Chapter VII BUDGET OF NOTIFIED INSTITUTIONS, ACCOUNTS AND AUDIT

Applicability of the provisions of the Act.-

1. (1) Except the provisions of Chapter VIII, nothing contained in this Act, is applicable to any religious institution or charitable endowment founded, organized, run or managed by religious denomination.
2. (2) Nothing contained in Chapter VII shall apply to a notified institution whose gross annual income does not exceed rupees one lakh

Budget of Notified Institutions.-

1. (1) The Chairman, Manger or the Executive Officer of a Notified Institution shall within ninety days before the close of every financial year, file in such form as may be prescribed a budget showing the probable receipts and disbursements of such institution during the following year, along with actual income and expenditure for the preceding year, [xxx]. The receipts portion shall comprise of the income proposed to be derived from Hundial collections, tasdik amount, annuity, Cash grants, Jathra, Rathotsava and Sevartha fees, interest on deposits, money orders, rent from land and building and such other income as may be prescribed: Provided that in case of such class or classes of notified institutions as may be specified by the State Government from time to time. It shall not be necessary to file the annual budget before the end of each year but it shall be sufficient to file the budget once in three years.
2. (2) Every budget filed under sub-section
3. (1) shall make adequate provision for,-
   • (i) the due pursuance of the objects of the Institution or Endowment and the proper performance of, and remuneration for, the services therein, including those for the schedule of articles of dittam or scale of expenditure for the time being in force and other requirements of worship or offering in connection with such service : Provided that the salaries of Archakas and temple servants shall not exceed thirty five percent of its gross annual income. Provided further that the budget shall provide only for such of the posts sanctioned and for such amount of salary as may be prescribed. Explanation: Gross annual income under this Chapter shall not include.
   • (a) donations made as contribution to the capital;
   • (b) amounts realised by sale of jewels or other movable or immovable properties belonging to the institution;
   • (c) amounts received for specified services or charities where the service or charity is performed.
     • (ii) the due discharge of all liabilities and subsisting commitments binding on the institution;
     • (iii) the arrangement made for securing the health, safety or convenience of the pilgrims, worshippers or other persons resorting to the institution;
     • (iv) the construction, repair, annual maintenance, renovation and improvement of the institution and the buildings connected therewith: Provided that such work shall not be taken up without obtaining administrative and technical sanction from such authority as may be prescribed.
     • (v) the audit fee at such percentage of the gross annual income as may be prescribed;
     • (vi) the Reserve Fund of the Institution at not less than ten percent of the gross annual income.
     • (vii) the maintenance of educational Institutions owned and controlled by the notified institutions;
     • (viii) irrespective of the category of notified institutions, the diversion of surplus fund not exceeding ten percent of the surplus fund for religious, charitable, educational, religious discourse and for any other purpose, the object of which is to preach Dharma and Cultural value duly obtaining sanction from the Commissioner.
4. (3) for the payment of contribution to the common pool fund as provided under section 17.
5. (4) The budget shall be filed,-
   • (i) where it relates to an Institution whose annual income is not more than [rupees five lakh], to the Assistant Commissioner;
   • (ii) where it relates to an Institution whose annual income is [more than rupees five lakhs but not more than twenty-five lakhs], to the Deputy Commissioner with a copy thereof to the Assistant Commissioner; and
   • (iii) where it relates to an Institution whose annual income is more than [rupees twenty-five lakhs], to the Commissioner with a copy thereof to the Deputy Commissioner.
6. (5) The authority to whom the budget is presented shall as far as may be within sixty days of the receipt of the proposal consider it and pass orders sanctioning the budget with or without any alteration, omission or addition as it may deem fit, after considering the remarks if any made by the immediate controlling authority under sub-section (6).
7. (6) The Assistant Commissioner or the Deputy Commissioner to whom a copy of the budget is marked shall forward the proposal with his remarks to the Deputy Commissioner or the Commissioner as the case may be, who is the authority to sanction the budget.
8. (7) If in the course of a financial year the Chairman or the Executive Officer finds it necessary to modify the provisions made in the Budget in regard to the receipt or distribution of the amount to be expended under the different heads he may submit a supplemental or revised budget to the authority specified, in sub-section (4), which shall be dealt with in the same manner as specified in sub-sections
9. (5) and (6).

