CA Sanjay Agarwal – Voice of CA

Representation for extension of the applicability of New Form No. 3CA, 3CB and 3CD for furnishing Tax Audit Report u/s 44AB of the Income Tax Act, 1961 for A.Y. 2015-2016 & onwards

CA Sanjay Agarwal the Founder of ‘Voice of CA’ has made a representation by email on 01.08.2014 to the CBDT Chairman and has requested to extend the Applicability of  Revised Tax Audit Report u/s 44AB of the Income Tax Act, 1961 to A.Y. 2015-2016 & onwards instead of A.Y. 2014-15.   

Tax Audit report been revised  vide Notification No. 33/2014, F.No.133/1/2014-TPL dated 25th July, 2014 issued by Central Board of Direct Taxes, Ministry of Finance, Government of India. .

Members, especially those who are Auditors/Directors in Banks, PSUs, Govt. sectors and entities having multiple locations are requested to forward this representation to the Chairman, CBDT in order to achieve the common benefit of extension of applicability of new format of tax audit report.

We are reproducing below the Format of The representation made to the CBDT Chairman. Member who wishes to make representation to CBDT may use the same  and modify or amend the same for the purpose of making representation to CBDT :-

 To                                                                                                                   Date:

The Chairman

Central Board of Direct Taxes

Ministry of Finance

Government of India

New Delhi.

Subject: Representation for extension of the applicability of New Form No. 3CA, 3CB and 3CD for furnishing Tax Audit Report u/s 44AB of the Income Tax Act, 1961 for A.Y. 2015-2016 & onwards

Respected Sir,

In reference to the captioned matter, we would like to respectfully submit that the Central Board of Direct Taxes vide Notification No.33 dated July 25th, 2014 has recently notified new Form No. 3CA, Form No. 3CB and Form No. 3CD for furnishing Tax Audit Report u/s 44AB of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) with immediate effect.

It is provided that the old Forms are invalid even for the previous AYs thereby necessitating the filing of Tax Audit Report u/s 44AB of the Act in revised format for any such Report filed for any Assessment Year after the date of Notification. Further, the schema and the revised utility for e-filing have not been updated at the website of Income Tax department till date.

The introduction of new Forms in the end of the month of July just before 2 months prior to the due date for furnishing Audit Report has mainly generated practical difficulties for the Tax Auditors and the Assessees, especially Government and semi-Government tax payers as the amendments, as much as 18 in numbers as compared to previous report, made in new form and the newly inserted clauses are not merely observations but requires detailed working and examination by the Tax Auditors. Also, the Tax payers are required to furnish additional information. Consequently, fresh tax audit has to be conducted so as to comply with the additional requirements of the new Forms.

The detailed reasons warranting the extension of the applicability of new form for AY 2015-2016 and onwards are as under:

1. The majority of the Auditors have already completed Tax Audits except uploading the Report on e-filing portal and in order to comply with these amendments and additional requirements, fresh examination and enquiry is to be conducted by the Tax Auditors.

2. The furnishing of Tax Audit report in new format at this point of time would increase burden on the Government in terms of revised Audit fees and allowances like travelling, lodging, boarding and other such expenses where:

a. the Audits are allotted by CAG of Government entities, Public Sector entities, Banks, Insurance companies, etc. and the Auditors are appointed from the States other than the State in which the entity is set up.

The Tax Auditors will be required to again visit the place of Audit in order to comply with the requisites of amended forms which in turn will increase the burden on the Government in terms of costing.

b. the entities have large number of branches situated in different regions of the country such as Banks.

In such cases, most of the Tax Audits have been duly completed by the branch auditors and have been handed over to the Auditor of Head Office for consolidation. In view of this Notification, the Tax Audit report of such entity will have to be furnished in revised forms and fresh audit will have to be conducted for all the branches thereby increasing burden on the Government in terms of costing.

3. The issues mentioned above are applicable for most of the cases in the private sector also.

4. The Guidance Note on Tax Audit under Section 44AB of the Income Tax Act, 1961 issued by the Institute of Chartered Accountants of India (ICAI) also needs revision so as to provide guidelines for the Professionals conduction such Audit.

In view of the above, it is humbly submitted that the applicability of new Forms for those Audits would lead to hardship of the Auditors as well as the tax payers and would result in increase of financial burden on the Government of India.

We would request you to kindly consider the aforementioned issues and extend the applicability of the revised Form No. 3CA/3CB & 3CD to AY 2015-2016 and onwards.

Thanking You.

