of Section 80P(4) through the Finance Act, 2006. This amendment categorically denied Section 80P benefits “in relation to” co-operative banks, recognising that many such banks had grown to function indistinguishably from commercial banks. The critical question that emerged was whether the disqualification of a cooperative bank from claiming deductions under Section 80P(4) inherently strips the bank of its foundational identity as a “co-operative society,” thereby denying the depositing primary society the Section 80P(2)(d) deduction.

This singular question has profoundly fractured the Indian judicial landscape, resulting in an alarming geographical anomaly. In the State of Karnataka, this deduction is categorically denied. Conversely, in virtually every other state, backed by the High Courts of Gujarat, Madras, Kerala, and Sikkim, the deduction is wholly allowed. As India transitions to the Income-tax Act, 2025, where Section 80P is reborn as Section 149, a subtle but vital alteration in the statutory phrasing promises to either fix this anomaly or perpetuate the confusion.

2. The Statutory Architecture – A Subtle but Crucial Shift

To comprehend the ongoing litigation, one must dissect the statutory architecture. Section 80P(2)(d) governs inter-cooperative investments, allowing a deduction of the “whole of such income” in respect of interest derived from investments with “any other co-operative society.” Sub-section (4) explicitly states:

“The provisions of this section shall not apply in relation to any co-operative bank other than a primary agricultural credit society…”

In the newly enacted Income-tax Act, 2025, Section 80P corresponds directly to Section 149. The inter-cooperative investment deduction is perfectly preserved in Section 149(2)(d). However, the exclusionary clause regarding cooperative banks in Section 149(5) features a subtle, yet potentially paradigm-shifting, alteration in its phrasing compared to its predecessor:

Statutory Theme
Income Tax Act, 1961
Income Tax Act, 2025
The Critical Shift
Inter-Cooperative Investment
Section 80P(2)(d)
Section 149(2)(d)
“in respect of any income by way of interest or dividends derived by the co-operative society from its investments with any other co-operative society” (Identical)
Cooperative Bank Exclusion
Section 80P(4)
Section 149(5)
“shall not apply in relation to any co-operative bank” vs. “shall not apply to any co-operative bank”

This deletion of the phrase “in relation to” from the 2025 Act strikes directly at the heart of the restrictive jurisprudence that has plagued Karnataka taxpayers.

3. The Supreme Court’s Foundational Matrix

The debate has been heavily influenced by landmark Supreme Court decisions. In Totgars Co-operative Sale Society Ltd. v. ITO [2010] 188 Taxman 282 (SC)/[2010] 322 ITR 283 (SC), the Apex Court while expressly stating that their judgement was confined to the facts of the instant case, ruled that interest earned on surplus funds from marketing of the members’ agricultural produce invested in short-term deposits with scheduled banks was not operational business income deductible under Section 80P(2)(a)(i), but rather “Income from other sources” under Section 56 of the 1961 Act. Crucially, the Court was never asked to evaluate Section 80P(2)(d), which grants a deduction based purely on the status of the investee entity. Despite this caveat, the Revenue routinely utilises Totgars (2010) to argue universally that all passive interest is ineligible for any Section 80P deduction.

Later, in Mavilayi Service Co-operative Bank Ltd. v. CIT [2021] 123 taxmann.com 161 (SC)/[2021] 279 Taxman 75 (SC)/[2021] 431 ITR 1 (SC) and Kerala State Cooperative Agricultural and Rural Development Bank Ltd. v. Assessing Officer [2023] 154 taxmann.com 305 (SC)/[2023] 295 Taxman 675 (SC)/[2023] 458 ITR 384 (SC), the Supreme Court clarified that the exclusion is strictly a proviso meant to exclude cooperative entities that function precisely on par with commercial banks holding RBI licenses. While these cases protected primary societies, they did not directly resolve whether a depositing society is barred from claiming 80P(2)(d) deductions on interest paid by a licensed cooperative bank.

