top of page

By:

Sumit Ranjan Das

21 August 2024 at 4:08:59 pm

Rethinking the Tax Audit

India’s recurring tax-audit crunch is forcing a rethink of both the compliance calendar and who should be eligible to conduct tax audits. Every September brings the same scramble which includes tight deadlines, portal related delays and professionals working late into the night to complete audit filings. This year is no exception. As of September 25, 2026, the September 30 deadline for tax-audit reports for AY 2026-27 remains unchanged, with no CBDT extension notified. Chartered Accountant...

Rethinking the Tax Audit

India’s recurring tax-audit crunch is forcing a rethink of both the compliance calendar and who should be eligible to conduct tax audits. Every September brings the same scramble which includes tight deadlines, portal related delays and professionals working late into the night to complete audit filings. This year is no exception. As of September 25, 2026, the September 30 deadline for tax-audit reports for AY 2026-27 remains unchanged, with no CBDT extension notified. Chartered Accountant (CA) associations are once again seeking more time. Meanwhile, the Institute of Cost Accountants of India (ICMAI) continues to press a separate case: that CMAs should be allowed to conduct tax audits. At first glance, these may appear to be unrelated professional disputes. Look closer, however, and they point to the same underlying strain: can India’s tax compliance framework keep pace with the volume, complexity and speed of modern business? The immediate question is whether the deadline moves. The larger one is whether the system needs rethinking. Further Extension The case for an extension this year is not new, but the pressures are cumulative. The compliance calendar is compressed. The August 31 non-audit ITR deadline falls barely a month before the tax audit deadline, leaving little breathing room for practitioners juggling overlapping assignments. Audit related return utilities were released in stages and subsequently updated, reducing the effective time available for reconciliation and filing. Financial disclosure requirements for non-corporate assessees have also expanded, requiring more data to be compiled and verified before a report can be finalised. Then there is the demanding task of reconciling GST returns, TDS/TCS records, AIS/TIS and Form 26AS with the books of account. Portal glitches, access issues and digital signature failures can further delay the process. Taken together, CA associations argue, these pressures justify moving the deadline to October 31, giving professionals more time to complete the work accurately rather than rush through verification. Not an Anomaly This is not the first time the tax audit deadline has been extended. For AY 2024-25, the deadline moved to October 7, 2024, amid concerns that included portal related difficulties. For AY 2025-26, the CBDT initially extended it to October 31, 2025, citing floods and other natural calamities. A subsequent extension moved the specified date to November 10, 2025. At what point does an extension stop being an exception and start becoming an expected outcome? India can continue managing tax audit pressure through last minute relief, year after year, or work towards a compliance calendar that is predictable enough to reduce the need for repeated extensions. While CAs are asking for more time, CMAs are asking for a seat at the table. Since 2015, ICMAI has pushed for CMAs to be included in the definition of “accountant” under tax law. The demand resurfaced during the drafting of the Income tax Bill, 2025, but was not incorporated. CMAs already carry statutory responsibilities in other areas, including cost audits under the Companies Act, 2013, and internal audits for specified classes of companies. ICMAI argues that this experience, combined with training in accounting, taxation and auditing, makes a case for revisiting tax audit eligibility. ICAI, however, has raised concerns about extending eligibility, emphasising specialised training, professional standards and disciplinary oversight. The debate, therefore, must consider more than qualifications alone. Audit quality, independence, accountability and taxpayer confidence are central to any decision on expanding eligibility. One debate concerns time and the other, eligibility. Both point to a tax compliance system in which reporting requirements continue to grow while deadlines remain tight. Addressing this pressure requires more than another one-off extension. It calls for realistic timelines set well in advance, reliable filing systems that can withstand peak-season demand, and a transparent, evidence-based review of professional capacity and eligibility standards. The immediate question is whether the CBDT extends the September 30 deadline for AY 2026-27. The bigger challenge is addressing the recurring pressure behind it through better planning, stronger systems and a considered review of professional capacity. An extension may offer relief this year. Broader eligibility, if supported by appropriate standards and safeguards, could expand capacity over time. Any reform must preserve audit quality, independence and public confidence. India’s tax audit framework needs to evolve towards a system that is timely, credible and accountable not merely workable in a pinch. September 30 comes around every year. The case for reform doesn’t go away when the deadline does. (The author is a Cost and Management Accountant and founder of TaxoDas. Views personal).

India waits to lasso diamantaire Mehul Choksi

Apr 14, 2025
5 min read

Mumbai: India rubbed its hands gleefully as the Belgium Police honoured its request to arrest the absconder diamantaire Mehul Chinubhai Choksi – more than seven years after he, along with his nephew Nirav Deepak Modi - allegedly duped the Punjab National Bank of nearly Rs. 13,800-crores.

 

The scam involving the ‘Mehul Mama-Nirav Bhanja’ erupted in Jan 2018, after the PNB lodged a complaint with the Central Bureau of Investigation (CBI).

 

By then the kin, along with many of their family members, winked and slipped out of the country, leaving a rattled India rubbing its palms in disappointment.

 

A political-cum-financial storm raged, embarrassing the Bharatiya Janata Party government of Prime Minister Narendra Modi a year before the Lok Sabha elections.

 

Multiple agencies launched a multi-pronged probe into what became the biggest banking scam in the past quarter century – and almost four times bigger than the stock market-cum-banking fraud the late Big Bull Harshad Mehta had inflicted on the Indian economy 33 years ago (in April 1992) – when it was just opening up.

