(1) The Deputy Commissioner of Taxes, with the approval of the Commissioner, shall select a number of returns of withholding tax filed under section 177 for audit.

(2) The Deputy Commissioner of Taxes shall conduct the audit of the selected return in respect of the following matters, namely:—

(a) whether the tax has been deducted or collected at the rate, in the amount and in the manner as provided in Part 7 and the rules made thereunder;

(b) whether the tax collected or deducted has been paid to the credit of the Government, or has been paid in accordance with the manner and within the time as prescribed;

(c) whether the certificate of tax deduction or collection has been furnished in accordance with the provisions of this Act.

(3) Where an audit under sub-section (2) results in findings that the provisions of this Act in respect of the matters mentioned in the said sub-section have not been complied with, the Deputy Commissioner of Taxes conducting the audit may take necessary actions under this Act, including the actions under sections 143, 144 and 266.

(4) For the purpose of selecting returns for audit under sub-section (1) and for conducting the audit, the Board shall formulate such comprehensive audit guidelines as it may think fit.

(5) No return shall be selected for audit after the expiry of 4 (four) years from the end of the year in which the return was filed.