Maintenance and Audit of Accounts.-

1. (1) The Chairman, Manager or where an Executive Officer is appointed the Executive Officer shall be responsible for keeping regular accounts of the institutions.
2. (2) The accounts shall be kept in such form and got audited annually in such manner as may be prescribed : Provided that in case of institutions whose gross annual income is five lakh rupees or more the accounts shall be got audited by the State Accounts Department. Provided further that no audit fee shall be levied and collected if the accounts of the notified or declared institution are audited by the State Accounts Department.
3. (3) Every auditor acting under sub-section
4. (2) shall have access to all the accounts books, vouchers, other documents and records in the possession of, or under the control of the Chairman, Manager or the Executive Officer, as the case may be.
5. (4) Notwithstanding anything contained in the preceding sub-sections, the Commissioner may, for reasons to be recorded in writing, direct a special audit of the accounts of any notified institution.

Audit Report.-

1. (1) The auditor shall in his report specify all cases of irregular, illegal or improper expenditure or failure or omission to recover moneys or other property belonging to the notified institution or of loss or waste of money or other property thereof and state whether such expenditure, failure, omission, loss or waste was caused in consequence of a breach of trust or misappropriation or any other misconduct on the part of the Chairman, Manager or the Executive Officer, as the case may be.
2. (2) The auditor shall also report on such other matter relating to the accounts as may be prescribed or on which the Deputy Commissioner or Assistant Commissioner, as the case may be, require him to report.

Rectification of Defects disclosed in audit and orders of surcharge against Chairman or Executive Officer.-

1. (1) The Authority sanctioning the budget shall send a copy of every audit report relating to the accounts of the Notified Institution to the Chairman, Manager or the Executive Officer or any other person concerned with the administration of that institution, as the case may be, and require him to submit an explanation thereof, within such period as he thinks fit. It shall be the duty of such Chairman, Manager or the Executive Officer or other person to remedy any defects or irregularities pointed out by the Auditor and report the same, together with his explanation and the explanation of any other person required, to the said Authority.
2. (2) If upon consideration of the report of the Auditor along with the explanation, if any, furnished under sub-section (1), the Chairman, Manager or the Executive Officer or any other person is found guilty of negligence, breach of trust or misappropriation or misconduct, which has resulted in loss to the notified institution, the said Authority may, give notice to the person to show cause why an order of surcharge should not be passed against him and after considering his explanation, if any, and holding such inquiry, as he thinks fit, by an order, certify the amount so lost and direct the Chairman, Manager or the Executive Officer or such other person, as the case may be, to make good within a specified time, the loss caused to the notified institution.
3. (3) The said Authority shall forward a copy of the order under sub-section
4. (2) with the reasons for the same by registered post to the Chairman, Manager or the Executive Officer of the Institution, or other person who is held guilty.
5. (4) The Chairman, Manger or the Executive Officer or any person aggrieved by an order, passed under sub-section
6. (2) may, within thirty days from the date of the communication of the order appeal:-
   • (i) to the Deputy Commissioner where the order is passed by the Assistant Commissioner;
   • (ii) to the Commissioner where such order is passed by the Deputy Commissioner; and
   • (iii) to the Karnataka Appellate Tribunal, if such order is that of the Commissioner.
7. (5) The Appellate Authority shall not stay the operation of the order pending the disposal of the appeal, unless sufficient security is furnished to its satisfaction.
8. (6) The Deputy Commissioner of the District in which any property of the Chairman or Manager or Executive Officer or other person from whom an amount is recoverable by way of surcharge is situated, shall on requisition made by the Assistant Commissioner, recover such amount as if it were an arrears of land revenue and pay the same to the notified institution concerned.
9. (7) If the surcharge is against the Executive Officer, it shall be recovered out of his salary and other amounts payable to him, as may be ordered by the authority.

Rectification of defects detected by Commissioner.- Without prejudice to the provisions of section 39 where the Commissioner either on his own or on a report of the Deputy Commissioner or any other person, has reason to believe that the Chairman, Manager, Executive Officer or any other person is guilty of illegal expenditure or of causing loss or waste of money or other property of the Notified Institution, by mis-conduct, misapplication, collusion, fraud, breach of trust or misappropriation, the Commissioner may after such enquiry as may be necessary and after giving him an opportunity to make his representation.-

1. (a) pass an order directing conditional attachment of the whole or any portion of the property of the Chairman, Manager, Executive Officer or such other person.
2. (b) institute such criminal proceedings as may be necessary.
3. (c) pass an order of surcharge after obtaining an audit report in this behalf.

Obligations of certain Institutions.- It shall be the obligation of every Hindu Religious Institution and every Charitable Endowment to which this Act applies to file before the Commissioner every year, within sixty days from the close of that financial year,-

1. (i) an annual audited statement of its income and expenditure, and
2. (ii) an annual statement of all immoveable property and all moveable property specified under section 31. In such form and in such manner as may be prescribed.