In this comprehensive guide, we provide answers to 71 frequently asked questions (FAQs) regarding Tax Audit Reports (TAR) and Accounting Standards (ASs) in India. From understanding the applicability of TAR to exploring the roles of auditors and reviewing boards, this article covers key aspects of tax audits and accounting standards.
(A) Obligations for preparing of information’s by taxpayer + auditing by auditor
1. Briefs on TAR’s Applicability
(i) When resident taxpayer in India (Taxpayer) carrying business + having sales + turnovers + gross receipts (all together) exceeding 1 crore in previous year under section 44AB of Income Tax Act (ITA), 1961
(ii) When taxpayer carrying business + having sales + turnovers + gross receipts (all together) exceeding 10 crore in previous year + aggregate amount received for sales + turnovers + gross receipts in cash not exceeding 5% + aggregate payment amount for purchases in cash not exceeding 5% (both together) under section 44AB of ITA, 1961
(iii) When taxpayer carrying profession + having gross receipts exceeding 50 lac in previous year under section 44AB of ITA, 1961
- List of professions:
(a) Legal profession
(b) Medical profession
(c) Engineering profession
(d) Architectural profession
(e) Accountancy profession
(f) Technical consultancy profession
(g) Interior decoration profession
(h) Company Secretary profession
(i) Film Artist + Actor profession
(j) Cameraman profession
(k) Director profession + assistant director + music director + assistant music director + art director + assistant art director + dance director + assistant dance director (all).
(l) Singer profession
(m) Story–writer profession
(n) Screen–play writer profession
(o) Dialogue writer profession
(p) Editor profession
(q) Lyricist profession
(r) Dress designer profession
(s) Information Technology (IT) profession
(iv) (a) When taxpayer carrying business + having sales + turnovers + gross receipts (all together) not exceeding 2 crore
+ (plus)
(b) Also net profit not 8% or 6% (case may be) under section 44AD of Income Tax Act (ITA), 1961
(v) (a) When taxpayer carrying profession + also gross receipts not exceeding 50 Lac
+ (plus)
(b) Also net profit not 50% under section 44ADA of ITA, 1961
(vi) (a) When taxpayer carrying business + having sales + turnovers + gross receipt (all together) not exceeding 1 crore
+ (plus)
(b) Also net profit not 8% or 6% (case may be) under section 44AD(1) of ITA, 1961
(vii) (a) When co-operative society (taxpayer) carrying business activities + having sales + turnovers + gross receipt (all together) exceeding 1 crore beside co-operative society already obtained audit report under provisions of Co-operative Societies Act, 1865.
+ (plus)
(b) Also clarification already notified vide CBDT’s circulars no. 03 dated May 21st, 2009
2. Briefs on TAR’s Non Applicability
(i) (a) When Partner of partnership firm + also LLP (both) taxpayer not required to obtain TAR (individually) for remuneration’s receipt beside amount exceeding 1 crore under section 44AB
+ (plus)
(b) Also partnership firm + LLP (both) already obtained TAR for sales + turnovers + gross receipts (all together) when exceeding 1 crore
+ (plus)
(ii) Also concluded by Bombay’s high court through reported case in 139com 164 on March 9th 2022
3. Meaning for Business + Sales + Turnovers + Receipts + Accounting Methods (all)
(i) Meaning for business (section 2(13) of ITA 1961)
- To include 100% trades + commerce’s + manufactures + adventures in nature of trades + commerce’s + manufactures (all).
(ii) Meaning for sales + turnover + gross receipts (section 2(91))
- To include 100% (aggregate) value for realizations from sales + supplies + distributions of goods + services (all) during previous year.
(iii) Meaning for sales + turnover + gross receipts under ICDS of ITA, 1961
- To include 100% cash + receivables + consideration in course of ordinary activities of taxpayer for sale of goods + services (both) under Income computation disclosure Standards (ICDS) during previous year.
(iv) Meaning for sales + turnover + gross receipts under GST, 2017
- (a) To include 100% values for outward supplies in state + union territory (both)
but
(b) Excluding 100% values for inwards supplies under Reverse Charge Mechanism (RCM) of GST, 2017
(v) Meaning for sales + turnover + gross receipts under Guidance Note (GN) issued by ICAI
- To include aggregate amount for sale of goods + sale of services – sale returns – trade discounts (all) under GN issued by Institute of Chartered Accountants of India (ICAI)
(vi) Meaning for sales + turnover + gross receipts under speculative transactions
- To include aggregate positive’s + negative’s differences be considered turnover for speculative transactions for computing turnover against TAR’s liability under section 44AB when contract for sales + purchases of commodities + stocks + shares to be settled without actual delivery of transactions + transfers of commodity + scripts (all).
(vii) Meaning for sales + turnover + gross receipts under actual delivery
- To include 100% transactions when purchases + sales of commodities + stocks + shares (all) actually intended to be delivered beside actual delivery not completed due to some unavoidable circumstances.
(viii) Meaning for specified date
- To include date for TAR to be filed with Income tax’s Centralized Processing Centre (CPC) at Bangalore before 1 month from due date for furnishing Income Tax Return (ITR) under section 139(1) of ITA, 1961 like TAR be filed up to September 30th when due date for filling ITR is October 31st
(ix) Meaning for Books of accounts + documents (both)
(a) To include certain books of accounts for business specified under section 145 of ITA, 1961 to enable to compute taxable incomes by Assessing Officer (AO) for taxpayer.
+ (plus)
(b) To include certain books of accounts for profession specified under section 44AA of ITA, 1961 to enable to compute taxable incomes by AO for taxpayer
+ (plus)
(c) List for professions included for books of accounts specified under section 44AA
(ca) For Legal profession
(cb) For Medical profession
(cc) For Engineering + architectural (both) profession
(cd) For Accountancy profession
(ce) For Technical consultancy profession
(cf) For Interior decoration profession
(cg) For other profession to be notified by CBDT in future.
(x) Meaning for accounting methods for chargeable incomes (section 145(1) + 145(2))
(a) To include incomes chargeable to Income tax from profits and gains of business or profession + incomes from other sources (both) be computed under section 145(2) on cash basis or on mercantile basis + also accounting method be employed by taxpayer consistently without frequent changes.
+ (plus)
(b) Central Government (Govt.) permitted to notify through official gazette from time to time for specific ICDS to be used for notified class of taxpayer for notified class of incomes.
+ (plus)
(c) (ca) AO permitted to make assessment under section 144 which commonly known ex-party assessment when AO not satisfied with 100% correctness + completeness of books of accounts (both) of taxpayer
or
(ca) When taxpayer not followed method for accounting specified under section 145(1)
or
(cb) When taxpayer not computed chargeable incomes specified under ICDS notified under section 145(2).
(xi) Meaning for method for special case’s accounting (section 145(A))
(a) To include to compute incomes chargeable from profits and gains for business or profession in special cases specified under section 145(A).
+ (plus)
(b) To include 100% values for purchases + sales of goods + sales of services + inventories + amount for taxes + duties + cesses + fees actually paid + incurred to bring goods + services up to place of location + also in agreed conditions (all).
(xii) Meaning for Gross Receipts
- (a) To include 100% receipts from business or profession + etc. + sales of goods + sales of services – 100% receipts against loans – 100% receipts against capital items = gross receipts
+ (plus)
(b) Also needed for computing turnover specified under section 44AB for obtaining TAR.