Yours faithfully,

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0 responses to “Extend applicability of revised Tax Audit report to A.Y. 2015-16”

  1. khushboo says:

    Sir, what if the audit report has been signed before 25 july and submitted to bank for seeking loan but not yet uploaded? can it be uploaded in old format?

  2. mohan rao jogyala says:

    SIR

    IT IS TRUE MOST OF THE AUDITORS HAVE COMPLETED TAX AUDIT AND READING FOR UPLOADING. SO IT IS RQUESTED TO IMPLEMENT FROM AY 2015-16.

  3. CA. NGS Rao says:

    Really an honest effort and sincere service individually undertaken to represent the voice of the professional. Kindly let know whether the CBDT has responded to the represnttion

  4. CA J K Arora says:

    Thnak you sir, you are right

    Govt. should notify it in advance, it is notified on 25-7-14 and till date schema for uploading was not available then assessee and CAs those have completed work early will have to spare time and efforts and reason is delay from govt side. It is good work but not at right time. Govt should reconsider it’s implementation.

  5. BSKRAO says:

    Among Cash, Mercantile & Mixed System of Accounting, Mercantile System reflects true profit or loss of the business enterprises. In this system all expenses relates to the year, whether paid or payable are debited to Profit & Loss A/c & payable portion shown in liability side of Balance Sheet, similarly all income relates to the year, whether received or receivable are credited to Profit & Loss A/c & receivable portion shown in the assets side of Balance Sheet. Further, expenses incurred in advance & income received in advance are shown in assets & liability side of Balance Sheet respectively. Based on this principle only all other accounting standards (Clarifications) are framed.

    Above information about Accounting Principles & Systems are taught at Pre-University level to commerce students. I being a PUC (Science) student, learnt about this at B.Com level.

    Further, AS are clarificatory in nature & can not over raid basic principle & system of accounting. I am of the strong view that one should follow the basic principle & system of accounting. In fact, AS are framed by professional bodies to take scope, which is creating confusion in the minds of assesses, tax professionals & public at large.

  6. BSKRAO says:

    ACCOUNTING STANDARDS are clarificatory in nature & can not over raid basic principle & system of accounting. I am of the strong view that one should follow the basic principle & system of accounting. In fact, AS are framed by professional bodies to take scope, which is creating confusion in the minds of assesses, tax professionals & public at large.

  7. CA Abbas says:

    Its good move, but the time is not correct. The new government wants to implement all the policies of the preceding government with immediate effect. To prove their activeness, the implications are not understood. It is better to give time to the professionals to understand the reporting requirement and responsibility of auditor and auditee. Further, the auditee will also need some time to understand the reporting requirement.

    The best time of implication is AY 2015-16.

  8. DAMODAR SHARMA says:

    Is there any confirmation is obtained for revised tax audit repor from respective autority for applicability from Assessment year ?

  9. HITESH K C says:

    can anybody provide me mail ID of CBDT?

  10. BSKRAO says:

    FURNISHING INFORMATION IN INCOME-TAX LAW AUDIT REPORT U/S 44AB IS A CLEAR CASE OF PRACTICE OF LAW. RECENTLY IN THE CASE OF BAR COUNCIL OF INDIA VS A.K.BALAJI (SC) IT WAS CLEARLY HELD THAT ADVOCATES ALONE ARE ENTITLED PRACTICE LAW. ICAI (FINANCIALS) AUTHORISED TO WORK ON FINANCIAL ACCOUNTS ONLY IN THEIR STATUTE BOOK & NOT AUTHORISED TO PRACTICE ANY INDIAN LAWS. I DO NOT UNDERSTAND WHY ICAI (FINANCIALS)GUIDANCE IS REQUIRED FOR CBDT TO REPLACE TAX AUDIT FORMS ? DISSENTING NOTE OF 2 MEMBERS IN WANCHOO COMMITTEE ABOUT INTRODUCTION OF TAX AUDIT IN INCOME-TAX ACT HAS BECOME TRUE AFTER A PERIOD OF 30 YEARS.

  11. U.D.VENKATESH says:

    It is the usual practice of vested interest to keep the learned officials in Ministry of Finance in Dark Room by way of self appraisal in Journals & News Papers. I think amendment in the interest of all Tax Professionals will come in Finance Act. Author is trying to misguide Tax Professionals, therefore it is prayed, not to follow the instructions of the author. Let us follow the directions of CBDT, Ministry of Finance in the interest of our nation.