Click Here To Read The Full Article

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RBI Mandates Reporting of Global INR Derivative Deals by 2028

RBI INR derivative reporting

Circular No. RBI/2026-27/38 A.P. (DIR Series) Circular No. 08 dated 27.04.2026

The Reserve Bank of India (RBI) has mandated Authorised Dealer (AD) Category-I banks to report all INR-based over-the-counter (OTC) derivative transactions to the Clearing Corporation of India Ltd. (CCIL) to enhance market transparency and oversight.

1. Scope of Reporting

Covers:

  • All INR-based OTC derivative deals
  • Transactions undertaken:
    1. Domestically, and
    2. Abroad by group entities of AD banks
  • Includes both:
    1. Deliverable contracts
    2. Non-deliverable contracts

2. Exemption for Small Transactions

  • Transactions with value Up to USD 1 million
  • Are exempt from reporting requirements

3. Reporting Timeline

Banks must:

  • Submit key transaction details within 2 working days
  • From the date of the transaction

4. Phased Implementation

The reporting framework will be:

  • Implemented in phases
  • Fully operational by 2028

5. Objective of the Framework

The mandate aims to:

  • Improve transparency in OTC derivatives market
  • Enable better risk monitoring and data aggregation
  • Strengthen regulatory oversight and financial stability

6. Conclusion

This initiative marks a significant step towards centralised reporting and enhanced supervision of INR-based derivatives, ensuring a more transparent and resilient financial market ecosystem.

Click Here To Read The Full Circular

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GST Bank Attachment Quashed for Parallel Proceedings | HC

GST provisional attachment

Case Details: B. B. Metal Vs. Joint Commissioner of State Tax [2026] 185 taxmann.com 595 (Bombay)

Judiciary and Counsel Details

  • G. S. Kulkarni & Aarti Sathe, JJ.
  • Sandeep Sachdeva, Devang Bhatia & Swarnima Shinde for the Petitioner.
  • Ms Shruti Vyas, Addl. G.P & D. S. Deshmukh for the Respondent.

Facts of the Case

The petitioner challenged the provisional attachment of five bank accounts made by the State tax authorities through Form GST DRC-22 under Section 83 of the CGST Act read with the Maharashtra GST Act. It was contended that identical proceedings for the same subject matter and tax period were already initiated by the Central authorities, who had conducted searches, issued summons, blocked input tax credit (ITC), and issued show cause notices. Despite the ongoing central proceedings and the jurisdictional objections raised by the petitioner, the State authorities conducted a parallel search and attached all bank accounts. The matter was accordingly placed before the High Court.

High Court Held

The High Court held that the impugned provisional attachment amounted to an abuse of process of law and resulted in the deprivation of property without lawful authority, contrary to constitutional protections. It was observed that the statutory framework under Section 6 of the CGST Act, which governs cross-empowerment and avoidance of parallel proceedings between Central and State tax authorities, clearly barred overlapping action once one authority had already initiated proceedings for the same subject matter and period. The Court further held that the State authorities could not invoke Section 83 of the CGST Act to justify attachment when the Central authorities were already seized of identical proceedings, making the exercise arbitrary and beyond jurisdiction. Accordingly, the DRC-22 attachment orders were quashed and the petitioner was permitted to operate its bank accounts.

List of Cases Referred to

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[Opinion] Interplay Between Section 5(2) and Unexplained Credits

Section 5(2) and Unexplained Credits

Mukesh Kohli –  [2026] 185 taxmann.com 895 (Article)

1. Introduction

Sometimes we professionals face a situation when the AO makes addition under section 68 or section 69 of Income Tax Act, 1961/ under section 102 or 103 of Income tax Act, 2025 to the Income of a non-resident without Considering the provision of section 5(2) of Income Tax Act, 1961/2025. Can an AO do this? Let us see the various provisions of section 5, 68 and 69 of Income Tax Act, 1961 as well as sections 5, 102, and 103 of Income Tax Act, 2025

2. Section – 68, Income-tax Act, 1961

Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the [Assessing] Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year:

Provided that where the sum so credited consists of loan or borrowing or any such amount, by whatever name called, any explanation offered by such assessee shall be deemed to be not satisfactory, unless:

(a) the person in whose name such credit is recorded in the books of such assessee also offers an explanation about the nature and source of such sum so credited; and

(b) such explanation in the opinion of the Assessing Officer aforesaid has been found to be satisfactory:

Provided further that where the assessee is a company (not being a company in which the public are substantially interested), and the sum so credited consists of share application money, share capital, share premium or any such amount by whatever name called, any explanation offered by such assessee company shall be deemed to be not satisfactory, unless:

(a) the person, being a resident in whose name such credit is recorded in the books of such company also offers an explanation about the nature and source of such sum so credited; and

(b) such explanation in the opinion of the Assessing Officer aforesaid has been found to be satisfactory:

Provided also that nothing contained in the first proviso [or second proviso] shall apply if the person, in whose name the sum referred to therein is recorded, is a venture capital fund or a venture capital company as referred to in clause (23FB) of section 10.

3. Section – 102, Income-tax Act, 2025

1. Where any sum is found credited in the books of an assessee maintained for any tax year, and:

(a) the assessee offers no explanation about the nature and source of such credit; or

(b) the explanation offered about the nature and source of such credit by assessee is not satisfactory in the opinion of the Assessing Officer,

Then, the sum so credited shall be charged to income-tax as income of the assessee of that tax year.

2. For the purposes of sub-section (1), where the sum so credited consists of loan or borrowing or any such amount, by whatever name called, the explanation offered by such assessee shall be deemed to be not satisfactory, unless:

(a) the person in whose name such credit is recorded in the books of such assessee also offers an explanation about the nature and source of such sum so credited; and

(b) Such explanation in the opinion of the Assessing Officer has been found to be satisfactory.

3. For the purposes of sub-section (1), where the assessee is a company (not being a company in which the public are substantially interested), and the sum so credited consists of share application money, share capital, share premium or any such amount, by whatever name called, the explanation offered by such assessee company shall be deemed to be not satisfactory, unless:

(a) the person, being a resident in whose name such credit is recorded in the books of such company also offers an explanation about the nature and source of such sum so credited; and

(b) Such explanation, in the opinion of the Assessing Officer has been found to be satisfactory.

4. Nothing contained in sub-section (2) or (3) shall apply if the person, in whose name the sum referred to in those sub-sections is recorded, is a venture capital fund or a venture capital company as referred to in Schedule V (Table: Sl. No. 6).

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Senior Sales Manager Held Workman – Termination Illegal | HC

workman status termination

Case Details: New World Paints (P.) Ltd. vs. Suhas Dattatray Narkar [2026] 185 taxmann.com 342 (Bombay)

Judiciary and Counsel Details

  • Amit Borkar, J.
  • Dinesh C. Patankar for the Petitioner.
  • Avinash D. Kango & Neha T. for the Respondent.

Facts of the Case

In the instant case, the respondent was appointed as Sales Manager in August 2016, and from 1 July 2017 his designation was changed to Senior Sales Manager (Project). He received a relieving letter dated 27 May 2020, issued without prior notice during the pandemic.

After termination, he issued a demand letter seeking reinstatement with full back wages and continuity of service. On non-redressal, he approached the Conciliation Officer; conciliation failed, and the dispute was referred to the Labour Court.

Before the Labour Court, though the petitioner appeared, no written statement was filed. Accordingly, the Labour Court proceeded on the respondent’s unchallenged material and held that the respondent was a workman and that his termination was illegal.

The petitioner-employer filed the instant writ petition contending that the respondent was not a workman, as he was drawing a salary of about Rs. 0.50 lakhs per month and was designated as Senior Sales Manager. However, designation and salary alone are not decisive; what is important is the nature of duties actually performed.

High Court Held

The High Court observed that the respondent had clearly stated on oath that his duties were mainly clerical and that he used to visit societies, meet office bearers, and collect product approvals. These duties did not indicate managerial or supervisory control and, therefore, the conclusion that the respondent was a workman was justified.

Since the petitioner had not shown compliance with statutory provisions such as notice or compensation, the order of reinstatement was a logical consequence.