4. Briefs on role for Taxation Audits Quality Review Board (TAQRB) of ICAI
- ICAI already constituted Taxation Audits Quality Review Board (TAQRB) for reviewing audit reports issued by Practicing Chartered Accountant (PCA) under ITA, 1961 + also GST, 2017 (both)
(i) TAQRB permitted for reviewing audit reports issued under ITA, 1961 + GST 2017 (both) issued by PCA that audit reports prepared with 100% compliances + reporting requirements specified under various sections of ITA, 1961 + ITR, 1962 + GST, 2017 + also GST Rules, 2017 (all).
(ii) TAQRB permitted for reviewing audit reports issued under ITA, 1961 + GST 2017 (both) issued by PCA that audit reports prepared with 100% pronouncements + GN + technical guides (all) issued by ICAI.
5. Briefs on role for SA-700 for preparation of TAR by Tax auditors
(i) (a) Tax auditor required to prepare TAR in form no. 3CA or form no. 3CB specified in SA-700.
+ (plus)
(b) Also TAR in 3CA + 3CB (both) be filed online in preset form when not prepared as specified in SA-700
(ii) Tax auditor being advised to write about responsibility of taxpayer + also responsibility of tax auditor in specified space provided for observations under form 3CA(3) + 3CB(5) (all) when GN’s requirements specified in SA-700 not complied.
(iii) (a) Tax auditor being advised to write qualifications + observations in specified space provided in form no. 3CA + 3CB (both).
+ (plus)
(b) Also additional information’s be written in separate attached note.
+ (plus)
(c) Also additional information’s should not be qualifications + observations (both)
6. Briefs on responsibility for preparation of financial statements by taxpayers
(i) (a) Taxpayer responsible for preparation of financial statements + to give true and fair view for financial positions + financial performances specified in applicable ASs issued by ICAI.
+ (plus)
(b) Meaning of Responsibility
- To include designing + implementing + maintaining internal controls for preparations + presentations of financial statements to give true and fair view + free from material misstatement due to fraud + also error (all).
+ (plus)
(b) Also include overseeing financial reporting’s
(iii) (a) Also for preparing financial statements + statement of particulars in Form 3CD
+ (plus)
(b) Also for assessing ability to continue as going concern + also disclosing (both) when applicable through using going concern basis for accounting except when taxpayer has intention to liquidate or to cease operation or no realistic alternative.
(iii) (a) Taxpayer responsible for preparing particulars to be furnished in Form 3CD under section 44AB of ITA, 1961 + rule 6G(l)(b) of ITR, 1962 to give true and correct particulars specified under ITA, 1961 + rules + notifications + circulars + etc (all).
+ (plus)
(b) To include designing + implementing + maintaining Internal controls for operating effectively for preparation + presentation of particulars to be furnished in Form No. 3CD with free from material misstatement due to fraud + also errors (both).
7. Responsibility for opinion’s expression on financial statements by tax auditors
(i) (a) Tax auditor responsible for expressing his opinion on financial statements based on audit conducted under Auditing Standards issued by ICAI.
+ (plus)
(b) Also tax auditor responsible for complying ethical requirements + to plan + to perform audit to obtain reasonable assurance for free from material misstatements about financial statements.
+ (plus)
(c) Also tax auditor responsible for performing procedures to obtain audit evidences for amounts + also disclosures (both) in financial statements.
+ (plus)
(d) Also tax auditor responsible for selecting procedures based on his judgment + assessment for risks of material misstatements about financial statements due to fraud + also error (all)
(iii) (a) Tax auditor responsible for performing risk’s assessment after considering internal financial controls for preparation of financial statements to give true and fair view.
+ (plus)
(b) Also tax auditor responsible for designing appropriate audit procedures.
+ (plus)
(c) Also tax auditor responsible for designing audit procedures which should not be for expressing opinion in place of adequate internal financial controls system on financial reporting’s + operating effectiveness of controls (both).
+ (plus)
(d) Also tax auditor responsible for appropriateness of used accounting policies + reasonableness of accounting’s estimates made by management + also evaluating overall (all).
(iii) (a) Tax auditor responsible for ensuring compliances of relevant ethical requirements for Independence + to communicate about his relationships + matters which reasonable to bear on independence + also to safeguard himself (all).
+ (plus)
(b) Also tax auditor responsible for verifying statements of particulars to be furnished by taxpayer under section 44AB of ITA, 1961 + also to be filled in Form No. 3CD of Rule 6G(l)(b) of ITR, 1962 (both).
+ (plus)
(c) Also tax auditor responsible for verifying + also filling statement under GN issued by ICAI for tax audit under section 44AB of ITA, 1961 (both).
8. Monetary penalty for delay in filling TAR + also not filling TAR by taxpayers
(i) Taxpayer required to pay monetary penalty minimum @ 0.5% on total sales + turnovers + gross receipts (all together) or maximum 1.5 lac whichever lower under section 271B of ITA, 1961 for delay filling + non filling of TAR (both) under section 44AB of ITA, 1961.
(ii) Taxpayer required to pay monetary penalty for late filling + also for not filling of TAR (both) after September 30th each year.
9. Briefs on responsibility to prepare Form No. 3CA or 3CB (Rule 6G of ITR, 1962)
(i) Form 3CA
Form No. 3CA be filed by tax auditor when incomes under business or profession + also mandatory required for maintenance of books of accounts (both) for audit under any law like under Companies Act (CA) 2013.
+ (plus)
(b) Also taxpayer permitted to appoint 2 or more than 2 tax auditors separately for each TAR + also mandatory audit (both) under any law like under CA, 2013
(ii) Form 3CB
(a) Form No. 3CB be filed by tax auditor when incomes under business or profession + also not mandatory required for maintenance of books of accounts (both) for audit under any law like under Partnership Act, 2013 (updated).
+ (plus)
(b) Also Form No. 3CB be filed by tax auditor when incomes under business or profession + also not mandatory required for maintenance of books of accounts under any law like under Partnership Act, 2013 + also different accounting years in previous year (all).
- Notified vide Circular: No. 561, dated May 22, 1990
10. Briefs on responsibility to qualify in Form 3CA or 3CB (Rule 6G of ITR, 1962)
(i) Tax auditor required to write for qualifications in TAR to enable user of audited financial statements for computing qualification’s effect.
(ii) Tax auditor required to write for qualifications under clause 3(a) of Form 3CB as observations + comments + discrepancies + inconsistencies in qualification’s nature like for not obtaining 100% information’s + explanations which necessary for conducting audit + for keeping books of accounts by head office + by branches of taxpayer + also to give true and fair views on financial statements (all).
(iii) Tax auditor permitted to qualify TAR
(a) When necessary books of accounts not properly maintained by taxpayer
+ (plus)
(b) When necessary information’s + also explanations for tax audit not provided by taxpayer.
(c) When necessary documents for verifying reportable transactions not provided by taxpayer.
+ (plus)
(d) When necessary stock records not properly maintained by taxpayer
+ (plus)
(e) When necessary valuation of closing stock not possible (Feasible)
+ (plus)
(f) When necessary yield + also percentage of wastage not ascertainable
+ (plus)
(g) When necessary records for verifying personal expenses not maintained.