  12. MANDEEP SINGH says:

    If all 16 lack audits done by 65000 CA’s with other work as like file ITRs of non audit assesses,Prepare balance sheets for bank purposes, file vat returns of assessees, represent assessees before tax authorities.
    you can imagine quality of work done by CA’s in audits u/s 44ab in last dates along with other above mentioned works.

    IT IS MY STRONG VIEW THAT AUDIT WORK ALSO NEED TO BE DISTRIBUTE OTHER TAX PROFESSIONALS as like ” Practice of law” distribute in Non- Advocates in taxation matters.

  13. MANDEEP SINGH says:

    I think one more amendment needed to the section 44ab. For this purpose all tax practitioners should be authorized to sign off tax audit reports. If such amendment will take place then there will be following benefits:-

    1) It will be helpful to widen genuine tax base.
    2) Low costs bear by assessees for given statutory compliance to section
    44ab.
    3) It will be helpful to reduce work load from CA’s.
    4) All audits will be completed in time.
    5) More tax practitioner in line more revenue, same as like more workers of
    any party more votes.
    6) FOR SAVE TIME & REDUCE WORK LOAD OF CA’s, CBDT NEED TO AUTHORIZE NON
    CA’s TAX PROFESSIONALS FOR TAX AUDIT.

    I think there is no need to defer new forms to next years due to that CA’s have overburdened. we need to solutions as mentioned above.

  14. CA D ANANDHAN says:

    CA.D.ANANDHAN
    All the tax professionals are intelligent.But they have not any jurisdictional powers.In our country CAG has more power than tax practitioners.

  15. K H Mahajan says:

    Humble request to CBDT to accept our proposal for Asst. yr 2015-16

  16. CA J K JAIN says:

    The CA is already overburdened, more so in updating the contact details in remote area’s assessees who are even not having their e-mail IDs, and if have do not open for long. The mid-way change should never be the thought of Govt. I agree & request the law amending authorities to defer it to AY 2015-16 for smooth & better sailing.

  17. VIPIN KUMAR says:

    The new government promised to simplify the tax regimes in its election campaigns but all that now seems to be flatter actions. Hope the bureaucrats will consider the submissions of needful and take right action. Better to give some time and win the confidence of general public.

  18. B S K RAO says:

    BECAUSE OF MANDATORY UPLOAD OF TAX AUDIT REPORT DONE ON THE BEHEST OF ICAI (FINANCIALS)ON THE ELEVENTH HOUR EARLIER, WE NON-CAS STARTED ROAMING AROUND IN SEARCH OF CAS TO FILE RETURNS IN TAX AUDIT CASES. THEN WHY WE SHOULD SUPPORT THE ABOVE ISSUE ? FURTHER, AGAINST RTI FOR SEEKING WRONG CLAIMS REPORTED IN TAX AUDIT CERTIFICATE FOR THE ASST. YEAR 2013-14, DEPTT. COULD NOT PROVIDE THE SAME. THEN WHY SO MUCH OF WORRY ABOUT TAX AUDIT FORMS.

  19. BSKRAO says:

    SITUATION RESULTING IN UNEMPLOYMENT OF NON-CA TAX PROFESSIONALS & FULL
    EMPLOYMENT TO CHARTERED ACCOUNTANTS IN INDIAN TAX LAW PRACTICE
    REQUIRING THE GOVT. TO HAVE TAX PRACTITIONERS LAW IN INDIA

    (1) As per Section 288(2) of Income-Tax Act, 1961 eight class of persons are authorized to represent the assesses. Among them only following five class of persons are authorized to prepare return on behalf of assesses under Rule 12A of Income-Tax Rules, 1962:-

    (1) Legal Practitioners
    (2) Chartered Accountants
    (3) Cost & Management Accountants
    (4) Company Secretaries
    (5) Income-Tax Practitioners

    (2) Original Income-Tax Act, 1961 was well drafted by learned officials in Finance Ministry & it was capable of meeting the expectation of the Govt. in all future events, except requiring amendments for events/changes taking place in this 21st Century. Disturbance to the original intention of legislature in Income-Tax Act, 1961 started in 1984 by the intervention of Institute of Chartered Accountants of India by way of inserting mandatory Tax Audit Certificate U/s 44AB by only Chartered Accountants. This was also cautioned by Sri.P.C.Padhi, former Chairman, Central Board of Revenue and Deputy Controller & Auditor General of India, Sri.D.K.Rangnekar former Editor, Economic Times, who were the members of Direct Taxes Committee, popularly known as Wanchoo Committee & gave dissenting note on the issue. On date, there are 46 Plus Mandatory CA Certificates in Income-Tax Act, which were inserted on the behest of ICAI (Financials) since from 1984. Because of 46 Plus mandatory CA Certificates in Income-Tax Act, 1961, Non-CA Tax Professionals viz. Legal Practitioners, Cost & Management Accountants, Company Secretaries & Income-Tax Practitioners can not exercise the authority granted in the statute fully & independently. Here, crux of the matter is CAs enjoy both the power of certification & representation, but Non-CAs are authorized only to represent the assesses. This is practically causing strict hurdle for voluntary compliance & assesses prefer to approach only CAs for tax compliance, resulting in unemployment of Non-CA Tax Professionals & full employment to CAs. This position of Non-CA Tax Professionals is comparable to decree of court which can not be executed.

