Page 13 - Banking Finance August 2025

ROUNDUP

of 60 tax audits per financial year per ride PMLA Proceedings, The 14-page order clearly stated that
chartered accountant starting from insolvency proceedings cannot be per-
April 1, 2026, to enhance audit quality Rules NCLT mitted to impair ongoing legal and
and ensure regulatory compliance. The National Company Law Tribunal criminal processes being pursued under
ICAI President Charanjot Singh Nanda (NCLT) has ruled that proceedings un- the PMLA framework.
confirmed the implementation at a der the Insolvency and Bankruptcy
recent press briefing in Delhi. Code (IBC) cannot be used to bypass Up to 200% Penalty for
ongoing investigations under the Pre-
While this cap already exists, current vention of Money Laundering Act Misreporting Income,
practice allows individual CAs to also
(PMLA). Dismissing the plea for the Warn Tax Experts
sign audits performed by firm partners.
dissolution of Shakti Bhog Snacks,
The new directive will restrict each Taxpayers misreporting income or
which is under scrutiny by the Enforce-
member to 60 tax audit assignments, ment Directorate (ED), the tribunal making false deduction claims may
irrespective of firm affiliation. ICAI, emphasized that permitting such dis- face penalties as high as 200% under
which has over four lakh members, said solution would amount to "judicial the Income Tax Act, experts have
this move aligns with international warned. According to chartered ac-
overreach" and hinder the ED's ability
norms and promotes ethical practices. countants Suresh Surana and Shefali
to pursue its case.
Mundra, Section 270A of the Act
The decision is aimed at reducing over- The NCLT underscored that allowing
burdening of auditors and ensuring dissolution while a special PMLA court clearly outlines penalties for
thorough due diligence in tax assess- has taken cognisance of ED's com- underreporting and misreporting in-
ments. It follows concerns raised in plaint would obstruct the recovery of come.
recent years about the potential dilu- proceeds from the alleged crime. A Underreporting-typically a result of
tion of audit quality when large num- two-member bench cited a Supreme errors or omission-attracts a penalty of
bers of assignments are handled by a Court judgment affirming that NCLT 50% of the tax due. However, if income
single professional or firm. and NCLAT lack jurisdiction over PMLA is deliberately misrepresented or if
proceedings, including attachments false documentation is submitted, the
Insolvency Cannot Over- and criminal prosecutions. penalty escalates to 200%. This in-
cludes use of fake invoices, fictitious
claims, or concealment of income
95 Crore People Benefit from Social Security sources.
Schemes: PM Modi The Income Tax Department has so-
phisticated tools to detect discrepan-
Prime Minister Narendra Modi announced that nearly 95 crore Indians are
cies between income declarations and
currently covered under at least one social security scheme-up from just 25
financial records. Even unintentional
crore in 2015. Citing a recent International Labour Organisation (ILO) re-
errors may trigger audits or investiga-
port, he noted that over 64% of India's population now receives some form tions, the experts said, urging taxpay-
of social protection, placing the country among the global leaders in social ers to ensure accuracy and transpar-
coverage.
ency in their filings.
Speaking during his monthly "Mann Ki Baat" broadcast, the Prime Minister In serious cases, misreporting can also
highlighted that this surge reflects India's commitment to social justice and
lead to prosecution under various sec-
inclusive growth. "This progress shows how the country is moving forward
tions of the Income Tax Act, further
with a sense of saturation, ensuring no one is left behind in health and
compounding the consequences.
welfare services," he stated.
He emphasized that government schemes now extend across sectors includ- NMDC Eyes Global Acqui-
ing health, pensions, and financial inclusion, making India one of the largest
social protection providers globally. Modi attributed this achievement to sitions in Critical Mineral
streamlined welfare delivery and the government's focus on last-mile con- Sector
nectivity and direct benefit transfer systems. State-owned mining major NMDC is

12 | 2025 | AUGUST | BANKING FINANCE