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For Official Use Only OFFICE OF THE ACCOUNTANT GENERAL (COMMERCIAL AND RECEIPT AUDIT) ANDHRA PRADESH, HYDERABAD LAND REVENUE AUDIT MANUAL (SECOND EDITION) Issued by THE ACCOUNTANT GENERAL (COMMERCIAL AND RECEIPT AUDIT) ANDHRA PRADESH, HYDERABAD For Official Use Only 2 OFFICE OF THE ACCOUNTANT GENERAL (COMMERCIAL AND RECEIPT AUDIT) ANDHRA PRADESH, HYDERABAD LAND REVENUE AUDIT MANUAL (SECOND EDITION) Issued by THE ACCOUNTANT GENERAL (COMMERCIAL AND RECEIPT AUDIT) ANDHRA PRADESH, HYDERABAD PREFACE This Manual has been prepared for the guidance of the field Audit parties entrusted with the Audit of Land Revenues. The present edition has been revised incorporating the amendments and changes upto June 2007. The revenue laws of Andhra Pradesh comprise of numerous legislation dealing with levy of taxes and cesses and also land tenures by way of land reforms which contribute to land revenue in view of the introduction of the ryotwari system in the place of Zamindari and Inam Systems. There are three sets of laws, one applicable to the entire Andhra Pradesh and the other two applicable exclusively to the Andhra area and Telangana area respectively. In view of the multifarious laws enacted and the multiplicity of records maintained for the levy and collection of land revenue a very wide field has to be covered in the audit of land revenues. In order, therefore, to facilitate the exercise of various checks in audit, the relevant checks to be exercised with reference to a particular law or record have been detailed while dealing with the concerned law 3 or record. This will obviate the need for frequent cross references if all the audit checks were consolidated and given separately in a single Chapter. Wherever different laws and procedures are prevalent in the Andhra and Telangana Areas, those laws and procedures have been given side by side to facilitate reference and ready understanding. In the absence of any indication to the contrary, it may be taken that the laws and procedures stated are applicable to the Andhra Pradesh State as a whole. It should be note that besides the provisions relating to the levy, assessment and collection of land revenue, fees, penalties, etc., contained in the various Acts and Rules made hereunder, there are the standing Orders of the erstwhile Board of Revenue which deal with some matters not dealt with in the Acts, such as assignment of lands, bought-in-lands, baling remissions, etc. Therefore, a knowledge of these orders also is essential for purpose of conducting effective audit of land revenues. If, in the course of audit any reference has be made to a particular provision of the Act or the Rules made thereunder or to the Board’s Standing Orders, such a reference should be made to the relevant A ct or Rule or the Board’s Standing Orders and not to the paragraphs of this Manual. Any error in the Manual or suggestion to improve it may be brought to the notice of the Group Officer (Deputy Accountant General) State Receipt Audit. The State Receipt Audit (Headquarters) Section is responsible for updation this Manual from time to time. Hyderabad, Accountant General Date: 2007 ( Commercial and Receipt Audit), Andhra Pradesh CONTENTS Sl.No. CHAPTER PAGES 1. Introduction 2. Historical Background 3. Organisational Setup of the Department 4. Survey and Settlement 5. Land Revenue/Water Tax 6. Levies on Land other than Land Revenue 4 7. Integrated Villages Accounting 8. Land Tenures, Estates and Inams 9. Andhra Pradesh Land Reforms and Land Assignment and Land alienation Laws 10. Andhra Pradesh Revenue Recovery Act, 1864 11. Miscellaneous including Computerization 12. Verification of Credit and Reconciliation of Figures 13. Audit Checks and Audit Procedure in General Annexures CHAPTER 1 INTRODUCTION 1.1 Constitutional Responsibility of the Comptroller and Auditor General of India for Audit of Receipts.- The audit of revenues is inherent in the powers vested in the Comptroller and Auditor General of India by Article 151 of the Constitution. Article 151 lays down the reports of the Comptroller and Auditor General of India relating to the accounts of the Union and the States shall be submitted to the President or the Governor of a State as the case may be, who shall cause them to be laid before each House of Parliament or Legislature. Union or a State and this totality would include all receipts embracing the revenues of the Union and or the States. Section 16 of the Comptroller and Auditor General’s (Duties, Powers and Conditions of Service) Act, 1971, specifically enjoins upon the Comptroller and Auditor General to audit all receipts of the Union and of the States and to satisfy himself that the rules and procedures in that behalf are designed to secure and effective check on the assessment, collection and proper allocation of revenue and are duly observed. For that purpose, the Comptroller and Auditor General is authorized to undertake such examination of the accounts as he thinks fit and to report thereon. 