The High Court further held that, since the findings of the Labour Court were based on evidence and there was no perversity, writ jurisdiction did not permit reappreciation of facts unless there was clear illegality. Therefore, the impugned award passed by the Labour Court was to be upheld.

The post Senior Sales Manager Held Workman – Termination Illegal | HC appeared first on Taxmann Blog.

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[Opinion] Common CARO Reporting Errors and Overlap with Main Audit Report

CARO reporting errors audit

Editorial Team – [2026] 185 taxmann.com 897 (Article)

1. Introduction

The Companies (Auditor’s Report) Order, 2020 (CARO 2020) significantly enhances auditors’ reporting responsibilities by requiring detailed, clause-wise disclosures on specific aspects of a company’s operations. While the main audit report expresses an overall opinion on the financial statements, CARO focuses on granular reporting of key matters such as fixed assets, borrowings, statutory dues, and internal controls.

In practice, however, auditors often face challenges in ensuring consistency and completeness between CARO reporting and the main audit report. Instances of incomplete reporting, contradictions, or omission of critical matters in either report are commonly observed, leading to regulatory scrutiny and, in some cases, disciplinary action. This highlights the need to clearly understand the distinction, overlap, and interlinkages between CARO and the main audit report.

2. Relevant Provisions

2.1 Companies Act, 2013

As per Section 143(3), The auditor’s report shall also state—

(a) whether he has sought and obtained all the information and explanations which to the best of his knowledge and belief were necessary for the purpose of his audit;

(b) whether, in his opinion, proper books of account as required by law have been kept by the company so far as appears from his examination of those books and proper returns adequate for the purposes of his audit have been received from branches not visited by him;

(c) whether the report on the accounts of any branch office of the company audited under sub-section (8) by a person other than the company auditor has been sent to him under the proviso to that sub-section and the manner in which he has dealt with it in preparing his report;

(d) whether the company’s balance sheet and profit and loss account dealt with in the report are in agreement with the books of account and returns;

(e) whether, in his opinion, the financial statements comply with the accounting standards;

(f) the observations or comments of the auditors on financial transactions or matters which have any adverse effect on the functioning of the company;

(g) whether any director is disqualified from being appointed as a director under sub-section (2) of section 164;

(h) any qualification, reservation or adverse remark relating to the maintenance of accounts and other matters connected therewith;

(i) whether the company has adequate internal financial controls with reference to financial statements in place and the operating effectiveness of such controls;

(j) such other matters as may be prescribed.

As per Section 143(11), The Central Government may, after consultation with the Advisory Committee, by general or special order, direct, in respect of such class or description of companies, as may be specified in the order, that the auditor’s report shall also include a statement on such matters as may be specified therein.

Provided that until the National Financial Reporting Authority is constituted under section 132, the Central Government may hold consultation required under this sub-section with the Committee chaired by an officer of the rank of Joint Secretary or equivalent in the Ministry of corporate Affairs and the committee shall have the representatives from the Institute of Chartered Accountants of India and Industry Chambers and also special invitees from the National Advisory Committee on Accounting Standards and the office of the Comptroller and Auditor General. (Effective from 10th April,2015)

2.2 Analysis – Overlap and Practical Challenges

While CARO 2020 and the main audit report serve different purposes, they are interrelated. CARO is not a substitute for audit opinion but a supplementary reporting framework. However, in practice:

  • Matters reported under CARO, for example, defaults in loan repayment, fraud, and non-compliance with laws, may have implications on the audit opinion.
  • Failure to reflect such matters appropriately in the main audit report can result in inconsistency.
  • Conversely, qualifications in the main report may not always be properly mirrored or explained in CARO clauses

This creates overlap risks and reporting gaps, requiring careful evaluation by auditors.

2.3 Illustrative Cases Observed in Practice

The following cases are illustrative of audit deficiencies and reporting inconsistencies observed in orders and inspection findings issued by the National Financial Reporting Authority and disciplinary proceedings of the Institute of Chartered Accountants of India.

Click Here To Read The Full Article

The post [Opinion] Common CARO Reporting Errors and Overlap with Main Audit Report appeared first on Taxmann Blog.

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