CA. M. Lakshmanan

Form No 3 CD and more than one Business & Filing of Tax Audit Report with the Return of Income.

While filling the required details in Form No. 3 CD for assessees, who are subject to Compulsory Audit under various sections, the correct details could not be furnished if the assessee has got income from more than one business and separate books are maintained for such businesses. For example for Gross Profit, Net Profit, Gross Profit/Turnover and Net Profit/Turnover,  the figures from all the businesses are clubbed and given, which serves no purpose of comparison or verification. The Income Tax Department has to look into the matter and make necessary corrections in the Form so that the figures given serve the purpose.

In the past while the Returns of Income are filed physically, the Tax Audit Report is to be enclosed with the Return of Income and if the same is not found the Return of Income is liable to be rejected. Now Tax Audit Reports are to be uploaded as soft copies along with the Return of Income which is filed electronically as e-return. As at present in electronic filing, the Return of Income and Audit Reports are independently accepted in the portal.  The Tax Audit Report can be filed even before the Return of Income and while filing the Return of Income the site never asks for Audit Report and hence it can be filed without Tax Audit Report also. Hence necessary changes are to made in the Income Tax Portal, in such situations, to allow filing of the Return of Income, only if the Audit Reports are also uploaded along with the Return of Income, in order to avoid future conflicts between assessees and Assessing Officers relating to accepting or rejecting the filing of Tax Audit Reports, which are filed, either before or after filing the Return of Income. This year suitable instructions are to be given to the officers at the CPC and other Assessing Officers to accept such returns even if the Audit Reports are filed earlier or belatedly and issue ‘intimations’ without rejecting the Return filed and without initiating penalty proceedings.

During the final stages, i.e. towards the end of the last date (for this year between 10th and 17th of October) the Income Tax server has become very slow and it look lot of time to accept the returns and forms filed. This may be due to large number assessees accessing the server for filing at the same time. Hence the capacity of the server is to be increased to accept large volume of data towards the end of the filing date.

Though the Chartered Accountants are equipped to prepare and file their clients Return of Income and Audit Reports in time they are helpless while majority of the Assessees approach the auditors towards the end of the filing date for preparation of the Return of Income and Audit. Due to changes in the system of preparing the Return of Income and Audit Reports in electronic form, the time consumed is relatively more compared with manual returns due to complications in filling the Return of Income and Tax Audit Reports. Even filing returns and forms through various soft wares available in the market also takes time since familiarizing procedures to fill the required particulars also takes time. If it is possible the Income Tax Department can verify such softwares and give certification for the correct functioning of the same to whomsoever approaches them for certification so that the Assessees can use them confidently. Hence the Assessing Officers can be lenient to certain extent in levying penalty till the system stabilizes.

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One Comment

  1. CA Mubassir Godil says:

    Dear Sir
    Your suggestions are very practical and precise.I believe the department will consider them if you will write to the CBDT.
    The CBDT is making constant efforts in making the filing of tax audit reports and returns seamless.
    They have in recent years given DSC management utility which is very helpful.

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