Section 44AB of the Income-tax Act, 1961 contains the provisions for the tax audit of an entity. As per these provisions, Tax audit will be conducted by a practicing chartered accountant who ensures the taxpayer have maintained proper books of account and complied with the provisions of the Income-tax Act.

In view of the challenges faced by taxpayers in meeting the statutory and regulatory compliance requirements across sectors due to the outbreak of Novel Corona Virus (COVID-19), the Government brought the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 [the Ordinance] on 31st March, 2020 which, inter alia, extended various time limits.  The due date to file an income tax return of AY 2020-21 is 30 November 2020 for all types of taxpayers, and also the last date to file ITR for AY 2019-20 is 30 November 2020 (belated and revised ITR). The due date for tax audit and filing of transfer pricing audit report is 31 October 2020.

It is evident that COVID-19 (Coronavirus) has affected the entire world including India. The World Health Organisation (WHO) has announced COVID-19 outbreaks a pandemic. The majority of the offices are working only partially. Life has almost come to a standstill and people are working for survival. As a result of which it is becoming difficult for the trade at large and the professionals to complete the compliances within the due dates prescribed and adhere to the time limits.

Tax Audit Report as prescribed u/s 44AB is to be submitted in Form 3CA / Form 3CB along with Form 3CD. Tax audit report in Form no. 3CA is required to be furnished when the assessee is required to get its accounts audited under any law other than Income-tax law and thus Tax Audit (for companies) can be conducted post completion of Statutory Audit (every company registered in India under the companies act,2013 is required to get its books of account audited irrespective of its turnover). The Statutory auditor is required to make a report to the members of the company on the accounts examined by him and on every financial statement which are required by or under this Act to be laid before the company in general meeting. Under the power vested as per the third proviso to Section 96 (1) of the Companies Act, 2013, the Registrar of Companies vide its order dated September 08, 2020, has provided an extension for a period of 3 months for conducting AGM i.e. last date to hold AGM for the current financial year is December 31, 2020 (which is even beyond the due date of Tax Audit and Income Tax Filling Due Date). Isn’t this conflict between due dates as prescribed under two Statutory Acts.

Clause 37 of Form 3CD require that the tax auditor is required to confirm Whether any cost audit was carried out, if yes, give the details, if any, of disqualification or disagreement on any matter/item/value/quantity as may be reported/identified by the cost auditor. MCA vide Circular No. 29/2020 dated 10/09/2020 has granted an extension for the filing of CR-4 (Form for filing of Cost Audit Report) till 30/11/2020 which is also beyond Due date of Tax Audit i.e. 30/10/2020.

The Punjab and Haryana High Court, In the case of Vishal Garg v. UOI [2015] 61 418 (Punjab & Haryana), had directed CBDT to make available the ITR forms on the very first day of the assessment year so that every taxpayer gets sufficient time to file their returns. For the current Assessment year, Most of the utilities or schema for the income tax Return were made available after June’20 instead of April’20(which is approx. 4 months delayed from the dates on which utility or schema should be released). Still, Java Utility for ITR 6 is yet to be released.

Comparable Data plays a vital role in Transfer pricing Audits. Since the date of AGM has been extended, the Annual Return by the company would be filled subsequently and thus there would be a delay in getting the comparable data.

In light of the above discussion, considering the overall economic environment and Pandemic situations, due dates of Tax Audit, ITR Filing, and Transfer pricing should be extended at least till 31/01/2021 i.e. one month from the date prescribed for holding AGM.

(Author: Saurabh Anokhchand Jain, (CA, DISA, M.Com) )

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April 2021