12. Audit.—

(1) The proper officer not below the rank of a Commissioner or any other officer authorised by him may, by way of a general or special order, undertake audit of any registered taxable person for such period, at such frequency and in such manner, as may be prescribed.

(2) The officers referred to in sub-section (1) may conduct audit in their office or at the place of business of the registered taxable person.

(3) The registered taxable person shall be informed by way of a notice not less than fifteen working days prior to the conduct of audit in such manner as may be prescribed.

(4) The audit under sub-section (1) shall be completed within a period of three months from the date of commencement of such audit.

(5) Where the proper officer referred to in sub-section (1) is satisfied that the audit in respect of such registered taxable person cannot be completed within the period of three months, he may, for the reasons to be recorded in writing, extend the said period by a further period not exceeding six months.

(6) For the purposes of this sub-section, the expression, “commencement of audit” shall mean the date on which the records and other documents called for by the proper officer, are made available by the registered taxable person or the actual institution of audit at the office of the proper officer or at the place of business of such registered taxable person, whichever is later.

(7) During the course of audit, the proper officer may require the registered taxable person—

(a) to afford him the necessary facility to verify the books of account or other documents as he may require; and

(b) to furnish such information as he may require and render necessary assistance for timely completion of the audit.

(8) On conclusion of audit, the proper officer shall, within thirty days, inform the registered taxable person, whose records are audited, about the findings, his rights and obligations and the reasons for such findings.

(9) Where the audit conducted under sub-section (1) results in detection of cess not paid or short paid or erroneously refunded, the proper officer may initiate action under section 16.