+ (plus)
(h) When necessary TDS returns could not be verified with books of accounts
+ (plus)
(i) When necessary records produced for verification of payments through account payee cheque’s not available.
+ (plus)
(j) When necessary amount of expenses against exempted incomes under section 14A of ITA, 1961 not ascertainable.
+ (plus)
(k)When identification of creditors under Micro, Small and Medium Enterprises (MSME) Development Act, 2006 not ascertainable
+ (plus)
(l) When necessary identification of prior period expenses not ascertainable from books of accounts
+ (plus)
(m) When necessary Fair Market Value (FMV) of shares under section 56(2)(viia) + 56 (2)(viib) (both) not ascertainable.
+ (plus)
(n) When necessary reports for audits carried by Excise + Service tax Department (now GST, 2017) (both) not provided by taxpayer.
+ (plus)
(o) When necessary GP Ratio not ascertainable from financial statements prepared by taxpayer
11. Responsibility for verifications in form 3CD’s information’s by tax auditors
- Tax auditor required to verify for true + also correctness (both) about information’s filled in form 3CD
- Tax auditor permitted to rely on judicial (courts) judgments for taking any view under his observations
- Tax auditor permitted to take his suitable cross references for specific item of incomes + expenditures already covered under more than 1 clause in form 3CD
- Tax auditor permitted to consider his own views when differences existed between views given by tax auditor and by taxpayer
12. Briefs on basic information’s (Clause 1 to 8)
- Taxpayer required to fill information’s in form no. 3CD
(i) Name of taxpayer ………………………………………………….
(ii) Address of taxpayer ………………………………………………….
(iii) PAN of taxpayer ………………………………………………….
(iv) GST number of taxpayer ………………………………………………….
(v) Status of taxpayer ………………………………………………….
(vi) Previous year for tax audit ………………………………………………….
(vii) Assessment year for tax audit ………………………………………………….
(viii) Relevant clause of section 44AB for tax audit ………………………………………………….
(viii-A) Section opted for taxation under section 115BA/115BBA/115BAB/115BAC/ 115BAD ………………………………………………….
- Tax auditor required to check information’s + to report in TAR for deficiency if any
13. Briefs on Partnership Firm + AOP + LLP information’s (Clause 9)
- Taxpayer required to fill information’s in form no. 3CD
(i) Positive + Negative profit sharing Ratio………………………..………………………………………
(ii) 100% changes occurred during previous year………………………..………………………………
(iii) Applicability of section 9B + 45 (4) of Income Tax Act (ITA), 1961…………………………
- Verification of documents by tax auditor
(i) Supplementary + Admission + Retirement deeds………………………..…………………………..
(ii) Document filings with ROF or ROC………………………..………………………………………………
(iii) Minutes of meetings for recording changes………………………..………………………………….
- Tax auditor required to check information’s + to report in TAR for deficiency if any
14. Briefs on Nature of business or profession + change if any (Clause 10)
- Taxpayer required to fill information’s in form no. 3CD
(i) Taxpayer required to fill information’s in form no. 3CD like nature of every business + profession (both) carried during previous year
(ii) Taxpayer required to furnish changes in business + profession (both) if carried during previous year.
- Tax auditor required to check information’s + to report in TAR for deficiency if any
15. Briefs on books of accounts prescribed (Clause 11)
- Taxpayer required to fill information’s in form no. 3CD
(i) Taxpayer required to fill information’s in form no. 3CD for books of accounts prescribed under Section 44AA Yes or No ……………..
(ii) (a) Taxpayer required to furnish list of books of accounts maintained + also address (both) where books kept…………………
+ (plus)
(b) Taxpayer required to write that books of accounts maintained on computer systems………
+ (plus)
(c) Taxpayer required to write that books of accounts kept at more than 1 location + also to provide address for more than 1 location (both) where books of accounts kept ………………………..……………………………………………………
(iii) Taxpayer required to write list of books of accounts + also nature of documents (both) examined by tax auditor ……………
(iv) List of prescribed books of accounts for medical professional (Rule 6F of ITR, 1962)
(a) Cash book
(b) Journal book when books of accounts kept on mercantile basis
(c) Ledger book
(d) Serial numbered on carbon copies of bills + also receipts issued (both)
(e) Original purchase bills + also payment vouchers (both)
(f) Daily case register (in Form No. 3C)
(g) Stock of drugs + medicines + also consumable accessories (all)
- Tax auditor required to check information’s + to report in TAR for deficiency if any
16. Briefs on nature of business (Clause 12)
- Taxpayer required to fill information’s in form no. 3CD
(i) Presumptive basis Business (Section 44AD)
(ii) Presumptive basis Profession (Section 44ADA)
(iii) Presumptive basis Transport business (Section 44AE)
(iv) Shipping business by Non-Resident (NR) (Section 44B)
(v) Business of exploration + business of mineral oils (Section 44BB)
(vi) Operation of aircraft by NR (Section 44BBA)
(vii) Civil construction + also turnkey power projects by NR (Section 44BBB)
(viii) Shipping business by shipping companies (Chapter XII-G)
(ix) Insurance Business (Section 44 of 1st schedule)
(x) Specified Business (Section 44D + 115A(1)(b))
- Tax auditor required to check information’s + to report in TAR for deficiency if any
17. Briefs on method of accounting employed (Clause 13)
- Taxpayer required to fill in 3CD + to make adjustments in P&L account under ICDS
(i) Taxpayer required to fill changes in absolute terms
(ii) Taxpayer required to compute incomes chargeable under Profits and Gains from Business or Profession (PGBP) + also Incomes from other sources (both) on cash basis or mercantile basis for accounting being used by taxpayer.
(iii) Taxpayer not permitted to use mixture of cash basis + also mercantile basis (hybrid basis) for accounting.
(iv) (a) Taxpayer required to use mercantile basis for accounting (only) under section 145(2) ICDS.
+ (plus)
(b) Also cash basis not permitted for accounting under section 145(2) ICDS.
- Mandatory Reporting by tax auditor:
(i) (a) Tax auditor not required to write for changes in accounting policies.
+ (plus)
(b) Also changes in accounting policies not treated changes in method of accounting therefore tax auditor not required to include in TAR.
(ii) (a) Tax auditor not required to write for changes in method of stock valuations.
+ (plus)
(b) Also changes in method of stock valuations not treated changes in method of accounting therefore tax auditor not required to include in TAR.
(iii) (a) Tax auditor required to write for changes in method of accountings which already employed in last year by taxpayer.
+ (plus)
(b) Also tax auditor required to write effect of increases or decreases in profits due to changes in method of accountings.
- Tax auditor required to check information’s + to report in TAR for deficiency if any
18. Briefs on method of valuation of closing stock (Clause 14)
(i) (a) Taxpayer required to fill information’s in form no. 3CD to compute valuation of closing stock under Accounting Standards–2 (AS-2) for preparing financial statements like under CA, 2013 when AS-2 already mandatory.
+ (plus)
(b) Also taxpayer required to compute valuation of closing stock under prescribed exclusive method when taxes like GST not to be added in valuation of closing stock.
(ii) Taxpayer required to compute valuation of closing stock under ICDS of section 145A of ITA, 1961 for computing taxable incomes for previous year when prescribed inclusive method to be used for inclusion of taxes (mandatory) like GST to be added in valuation of closing stock.