    (3) Audit means “verification”, depending on the purpose they are classified as Energy Audit, Environment Audit, Product Audit, Process Audit, Legal Audit in USA & Tax Audit in Indian Income-Tax Act. Here, person conducting audit should be specialized in that subject. Hence, the word “Audit” is not the domain of Chartered Accountants. Assessing officers of Income-Tax Deptt. who come from different streams conducting audit in scrutiny assessment proceedings are not Chartered Accountants. In conclusion, person specialized in Income-Tax law should issue Certificates/Reports in Income-Tax Act. On careful study of Section 288(2) of Income-Tax Act read with Rule 12A of Income-Tax Rules, it has to be presumed that all five class of persons referred in Para No.1 above possess knowledge of Section 145 read with 14 Accounting Standards of CBDT, required for Income-Tax Practice. Because certain qualification has been fixed in Income-Tax Act for these five class of persons. Further, Accounting Standard framed by ICAI (Financials) & IFRS not required for Income-Tax Practice. Here the question is, when such other four class of Non-CA Tax Professionals are authorized to prepare return under Rule 12A of Income-Tax Rules, there is no justification to prohibit them for issue of Certificates/Reports in Income-Tax Act. Therefore, it is clear that on introduction of Certificates from only CAs in Income-Tax Act, original intention of legislature in Section 288(2) of Income-Tax Act read with Rule 12A of Income-Tax Rules has been struck down.

    (4) As per the latest information provided by Directorate of Income-Tax (Systems), New Delhi against application filed U/s 6(1) of Right to Information Act, it is evident that only 65,570 CAs are practicing, who are unevenly spread throughout India. India is highly populated country, existing number of practicing CAs does not meet the requirement of our economy. Due to ceiling on number of tax audit, Non-CA Tax Professionals handling tax audit cases have to roam around in search of empty slots of CA Signature to give compliance in case of their clients during due dates. This has also resulted in high cost of compliance, due to high demand & extra payment made for reservation of empty slots of CA Signature. CA Certificates in Income-Tax Act are causing strict hurdle for voluntary compliance not only in Income-Tax Act, but also in other Central and State Govt. taxation laws. In another 10 years, Non-CA’s who entered the Tax Profession in 1980’s will all eliminate & Govt. has to relay on only CA’s for seeking compliance under all Indian taxation laws.

    (5) Our esteemed Central Govt. should come out with subordinate legislation; introduce Tax Practitioners Bill covering all tax law professionals in India also. Such Tax Practitioners Bill should be introduced with “Preamble” stating that “Other than Advocates are also practicing tax law in India, in order to protect them and also in the interest of Govt. revenue, this Tax Practitioners Bill has been introduced”. Then such Tax Practitioners Law can not be struck down in view of SC verdict in the case of Bar Council of India Vs A.K.Balaji, wherein it was clearly held that Advocates alone are entitled to practice the profession law both in litigious & non-litigious matters. Treasury Department Circular No.230 for regulations governing practice before the Internal Revenue Service in USA and Tax Agent Service Act of Australia are very good examples for kind consideration of Ministry of Finance, Government of India to have similar Tax Practitioners Law in India also, to widen genuine tax base of assesses.