 

In Belgium

According to official reports, Choksi was living with his Belgium citizen-wife Preeti in Antwerp, a global diamond hub, presumably for the past 18 months on a ‘residency permit’ acquired through questionable means, for medical reasons.

 

Earlier, he shot to the headers (June 2021) while being taken in a wheelchair to a court by the Dominican Republic's Police on charges of sneaking into the small country in the Caribbean Sea, North America.

 

Interestingly, as the Antigua & Barbuda government initiated the process to cancel his citizenship acquired through an investor visa, Choksi had suddenly gone ‘missing’ till he surfaced in the Dominican Republic.

 

The April 2025 action by Belgium followed a request by India’s CBI and the financial frauds specialist Enforcement Directorate (ED) to nab Choksi as the InterPol had revoked his Red Corner Notice in 2023.

 

Mama and Bhanja

‘Mama’ Choksi is the founder-owner of Gitanjali Group while ‘bhanja’ Nirav’s Firestar plus other companies – and the duo, with some PNB officials hand-in-glove – conspired to make a ‘mamu’ of not only PNB, but other banks, as it subsequently tumbled out.

 

After making a quiet exit, Choksi was detected living in the verdant Antigua & Barbuda Isles (West Indies), then attempted entry to the Dominican Republic, was sent back to Antigua & Barbuda and then went to Belgium where he was nabbed on Sunday.

 

Similarly, Modi was found sauntering on the streets of London and nabbed in March 2019. He remains in jail there since India's extradition is still pending.

 

However, India is keeping its fingers crossed that it may finally lay hands on Choksi, bring him to India and face trial in the PNB scam, though it may take time.

 

Born in Mumbai (1959) and educated in Gujarat, Choksi, 66, and wife Preeti have three children.

 

The Rs. 13,800-crore PNB scam

In the modus operandi revealed after India’s second-largest PSU bank PNB admitted it was scammed, Choksi and Modi used fraudulent Letters of Undertaking (LoU) to get overseas credits or loans from Indian banks.

 

The PNB first informed the Reserve Bank of India (RBI) of the fraud and then lodged a criminal complaint with the CBI in Jan. 2018, plus another CBI complaint in Feb, that led to a FIR against Modi and Choksi and their companies.

 

The ED entered the scene to probe the allegations of money-laundering through the LoUs – which they allegedly misused to avail short-term business finances from foreign branches of Indian banks.

 

The probe said that the duo were availing the LoUs from the PNB’s Brady House Branch from March 2011, and over the next six-seven years, managed to get a whopping 1,200-plus LoUs like a breeze with the help of some friendly bankers within.

 

Post-scam, the gold-diamond companies Gitanjali Group and Firestone Group with multiple operations in India and abroad have largely wound up, while some personal assets of the mama-bhanja have been auctioned to recover a part of the dues.

 

ED's plea to declare Choksi fugitive stuck for seven years

Even as absconding diamantaire Mehul Choksi, a key accused in the Punjab National Bank loan fraud case, has been arrested in Belgium, the ED's plea to declare him a fugitive economic offender has been pending before a court in Mumbai for nearly seven years.


Choksi, 65, and his nephew diamantaire Nirav Modi are the prime accused in the Rs 13,000 crore PNB bank loan fraud case. Choksi was arrested in Belgium following an extradition request by Indian probe agencies, official sources said on Monday.


The Enforcement Directorate had filed the application in July 2018, seeking to declare Choksi an FEO and confiscate his assets under provisions of the Fugitive Economic Offenders Act.


However, the matter has witnessed repeated delays owing to a barrage of applications filed by the accused in the PMLA court and the Bombay High Court alleging procedural lapses in the Enforcement Directorate's plea.


"The court is kept busy with frivolous applications, and hearing on our application to declare him (Choksi) an FEO has been adjourned for the past seven years,” an ED officer had said after the hearing was once again deferred this February.


"The court should have continued the hearing and taken a decision on the future course of action once the application was moved," the officer had said.

He had urged the court to take note of the repeated filing of similar applications and to not entertain them.


Choksi's lawyer had informed the court that the accused was undergoing treatment for suspected cancer in Belgium and intended to file an application in connection with his health.


Under the FEO Act, an individual can be declared a Fugitive Economic Offender if a warrant has been issued against him for an offence involving Rs 100 crore or more and he has left India while refusing to return. Once declared an FEO, the person's property can be confiscated by the investigating agency.


Choksi had challenged the ED's application in the Bombay High Court, alleging that the agency "had not followed proper procedure before filing the application and, hence, it stands vitiated".


However, in September 2023, the High Court dismissed his plea, ruling that the ED had adhered to the prescribed format under the FEO Act. It also vacated a stay on the special court's proceedings.


Despite this, the hearing on declaring Choksi FEO could not commence, with Choksi continuing to file applications before the special court through his lawyers.


While most of these pleas have been dismissed, a few remain pending. His latest attempt to stall proceedings through a plea to recall the notice issued on the ED's FEO application was rejected in December 2023.


According to ED officials, Choksi left India under suspicious circumstances in early January 2018.


Shifting stance

Choksi's counsel has argued that the ED kept shifting its stance on the material grounds for declaring him an FEO and that the suspension of his Indian passport made it impossible for him to return for investigation.

The court, however, rejected this argument, stating that the notice was issued based on accurate information and not based on "wrong facts or mistaken assumptions".


ED claimed the accused left the country under suspicious circumstances in the first week of January 2018.


Nirav Modi has already been declared as an FEO by the special court. He has been lodged in jail in London since 2019.

Comments


bottom of page