(iii) Taxpayer required to fill in form no. 3CD under section 44AB of ITA, 1961 + to re-compute taxable incomes for previous year through adding or subtracting effect of adjustment against difference between exclusive method and inclusive method for valuations of closing stock under ICDS + AS-2 (both)
- Tax auditor required to check information’s + to report in TAR for deficiency if any
19. Briefs on capital asset converted into stock-in-trade (Clause 15)
(i) Taxpayer required to fill information’s in form no. 3CD to compute FMV for capital asset already converted into stock-in-trade on date of conversion for accounting purpose under section 28 (via) of ITA, 1961
(ii) Taxpayer required to fill in form no. 3CD for FMV + also to pass book entry in books of accounts at FMV (both)
- Tax auditor required to check information’s + to report in TAR for deficiency if any
20. Briefs on Amount not credited to Profit and Loss account (Clause 16)
- Taxpayer required to fill information’s in form no. 3CD for incomes not credited to profit and loss account
(i) Clause 16(a)
Items covered under scope of section 28 of ITA, 1961 but not credited to profit and loss account…………………………………
(ii) Clause 16(b)
- Amount of Performa credits + drawbacks + refund of duty of custom + excise + service tax + refund of sales tax + value added tax (now GST, 2017) (all) when credits already admitted by govt. deptt. but not credited to profit and loss account …………..
(iii) Clause 16(c)
- Amount of escalation claims accepted by counter-party but not credited to profit and loss account ………………………………………………………………………………………………….
(iv) Clause 16(d)
- Amount of any income accrued but not credited to profit and loss account…………..
(v) Clause 16(e)
- Amount shown capital receipts instead of revenue receipts + also not credited to profit and loss account……………………
- Tax auditor required to check information’s + to report in TAR for deficiency if any
21. Briefs on Land + Building (both) transferred below FMV (Clause 17)
- Taxpayer required to fill information’s in form no. 3CD for any transfer of land + also building (both) below FMV being adopted for stamp duty purpose under section 43CA or 50C.
- Tax auditor required to check information’s + to report in TAR for deficiency if any
22. Briefs on allowable depreciation’s particulars – ITA, 1961 (Clause 18)
- Taxpayer required to fill information’s in form no. 3CD for calculations of allowable depreciation under section 32 of ITA, 1961.
- Tax auditor required to check information’s + to report in TAR for deficiency if any
23. Briefs on admissible amount under different sections (Clause 19)
- Taxpayer required to fill information’s in form no. 3CD for admissible amounts:
| S.No | Section | Amount debited to profit and loss account | Amounts admissible as per provisions of Income-tax Act, 1961 and also fulfils conditions, if any specified under relevant provisions of Income-tax Act, 1961 or Income-tax Rules, 1962 or any or guidelines, circular, etc., issued in this behalf. |
| (i) | 32AC | ……………………… | …………………………………………………… |
| (ii) | 32AD | ……………………… | …………………………………………………… |
| (iii) | 33AB | ……………………… | …………………………………………………… |
| (iv) | 33ABA | ……………………… | …………………………………………………… |
| (v) | 35(1)(i) | ……………………… | …………………………………………………… |
| (vi) | 35(1) (ii) | ……………………… | …………………………………………………… |
| (vii) | 35(1)(iia) | ……………………… | …………………………………………………… |
| (viii) | 35(1)(iii) | ……………………… | …………………………………………………… |
| (ix) | 35(1)(iv) | ……………………… | …………………………………………………… |
| (x) | 35(2AA) | ……………………… | …………………………………………………… |
| (xi) | 35(2AB) | ……………………… | …………………………………………………… |
| (xii) | 35ABB | ……………………… | …………………………………………………… |
| (xiii) | 35AC | ……………………… | …………………………………………………… |
| (xiv) | 35AD | ……………………… | …………………………………………………… |
| (xv) | 35CCA | ……………………… | …………………………………………………… |
| (xvi) | 35CCB | ……………………… | …………………………………………………… |
| (xvii) | 35CCC | ……………………… | …………………………………………………… |
| (xviii) | 35CCD | ……………………… | …………………………………………………… |
| (xix) | 35D | ……………………… | …………………………………………………… |
| (xx) | 35DD | ……………………… | …………………………………………………… |
| (xxi) | 35DDA | ……………………… | …………………………………………………… |
| (xxii) | 35E | ……………………… | …………………………………………………… |
- Tax auditor required to check information’s + to report in TAR for deficiency if any
24. Briefs on bonus + commission + EPF contribution (all) (Clause 20)
- Taxpayer required to fill information’s in form no. 3CD
(i) Clause 20(a)
- Payments made under bonus + commission in place of profits + dividends (all)
- Tax auditor required to check information’s + to report in TAR for deficiency if any
(ii) Clause 20(b)
- Contribution received under Employee Provident Fund (EPF) specified under section 36(1)(va) of ITA, 1961.
- Tax auditor required to check information’s + to report in TAR for deficiency if any
25. Briefs on Expenditures debited to profit and loss account (Clause 21(a))
- Taxpayer required to fill information’s in form no. 3CD
(i) For capital expenditures
(ii) For personal expenditures
(iii) For advertisement expenditures in souvenirs + brochures + pamphlets + also etc (all) published by political parties
(iv) For club entrance fees + also subscription expenditures (both)
(v) For cost for club services + also facilities used by taxpayer (both)
(vi) For penalty + also fine (both) for violation of enforceable law
(vii) For any other penalty + also fine (both) not covered above
(viii) For expenditures incurred for prohibited offences like Bribes + Smuggling + also etc. (all)
- Tax auditor required to check information’s + to report in TAR for deficiency if any
26. Briefs on Disallowable payments without depositing TDS (Clause 21(b))
- Taxpayer required to fill information’s in form no. 3CD for payments disallowable + also which already debited in profit and loss account (both) like:
(i) 100% payments to NR therefore disallowable under section 40(a)(i) when TDS not deducted + which also not deposited (both)
(ii) 100% payments to resident therefore disallowable under section 40(a)(ia) when TDS not deducted + which also not deposited (both)
(iii) 100% payments to NR for Equalization Levy (EL) therefore disallowable under section 40(a)(ib) when equalization levy not collected + which also not deposited
(iv) 100% payments for Fringe Benefit Tax (FBT) therefore disallowable – section 40(a)(ic)
(v) 100% payments for Wealth Tax (WT) therefore disallowable under section 40(a)(iia)
(vi) 100% payments for Royalty + license fee + service fee + which also etc. (all) without TDS therefore disallowable under section 40(a) (iib)
(vii) 100% payments for salary payable outside India to NR without TDS therefore disallowable under section 40(a) (iii)
(viii) 100% payments for PF + also other fund (both) therefore disallowable under section 40(a) (iv)
(ix) 100% payments for tax paid by employer for perquisites therefore disallowable under sec. 40(a)(v)
- Tax auditor required to check information’s + to report in TAR for deficiency if any
27. Briefs on disallowable expenses + deemed incomes (Clause 21(c) to 21(i))
- Taxpayer required to fill information’s in form no. 3CD for payments disallowable + which also already debited in profit and loss account (both) like:
(i) Clause 21(c)
- 100% amounts debited to profit and loss account for interest + salary + bonus + commission + also remuneration therefore disallowable under section 40(b) + 40(ba)
(ii) Clause 21(d)
- 100% amounts not debited in profit and loss account still be treated deemed incomes under section 40A (3) + 40A (3A) (both)
(iii) Clause 21(e)
- 100% amounts debited to profit and loss account for gratuity’s provisions therefore disallowable under section 40A (7)
(iv) Clause 21(f)
- 100% amounts debited to profit and loss account which paid by taxpayer to employee therefore disallowable under section 40A (9)
(v) Clause 21(g)
- 100% amounts debited in profit and loss account for contingent liability therefore disallowable.