1.2. Principles of Receipt Audit. – Audit of receipts is broadly governed by the general principles laid down in chapter 3 of section II of Manual of Standing order (Audit). The 5 instructions contained in this manual are supplementary thereto and describe specifically the procedure to be followed in the audit of land revenue. 1.3. Audit Vis-à-vis Executive functions.- It is the primary responsibility of departmental authorities to see that all revenues of Government which have to be brought to account are correctly and properly assessed, realised and credited to Government account. The Audit Department does not, however, in any way, substitute itself for the Revenue Authorities in the performance of its statutory duties. The most Important function of audit is to see (1) that adequate regulations and procedures have been framed by the department to secure an effective check on the assessment, collection and proper allocation of taxes, (2) that the departmental machinery is sufficiently safeguarded against error and fraud and that, so far as can be judged the procedure is calculated to give effect to the requirements of law and (3) to satisfy itself, by adequate test check, that such regulations and procedures are actually being carried out. It should also be borne in mind that the basic purpose of audit is not only to see that all demands raised are promptly collected and credited to Government but also to ensure that these demands are correctly raised and they satisfy the requirements of law and that the Executive does not grant unjustified or unauthorized remissions to tax payers. In taxation laws, lacunae may occur as result of oversight or omission at the time of framing or enacting the laws. If the provisions of the law are such that the tax payer takes unfair advantage of such lacunae or provision by way of legal avoidance, Audit may bring to the notice of the Executive such legal evasions, the idea being not to criticize the Legislature but to enable the Government/ Legislature to review the position and initiate remedial action wherever necessary to plug leakages of revenue. Audit does not review the judgement exercised or the decision taken in individual cases by officers entrusted with those duties but an examination of such cases may be an important factor in judging the effectiveness of assessment procedure. Where, for example, the information received in any individual case is insufficient to enable Audit to see how the requirement of law has been complied with, Audit may ask for further information to enable it to form the judgement required of it as to the effectiveness of the system. It is however, towards forming a general judgement rather than to the detection of individual errors that the audit enquiries should be directed. This does not bar, as a matter of principle, irregularities being pointed out by Audit in individual cases, where substantial amounts are involved or where there have been serious violations of the law or the rules having the force of law. In the discharge of these functions, members of the Audit Department will have access to the relevant records and papers of the Revenue Department but they should observe secrecy in the same way as the officers of the Revenue Department. 1.4. Audit Vis-à-vis judicial pronouncements.- The Audit Department does not, normally, question the decision of a High Court which is binding on the Officers functioning within the jurisdiction of that High Court till it is any way modified or overruled by the 6 Supreme Court. It is only in those cases where no authoritative interpretation of law by High Court or the Supreme Court is available that the Comptroller and Auditor General states what in his judgement is the correct requirement of law on the basis of the plain meaning of the statute and puts forward that view to the Revenue Department for its examination and amendment of the relevant provisions of law if deemed necessary. 1.5. In the subsequent chapters, the basic provisions of the Act and the rules governing the assessment and collection of land revenue and its allied taxes are set out. Being only a summary, this can in no sense be regarded as a substitute for the Act itself and therefore, it should be treated merely as a preliminary step to enable the staff to grasp the essentials of land revenue administration. CHAPTER 2 7 LAND REVENUE – HISTORICAL BACKGROUND 2.1. Land Revenue the first charge. – Land is an important source of livelihood for the people in India and also a source of income for the State. In theory, all lands belong to the State and the patta given to a ryot is only in recognition of occupancy right on the land granted to him.

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