    (6) Opinion No.50 Dt.12.03.2013 issued by Committee on the Unauthorized Practice of Law appointed by Supreme Court of New Jersey states that “A non-lawyer who holds a power of attorney may not engage in the practice of law”. US Treasury Circular No.230 is the Tax Practitioners Law, regulating all Tax Professionals in USA. Limited appearance of persons other than Attorney’s/Advocates before Internal Revenue Service of Income-Tax Authorities in USA provided in Clause No.10.3 read with exception Clause No.10.32 of US Treasury Circular No.230. Exception Clause No.10.32 reads as under:-

    “Nothing in the regulations in this part may be construed as authorizing persons not members of the bar to practice law”

    (7) Among Legal Practitioners, Cost & Management Accountants, Company Secretaries, Chartered Accountants and Income-Tax Practitioners, who wants to practice tax law in India, should mandatory seek registration under Tax Practitioners Law, whatever their parent body say is immaterial & Tax Practitioners Law should recognizes the qualifications acquired by all five class of tax professionals mentioned above. Population wise India is a large country, Govt. can not relay on one professional body for seeking voluntary compliance under Indian taxation laws. Tax Practitioners Bill is well suited to India, required for India & need of the hour. I hope Finance Ministry will consider this suggestion of mine working in the interest of all tax professionals and Govt. revenue since from 2001.

  20. CA B G Kale says:

    Relief should be given to the Tax Audit Reports signed before 25/07/2014 but not yet uploaded. And I hope that the reports which were uploaded before 25/07/2014 will not be required to be uploaded in the new format

  21. MUKAMBIKA.K. says:

    IN SPITE OF HUE & CRY FROM NON-CAS, UPLOAD OF TAX AUDIT REPORT WAS MADE COMPULSORY WITH OUT CONSIDERING THE REPRESENTATION OF RELATED NON-CA TAX PROFESSIONALS & ASSESSES ABOUT NON-AVAILABILITY OF EMPTY SLOTS OF CAS.
    THEN, WHY WE SHOULD JOIN HANDS WITH CAS IN THE ABOVE MATTER ?

  22. S PRAKASH says:

    sir,
    Kindly remember days when the uploading of the audit report was introduced in the last minute.Why the CA’s did not raise the VOICE then? Why only now they are against the amendment to the Form 3CD,3CA and 3CB? In the interest of the tax paying public let the CBDT clarify as to why the changes has been made in the last hour?The CBDT never cares for the VOICE of the tax paying public, let CBDT think in the favor of the assessee and not in the interest of the CA.Is the Finance Department and CBDT work only of the CA’s or it is worried about the tax paying community at large? Let the CBDT think of increasing the TAX BASE,and voluntary filing of returns by the assessee and removing the hurdles of certifications from the CA for filing the returns.In my experience the Departmental officials are more intelligent than any tax professionals in unearthing the block money.

  23. BSKRAO says:

    CAN ANY ONE IMAGINE THE TROUBLE FACED BY NON-CAS WHILE MANDATING THE UPLOAD OF TAX AUDIT REPORT. WHY WE SHOULD SUPPORT ABOVE ISSUE INITIATED BY CAS ?

  24. BSKRAO says:

    AMENDMENT IS EXPECTED IN FAVOUR OF PCMAS AND PCS. PLEASE DO NOT SUPPORT THE ABOVE ISSUE.

  25. cokanabar (Retd FCA) says:

    The Secretary, From CO Kanabar.
    Chairman of HA6-1DU (U.K) Central Board of Direct Taxes, Date 04-08-2014.
    New Delhi 110001.

    Sub:- Change the Assessment year w.e.f 2014/15 to
    2015/16 in respect of e filing of the triple
    Tax Audit Reports for Ass –Year 2014/15.

    It has been learned that the Audit community is puzzled over the eleventh hour Notice of the CHANGES in the Format of these 3 Forms with 18 Amendments as reported and with NO similar change/amendment of the date or the Assessment year relating for submission of the same.
    THIS amounts to a war like preparation by Auditors relating to the triple Reports and is as good as placing the Cart before the Horse instead of the grass in a mild tone.
    It is also learnt that many CAs have already used format in e forms as prevailing prior to your esteemed order.
    THE CBDT is known to have evolved always to give REASONABLE time in all sorts of things and hope it will continue to hear what the interested community wants and do the needful either to change the Ass. years or file the revised Forms however the Former is more suitable. Thank you. Kanabar(3006)

  26. CA ANIL D. SARAF says:

    It’s a right suggestion and remedy.

  27. Rajagopalan S says:

    Dear Sir,

    A very good and apt representation. Hope the CBDT considers the request favourably. In times like this, it is sad our Institute of Chartered Accounants of India keeps quiet and does not get involved and leaves the members to fend for themselves.

    Regards
    Rajagopalan S.

  28. pbk says:

    Now the Modi govt Officers are also behaving like the useless congress. If this will be the approach we will have to search for new person. Now my instinct (looking to the past behaviour of the senseless beaurocrats)says that they will continue the old form for the govt related companies and press upon the new form for the general public.

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