(vi) Clause 21(h)
- 100% amounts debited in profit and loss account for expenditures incurred on exempted incomes therefore disallowable under section 14A
(vii) Clause 21(i)
- 100% amounts debited in profit and loss account for interest paid on borrowed capital therefore disallowable under section 36(1)(iii)
- Tax auditor required to check information’s + to report in TAR for deficiency if any
28. Briefs on disallowable expenses + deemed incomes (Clause 22 to 25)
Taxpayer required to fill information’s in form no. 3CD for payments disallowable + which also already debited in profit and loss account (both) like:
(i) Clause 22
- 100% amounts debited in profit and loss account for Interest paid to MSME vendors therefore disallowable under section 23 of MSME Act, 2006 when not paid in 45 day from due date for payment.
(ii) Clause 23
- (a) 100% particulars of payments made to specified persons (relatives) specified under section 40A(2)(b) of ITA, 1961.
+ (plus)
(b) Also AO permitted to determine quantum for disallowances on best judgment basis
(iii) Clause 24
- 100% amounts not debited in profit and loss account still treated profits and gains specified under section 32AC + 32AD + 33AB + 33ABA + 33AC of ITA, 1961 (all)
(iv) Clause 25
- 100% amounts not debited to profit and loss account still treated deemed incomes + also chargeable to Income tax under section 41 of ITA, 1961 (both)
- Tax auditor required to check information’s + to report in TAR for deficiency if any
29. Briefs on disallowable against not paid statutory dues (Clause 26)
- Taxpayer required to fill information’s in form no. 3CD for statutory dues which not paid + also already debited in profit and loss account (both) therefore disallowable.
- Taxpayer required to fill that sales tax + customs duties + excise duties + other indirect taxes + levies + cesses + also etc. (all) passed or not passed through profit and loss account
- Clause No. 26 applicable on certain expenditures specified under section 43B (a) + (b) + (c) + (d) + (e) + (f) + (g) of ITA, 1961 (all) like:
(i) 100% amounts already existed on April 01st of previous year + also not disallowed in assessment of preceding previous year like:
(a) Which also paid in previous year………………………………………………………………….
(b) Which also not paid in previous year………………………………………………………….
(ii) Expenses already incurred in previous year:
(a) Which also paid on or before due date for furnishing return of incomes for previous year under section 139(1) ……………………
(b) Which also not paid on or before due date above mentioned ……………………..
- Tax auditor required to check information’s + to report in TAR for deficiency if any
30. Briefs on GST credited + utilized + account treatment (all) (Clause 27(a))
- Taxpayer required to fill information’s in form no. 3CD for Input Tax Credit (ITC) of GST + utilized GST + also accounting treatments in profit and loss account (all).
- Taxpayer required to fill amount of ITC of GST + utilization of ITC + treatments in profit and loss account + also outstanding of ITC on March 31st each year (all).
- Tax auditor required to check information’s + to report in TAR for deficiency if any
31. Briefs on Prior period Incomes + expenses (both) (Clause 27(b))
- Taxpayer required to fill information’s in form no. 3CD for Incomes + expenditures for prior period credited + also debited in profit and loss account (all)
- Tax auditor required to check information’s + to report in TAR for deficiency if any
32. Briefs on Shares purchased at Zero value + inadequate value (Clause 28)
- Taxpayer required to fill information’s in form no. 3CD for purchase of public company’s shares + public not substantially interested + shares purchased without consideration + with inadequate consideration specified under section 56(2) (viia).
- Tax auditor required to check information’s + to report in TAR for deficiency if any
33. Briefs on issue of shares above Fair Market Value (FMV) (Clause 29)
- Taxpayer required to fill information’s in form no. 3CD for receipt of sales consideration above FMV specified under section 56(2)(viib) of ITA, 1961.
- Tax auditor required to check information’s + to report in TAR for deficiency if any
34. Briefs on incomes not included but chargeable to tax (Clause 29A)
(i) Clause 29A (a)
- Taxpayer required to fill information’s in form no. 3CD for nature of incomes + amount of incomes to be included for incomes chargeable to income tax under incomes from other sources specified under section 56(2)(ix) (Yes/No)…………………….
(ii) Clause 29A (b)
- Taxpayer required to fill information’s in form no. 3CD:
(a) Nature of incomes………………………………………………………………………………………
(b) Amount of incomes (in Rs) …………………………………………………………………………
- Tax auditor required to check information’s + to report in TAR for deficiency if any
35. Briefs on incomes to be included but chargeable to tax (Clause 29B)
(i) Clause 29B (a)
- Taxpayer required to fill information’s in form no. 3CD for nature of incomes + amount of incomes to be included for incomes chargeable to income tax under income from other sources specified under section 56(2)(x) of ITA, 1961. (Yes/No)………………………………………………………………………………………………………………
(ii) Clause 29B (b)
- Taxpayer required to fill information’s in form no. 3CD:
(a) Nature of incomes………………………………………………………………………………………
(b) Amount of incomes (in Rs) …………………………………………………………………………
- Tax auditor required to check information’s + to report in TAR for deficiency if any
36. Briefs on amount borrowed + outstanding on Hundi (both) (Clause 30)
- Taxpayer required to fill information’s in form no. 3CD for amount borrowed on hundi + outstanding for hundi + also interest paid (all) through other than account payee cheque specified under section 69D of ITA, 1961.
- Tax auditor required to check information’s + to report in TAR for deficiency if any
37. Briefs on primary adjustment to Transfer Pricing (TP) (Clause 30A)
- Taxpayer required to fill information’s in form no. 3CD for primary adjustments to Transfer Price (TP) in previous year specified under section 92CE (1) of ITA, 1961 (Yes/No)………………………………………………………………………………………………………………
(i) Number of clause of sec. 92CE (1) covering for primary adjustments ..…………………
(ii) Amount for primary adjustments …………………………………………………….…………………
(iii) Amount for primary adjustments to be repatriated to India from Associate Enterprise (AE) located outside India. …………………
(iii) Amount for primary adjustment from AE not repatriated within prescribed time. ……………………………
(iv) Amount for interest on primary adjustment from AE not repatriated within prescribed time……………………
- Tax auditor required to check information’s + to report in TAR for deficiency if any
38. Briefs on interest + similar expenses (both) exceeding 1 cr. (Clause 30B)
- Taxpayer required to fill information’s in form no. 3CD for expenditures under interest + also similar in nature exceeding 1 crore during previous year specified under section 94B (1) of ITA, 1961:
(i) Amount for expenditures incurred for interest + also similar in nature …………………
(ii) Earnings before interest + tax + depreciation + also amortization (EBITDA) ………
(iii) Amount of expenditures for interest + also similar in nature (both) exceeding 30% of EBITDA………………………
(iv) Details of interest expenditures brought forwarded under section 94B(4) of ITA, 1961 ………………
- Tax auditor required to check information’s + to report in TAR for deficiency if any
39. Briefs on General Anti Avoidance Rule (GAAR) provisions (Clause 30C)
- Taxpayer required to fill information’s in form no. 3CD for Impermissible Avoidance Arrangements (IAAs) under GAAR provisions specified under section 96 of ITA, 1961:
(i) Nature of IAAs executed by taxpayer……………………………………………………………………
(ii) Amount of Income Tax Benefits (ITBs) on 100% IAAs executed by taxpayer ………..
