The system and manner of conducting of Tax Audit u/s 44AB have changed drastically in recent time. We now in electronic age, thus have to file the Tax audit Reports by e filing. The journey of tax audit report started with manual filing, proceeded towards to No filing and now the present going on procedure of e filing. The e filing of Tax audit reports is complete in itself, however some relevant issues crop up with the filing of the tax audit report with the authorities. One such issue is the revision of Tax Audit Report already uploaded.
1. TAX AUDIT ALREADY FILED REPORT CAN BE REVISED
Yes, it can be revised. However In case of revision, the audit report should be given in the manner suggested by the Institute in SA-560 (Revised) “Subsequent Events”. It may be pointed out that report under section 44AB should not normally be revised.
The revision of the Tax Audit report is directly related to taxation implications of the revised tax audit report. The reasons of subsequent events are defined, but some puerperal reasons are also justified to revise the Tax audit Report. Voluntarily filing a revised tax audit report income is not a time bound affair and it is well in the parameters with the compliance of the Income Tax. The Institute and the Ministry of Corporate Affairs have affirmed this position. In case of revision, the audit report should be given in the manner as required by the Institute in SA-560 (Revised), Subsequent Events. The Ministry of Corporate Affairs had also clarified that accounts can be revised to comply with technical requirements.
2. MANNER & PROCEDURE OF REVISING TAX AUDIT REPORT ELECTRONICALLY
Guidance Note of Tax Audit u/s 44AB of Income Tax Act-1961 prescribes that In certain cases, members are called upon to report on the accounts reopened and revised by the board of directors. The accounts of a Company once adopted at its annual general meeting should not normally be re-opened and revised. In case of revision, the audit report should be given in the manner suggested by the Institute.(Published in the Chartered Accountant, pp.655, February, 1985. Also refer to Revision/Rectification of Financial Statements, published in Compendium of Guidance Notes – Volume I). The Department of Company Affairs had also clarified that accounts can be revised to comply with technical requirements. It may be pointed out that report under section 44AB should not normally be revised. However, sometimes a member may be required to revise his tax audit report on grounds such as:
(i) revision of accounts of a company after its adoption in annual general meeting.
(ii) change of law e.g., retrospective amendment.
(iii) change in interpretation, e.g. CBDT’s circular, judgments, etc.
(iv)Any other reason like system/software error requiring change in report already uploaded.
Further After uploading a Tax report if it came to the knowledge of auditor that his client is engaged in another business also this has been not disclosed to him at the time of the original Tax Audit. In such circumstances the tax auditor is having all the right to revise the original tax audit report at its first reporting rather than sitting idle and wait for any action from the Tax authority.It is better to compute the revised total taxable income of the client and also the revised tax liability. Many opined that the auditor may be at risk because of its first audit report, but this sword is having two way edges. The auditor has to choose the one, but the auditor is eligible to revise the same within own rights.
3. A REVISED AUDIT REPORT CAN BE REVISED AGAIN?
There is no limit to revise the Tax audit reports. The only suggestion from the guidance note and the department is that it should be in a manner suggested in SA- 560. After going through the Guidance Note of Tax Audit u/s 44AB of Income Tax Act-1961, it is very clear that Tax Audit report should not be normally revised. However, there is no bar in revising and revising again with a rider that it can be revised only to meet some technical requirements. It should be assured that the new revised report should carry the reference of old reports and should be signed in the current date. The date of the audit report is the date of signing the physical copy of the tax audit report /revised tax audit report.
4. REASONS FOR REVISING TO BE MENTION
In case, where a member is called upon to report on the revised accounts, then he must mention in the revised report said that the report is a revised report and a reference should be made to the earlier report also. In the revised report, reasons for revising the report should also be mentioned.
5. CBDT PROVIDES FACILITY FOR REVISION
The e-filing portal allows uploading such Revised Audit Report by the CA for the same PAN and Assessment Year. Further, the utility provided by CBDT for filling/ uploading of the TAX Audit report further added under heading “OTHERS” under uploading TAB. When us tick on another, it will ask for further description/details. But here you can write anything & upload the same to the department website. You can also make comments/observations in respect of a particular class of Form No.3CD are to be mentioned in the e-form at a space provided therein. Alternatively, they can be uploaded as PDF files in the field ‘Upload other report’ of the portal.
6. NO TIME LIMIT PRESCRIBED FOR REVISION OF TAX AUDIT REPORT
The guidance Note & law also did not specify anywhere the period up to which revision can be done.
7. SUBSEQUENT UPLOADING MAY BE BECAUSE OF JOINT AUDITOR
The e-filing portal allows the report to be uploaded by a single auditor. Therefore, the joint auditors may mutually agree and decide the auditor who shall upload the report. However, all the joint auditors should sign the hard copies. As per the ICAI’s“Guidance Note on Tax Audit u/s 44AB of the Income-tax Act, 1961”, it is possible for the assessee to appoint two or more chartered accountants as joint auditors for carrying out the tax audit, in which case, the audit report will have to signed by all the chartered accountants. As per the Standards on Auditing 299 (Responsibility of Joint Auditors) issued by ICAI, normally, the joint auditors are able to arrive at an agreed report. In such case, the physical copy should be signed by all the auditors.
Thereafter, any one of them may upload the report. However, where the joint auditors are in disagreement with regard to any matters to be covered by the report, each one of them should express own opinion through a separate report. A joint auditor is not bound by the views of the majority of the joint auditors regarding matters to be covered in the report and is required to express his opinion in a separate report in case of a disagreement. Such separate reports are also to be uploaded to the portal.
8. SA 560 IS TO ENSURE THE AUDITOR PERFORMS AUDIT PROCEDURES
SA 560, Subsequent Events outlines the auditor’s responsibility in relation to subsequent events. For the purposes of ISA 560, subsequent events are those events that occur between the reporting date and the date of approval of the financial statements and the signing of the auditor’s report.
The overall objective of SA 560 is to ensure the auditor performs audit procedures that are designed to obtain sufficient appropriate audit evidence to give reasonable assurance that all events up to the (expected) date of the auditor’s report have been identified, properly accounted for/or disclosed in the financial statements.
SA 560 also covers events that are discovered by the auditor after the date of the auditor’s report but before the financial statements are issued. SA 560 says that if financial statements are affected by “events occurring between the date of the financial statement and the date of the auditor’s report, and facts that become known to the auditor after the date of the auditor’s report”, an auditor, “shall discuss the matter with the management, determine whether financial statements need amendment and if so inquire how the management intends to do the matter in the financial statements.”
CA AMRESH VASHISHT, Meerut
(About the Author– Author was Member of ICAI- Regional Research Committee 2013-14 and ICAI- Committee For Direct Taxes 2011-12 and can be reached at email [email protected] or on phone Phone: 0 1 2 1-2 6 6 1 9 4 6. Cell: 9 8 3 7 5 1 5 4 3 2 having office at 1 1 5, Chappel Street, Meerut Cantt, UP, INDIA)