- Tax auditor required to check information’s + to report in TAR for deficiency if any
40. Briefs on loans + deposits (both) received or accepted (Clause 31(a))
- Taxpayer required to fill information’s in form no. 3CD for particulars of loans + deposits (both) in amount received or accepted exceeding monetary limits specified under section 269SS:
(i) Name + address + Permanent Account Number (PAN) or Aadhaar Number of lender + depositor ……………………………
(ii) Amount of loan + deposit (both) taken or accepted ………………………………………………
(iii) Squared up account for loans + deposits (both) taken or accepted………………………
(iv) Maximum amount outstanding in account at any time during previous year ……………………………………
(v) Loans + deposits (both) taken or accepted through bank account ………………………
(vi) Loans + deposits (both) taken or accepted not through account payee cheque + banker’s cheque……………………………
- Tax auditor required to check information’s + to report in TAR for deficiency if any
41. Briefs on amount taken + accepted (both) exceeding limit (Clause 31(b))
- Taxpayer required to fill information’s in form no. 3CD for particulars of specified sum exceeding monetary limits specified under section 269SS for amount taken + accepted (both) during previous year:
(i) Name + address + PAN or Aadhaar Number of person from whom specified sum received ………………………………
(ii) Amount of specified sum taken + accepted (both) …………………………………………………
(iii) Specified sum taken + accepted (both) through bank account ………………………………
(iv) Loans + deposits taken + accepted not through account payee cheque + draft (all) …………………………………………
- Particulars at (i) + (ii) not needed when taken + accepted by govt. company + banking company + corporation established by Central Govt.’s Act + State Govt.’s Act + Provincial Act (all).
- Tax auditor required to check information’s + to report in TAR for deficiency if any
42. Briefs on amount received exceeding specified limit (Clause 31(ba))
- Taxpayer required to fill information’s in form no. 3CD for particulars of receipts in amount exceeding monetary limits specified under section 269ST during previous year:
- Taxpayer not permitted to receive amount exceeding monetary limits specified under section 269ST in aggregate from single person + in single day + for single transaction + for single event + single occasion during previous year without through bank account of receiver + also payer (all) like:
(i) Name + address + PAN or Aadhaar Number of payer ……………………………………………
(ii) Nature of transactions for receipts ……………………..………………………………………………..
(iii) Amount of receipts (in Rs) ……………………………………………………………………………………
(iv) Date of receipts ……………………………………………………………………………………………………
- Tax auditor required to check information’s + to report in TAR for deficiency if any
43. Briefs on amount received exceeding specified limit (Clause 31(bb))
- Taxpayer required to fill information’s in form no. 3CD for particulars of receipt in amount exceeding monetary limit specified under section 269ST during previous year:
- Taxpayer not permitted to receive amount exceeding monetary limit specified under section 269ST in aggregate from single person + in single day + for single transaction + for single event + also single occasion during previous year without account payee cheque or draft (all) like:
(i) Name + address + PAN or Aadhaar Number of payer ……………………………………………
(ii) Amount of receipts (in Rs) …………………………………………………………………………………..
- Tax auditor required to check information’s + to report in TAR for deficiency if any
44. Briefs on amount paid exceeding specified limit (Clause 31(bc))
- Taxpayer required to fill information’s in form no. 3CD for particulars of payments in amount exceeding monetary limit specified under section 269ST during previous year:
- Taxpayer not permitted to payment amount exceeding monetary limit specified under section 269ST in aggregate from single person + in single day + for single transaction + for single event + single occasion during previous year without through bank account of receiver + also payer (all) like.
(i) Name + address + PAN or Aadhaar Number of payee………………………..……….………..
(ii) Nature of transactions ………………………..………………………………………………………………
(iii) Amount of payments (in Rs) …………………………………………………………………………………
(iv) Date of payments …………………………………………………………………………………………………
- Tax auditor required to check information’s + to report in TAR for deficiency if any
45. Briefs on amount paid exceeding specified limit (Clause 31(bd))
- Taxpayer required to fill information’s in form no. 3CD for particulars of payments in amount exceeding monetary limits specified under section 269ST during previous year:
- Taxpayer not permitted to payment amount exceeding monetary limits specified under section 269ST in aggregate from single person + in single day + for single transaction + for single event + also single occasion during previous year without account payee cheque + also draft (all) like:
(i) Name + address + PAN or Aadhaar Number of payee……………………………………………
(ii) Amount of payments (in Rs) …………………………………………………………………………………
- Particulars furnished under clause 31 (ba) + (bb) + (bc) + (bd) not needed to be given when repayment against loan + deposit + specified advance received by govt. company + banking company + post office savings bank + cooperative bank + transaction referred under section 269SS + also person specified in Notification No. S.O. 2065(E) dated July 03rd 2017
- Tax auditor required to check information’s + to report in TAR for deficiency if any
46. Briefs on amount paid in cash exceeding specified limit (Clause 31(c))
- Taxpayer required to fill information’s in form no. 3CD for particulars of repayment of loan + deposit + also specified advance in amount exceeding monetary limits specified under section 269T during previous year:
(i) Name + address + PAN or Aadhaar Number of payee ………………………..…………………
(ii) Amount of repayments (in Rs) …………………………………………………………………………….
(iii) Maximum amount outstanding in account at any time during previous year……….
(iv) Repayment made without bank account of receiver + payer (both) ……………………
(v) Repayment without account payee cheque + banker cheque (both)…………..…………
- Tax auditor required to check information’s + to report in TAR for deficiency if any
47. Briefs on repayment of loan + deposit + specified advance (Clause 31(d))
- Taxpayer required to fill information’s in form no. 3CD for particulars of repayment of loans + deposits + specified advances exceeding monetary limits specified under section 269T during previous year:
(i) Name + address + PAN or Aadhaar Number of receiver……………………………………….
(ii) Repayment of loan + deposit + specified advance made without account payee cheque + banker cheque (both) …………………………
- Tax auditor required to check information’s + to report in TAR for deficiency if any
48. Briefs on repayment of loan + deposit + specified advance (Clause 31(e))
- Taxpayer required to fill information’s in form no. 3CD for particulars of repayment of loans + deposits + specified advance exceeding monetary limits specified under section 269T during previous year without account payee cheque + banker cheque (all) like:
(i) Name + address + PAN or Aadhaar Number of receiver…………………………………………
(ii) Repayment of loan + deposit + specified advance made without account payee cheque + banker cheque. ……………………………
- Particulars furnished under clause 31 (c) + (d) + (e) not needed to be given when repayment of loans + deposits + specified advances taken + accepted from govt. + govt. company + banking company + corporation established by Central Govt.’s Act + State Govt.’s Act + Provincial Act (all).
- Tax auditor required to check information’s + to report in TAR for deficiency if any
49. Briefs on brought forward loss + dep. Allowance (Clause 32(a) to 32(e))
- Taxpayer required to fill information’s in form no. 3CD for brought forward losses + depreciation allowances + speculative losses + deemed speculative business by company under section 73 + 73A + 79 (all).
(i) Clause 32(a)
- Details of brought forward loss + depreciation allowance:
| Sl No | Assessment Year | Nature of loss/ allowance (in rupees) | Amount returned* + ** (in rupees) | All losses/ allowances not allowed under section 115BAA/ 115BAC/ 115BAD | Amount adjusted by withdrawal of additional depreciation on account of opting for taxation under section 115BAC /115BAD | Amounts assessed (give reference to relevant order) | Remarks |
| (1) | (2) | (3) | (4) | (5) | (6) | (7) | (8) |
| … | …….… | …….… | …….… | …….… | …….… | …….… | …….… |
| … | …….… | …….… | …….… | …….… | …….… | …….… | …….… |
* When assessed depreciation lower than returned depreciation + also appeal not filed (both) against lower assessed depreciation.
+ (plus)
** Also assessed depreciation be treated returned depreciation therefore assessed depreciation to be filled for assessment year 2021-22 (only).
(ii) Clause 32(b)
- Change in company’s shareholding due to losses incurred prior to previous year carried forwarded of losses which not allowed under section 79……………………………
(iii) Clause 32(c)
- Details of speculation losses incurred under section 73 ………………………………………
(iv) Clause 32(d)
- Details of losses for specified business incurred under section 73A ……………………
(v) Clause 32(e)
- Details of deemed speculative business incurred by company + also specified in explanation to section 73 of ITA, 1961 ………………………………………………………………….
- Tax auditor required to check information’s + to report in TAR for deficiency if any
50. Briefs on admissible deductions under chapter VIA + III (Clause 33)
- Taxpayer required to fill information’s in form no. 3CD for admissible deductions specified under section 10A + 10AA of Chapter VIA + Chapter III (all)
| S.No | Section | Amounts of admissible deductions |
| …….. | ……………… | ……………………………………… |
| …….. | ……………… | ……………………………………… |
- Tax auditor required to check information’s + to report in TAR for deficiency if any
51. Briefs on deduction + collection under chapter XVII-B+BB (Clause 34(a))
- Taxpayer required to fill information’s in form no. 3CD for Tax Deduction at Source (TDS) for purchases made + Tax Collection at Source (TCS) against sales made (both) under Chapter XVII-B or Chapter XVII-BB of ITA, 1961
| Tax ded uction and colle ction Account Number (TAN) | Section | Nature of payment | Total amount of pay ment or receipt of nature specified in column (3) | Total amount on which tax required to be dedu cted or collected out of (4) | Total amount on which tax was dedu cted or colle cted at specified rate out of (5) | Amount of tax ded ucted or coll ected out of (6) | Total amount on which tax de ducted or collec-ted at less than spec ified rate out of (7) | Amount of tax ded ucted or collected on (8) | Amount of tax dedu cted or coll ected not depo sited to credit of Central Gove rnment out of (6) and (8) |
| (1) | (2) | (3) | (4) | (5) | (6) | (7) | (8) | (9) | (10) |
| …………. | …………. | ………. | …………. | …………. | …………. | …………. | …………. | …………. | ………. |
| …………. | …………. | …………. | …………. | ………. | …………. | …………. | …………. | …………. | ………. |
- Tax auditor required to check information’s + to report in TAR for deficiency if any
52. Briefs on filling of returns against TDS + TCS (Clause 34(b))
- Taxpayer required to fill information’s in form no. 3CD details for TDS + TCS (both)
| Tax deduction and collection Account Number (TAN) | Type of
Form |
Due date for furnishing | Date of furnishing, if furnished | Whether statement of tax deducted or collected contains information about all details/ transactions which required to be reported. If not, please furnish list of details/ transactions which not reported. |
| …………. | …………. | …………. | …………. | ……………………………….. |
| …………. | …………. | …………. | …………. | ……………………………….. |
- Tax auditor required to check information’s + to report in TAR for deficiency if any
53. Briefs on interest on delay deposit of TDS + TCS (both) (Clause 34(c))
- Taxpayer required to fill information’s in form no. 3CD details for interest on delay deposit of TDS + TCS (both) specified under section 201(1A) + 206C(7) both
| Tax deduction and collection Account Number (TAN) | Amount of interest under section 201(1A)/206C(7) payable | Amount paid out of column (2) along with date of payment. |
| ……………………….. | ……………………….. | ……………………….. |
| ……………………….. | ……………………….. | ……………………….. |
- Tax auditor required to check information’s + to report in TAR for deficiency if any
54. Briefs on quantitative details for trading entity (Clause 35(a))
- Taxpayer required to fill information’s in form no. 3CD details in quantitative by trading concern for principal items of goods traded:
(i) Opening Stock …………………….………………………………………………………………………………
(ii) Purchases during previous year …………………….……………………………………………………
(iii) Sales during previous year …………………….……………………………………………………………
(iv) Closing stock …………………….………………………………………………………………………………….
(v) Shortage + excess (both) if any …………………….……………………………………………………….
- Tax auditor required to check information’s + to report in TAR for deficiency if any
55. Briefs on quantitative details for manufacturing entity (Clause 35(b))
- Taxpayer required to fill information’s in form no. 3CD details in quantitative by manufacturing concern for principal items of goods manufactured:
A. Raw Materials:
(i) Opening stock …………………….………………………………………………………………………………..
(ii) Purchases during previous year…………………….………………………………………………………
(iii) Consumption during previous year …………………….…………………………………………………
(iv) Sales during previous year …………………….……………………………………………………………..
(v) Closing stock …………………….………………………………………………………………………………….
(vi) Yield of finished products …………………….……………………………………………………………….
(vii) Percentage of yield …………………….…………………………………………………………………………
(viii) Shortage + excess (both) if any. …………………….………………………………………………………
B. Finished products + by-products (both):
(i) Opening stock …………………….………………………………………………………………………………..
(ii) Purchases during previous year …………………….……………………………………………………..
(iii) Quantity manufactured during previous year …………………….…………………………………
(iv) Sales during previous year …………………….……………………………………………………………..
(v) Closing stock …………………….………………………………………………………………………………….
(vi) Shortage + excess (both) if any. …………………….………………………………………………………
- Tax auditor required to check information’s + to report in TAR for deficiency if any
56. Briefs on Deleted (Clause 36)
57. Briefs on receipt of deemed dividend (Clause 36A(a) + 36A(b))
- Taxpayer required to fill information’s in form no. 3CD details for receipt of deemed dividends specified under section 2(22)(e) of ITA, 1961
(i) Clause 36A(a)
- Details for amount received if any under deemed dividends specified under section 2(22)(e) of ITA, 1961.
(ii) Clause 36A (b):
(a) Amount received for deemed dividends (in Rs)……………….………………………….
(b) Date of receipts…………………………………………………………………………………………
- Tax auditor required to check information’s + to report in TAR for deficiency if any
58. Briefs on cost audit conducted or not conducted (Clause 37)
- Taxpayer required to fill information’s in form no. 3CD that cost audit conducted or not conducted + if conducted to fill qualifications + disagreements for matters + items + values + quantities (all) reported by cost auditor…………………………………….
- Tax auditor required to check information’s + to report in TAR for deficiency if any
59. Briefs on central excise audit conducted or not conducted (Clause 38)
- Taxpayer required to fill information’s in form no. 3CD for central excise audit under Central Excise Act, 1944 (now GST, 2017) conducted or not conducted + if conducted to furnish qualifications + disagreements for matters + items + values + quantities (all) reported by central excise auditor…………………………………..………….
- Tax auditor required to check information’s + to report in TAR for deficiency if any
60. Briefs on valuation of services audit conduct or not conduct (Clause 39)
- Taxpayer required to fill information’s in form no. 3CD for valuation of services audit under section 72A of Finance Act, 1994 (now GST, 2017) conducted or not conducted + if conducted to furnish qualifications + disagreements for matters + items + values + quantities (all) reported by central excise auditor …………………..…
- Tax auditor required to check information’s + to report in TAR for deficiency if any
61. Briefs on turnover + gross profit + ratios (all) for 2 years (Clause 40)
- Taxpayer required to fill information’s in form no. 3CD details for turnover + gross profit + ratios (all) for previous year + preceding to previous year (2 year) like:
| S.No | Particulars | Previous year
(March 31, 2023) |
Preceding to Previous year
(March 31, 2022) |
| (i) | Total turnover of assessee | ………………..…… | ………………..…….. |
| (ii) | Gross profits divided by turnover in % | ………………..…… | ………………..…….. |
| (iii) | Net profits divided by turnover in % | ………………..…… | ………………..…….. |
| (iv) | Stock-in-trade divided by turnover in % | ………………..…… | ………………..…….. |
| (v) | Material consumed divided by finished goods produced in % | ………………..…… | ………………..…….. |
- Tax auditor required to check information’s + to report in TAR for deficiency if any
62. Briefs on demand raised + refund issued for non ITA, 1961 (Clause 41)
- Taxpayer required to fill information’s in form no. 3CD details for demand raised + refund issued during previous year under any tax law other than ITA, 1961 + also Wealth Tax Act, 1957 + details of proceedings (all)
- Tax auditor required to check information’s + to report in TAR for deficiency if any
63. Briefs on details of forms number 61 + 61A + 61B (Clause 42(a) + 42(b))
(i) Clause 42(a)
- Taxpayer required to fill information’s in form no. 3CD for form No. 61 + 61A + 61B (all) filed (Yes or No) ………………………………
(ii) Clause 42(b)
- Taxpayer required to fill information’s in form no. 3CD for form No. 61 + 61A + 61B (all) filed:
| Income tax Department Reporting Entity identification Number | Type of Form | Due date for furnishing | Date of furnishing, if | Where Form contains information about all details/furnished transactions which required to be reported. I f not, please furnish list of details/ transactions which not reported |
| …………………….. | ……………… | ……………… | ……………… | ……………… |
| …………………….. | ……………… | ……………… | ……………… | ……………… |
| …………………….. | ……………… | ……………… | ……………… | ……………… |
- Tax auditor required to check information’s + to report in TAR for deficiency if any
64. Briefs on parent company / alternative reporting entity (Clause 43(a) + 43(b))
(i) Clause 43(a)
- Taxpayer required to fill information’s in form no. 3CD for parent company or alternative reporting entity liable to furnish report under section 286(2) (Yes or No)……………………………………………………………………………………………………………………….
(ii) Clause 43(b)
- Taxpayer required to fill information’s in form no. 3CD for parent company or alternative reporting entity under section 286(2) like:
(a) Report filed or not filed by assessee or its parent entity or alternate reporting entity …………………………………………
(b) Name of parent entity………………………………………………………………………………
(c) Name of alternate reporting entity if applicable……………….………………………
(d) Date of furnishing of report…………………………………………………..…………………
- Tax auditor required to check information’s + to report in TAR for deficiency if any
65. Briefs on expenses from registered + non registered dealers (Clause 44)
- Taxpayer required to fill information’s in form no. 3CD for break-up of expenditures of entities with registered or not registered under GST, 2017
| Sl. No. | Total amount of Expenditure incurred during year | Expenditures in respect of entities registered under GST | Expenditures relating to entities not registered under GST | |||
| Relating to goods or services exempt from GST | Relating to entities falling under composition scheme | Relating to other registered entities | Relating to payment to registered entities | |||
| …….. | ……………. | ……………. | …………… | ………… | ………… | ………… |
| …….. | ……………. | ……………. | …………… | ………… | ………… | ………… |
- Tax auditor required to check information’s + to report in TAR for deficiency if any
66. Briefs on suggestive note by tax auditor (Clause 44)
(i) (a) Informed by assessee that information’s reported under clause 44 of form 3CD based on information’s extracted from accounting software (GST report)
+ (plus)
(b) Also may not be 100% accurate accounting software used by assessee + not configured to generate report required under clause 44 in absence of prevailing statutory requirement under Income tax Act, 1961, GST, 2017, under any or law + software (system) not capturing information’s for entity falling under composition scheme (supply) with ineligible credit.
(ii) (a) We have verified statement prepared by assessee under Auditing Standards generally accepted in India + test checked based on concept of materiality + also concept of reasonable assurance (all).
+ (plus)
(b) Also for every accounting entry passed in accounting software it’s not possible to extract desired details to be reported under clause 44 of 3CD.
+ (plus)
(c) Also unable to comment on accuracy for information’s provided by assessee.
(iii) Assessee informed that expenditures for entities not registered under GST like import of goods + import of services + also services (all) from unregistered suppliers when GST liability under RCM already discharged.
(iv) Assessee informed that differences between Clause 2 like total expenditures + sum of clause 6 + 7 (both) for depreciation + bad debt + expenditures (all) like salary not supply under GST, 2017 + total expenditures column 2 + also capital expenditures.
(v) Assessee communicated that details under rule 56 of CGST Rules to be furnished during assessment proceedings before AO if demanded.
(B) Obligations for Accounting Standards (AS) by taxpayer + tax auditor (both)
67. Briefs on AS’s compliance verifications by tax auditor + Statutory auditors
- Tax auditor + statutory auditors (both) required to ensure compliances of standards issued by Institute of Chartered Accountant of India (ICAI) like:
(i) Compliances of Accounting Standards (AS) issued by ICAI
(ii) Compliances of Standards on Auditing (SA) issued by ICAI
(iii) Compliances of Framework prepared for presentation of Financial Statements issued by ICAI
68. Briefs on AS’s summary for preparation of financial statements
(i) ICAI introduced 4 levels for implementation’s preparation for financial statements
(ii) Presently total 27 AS applicable from AS-1 to AS-29 (29 AS –2 AS = 27 AS) like AS-6 + AS-8 (both) not applicable
| Level | Turnover criteria | Borrowings criteria |
| Level-I | When Turnover exceeding 250 crore | When Borrowings exceeding 50 crore |
| Level-II | When Turnover exceeding 50 crore | When Borrowings exceeding 10 crore |
| Level-III | When Turnover exceeding 10 crore | When Borrowings exceeding 2 crore |
| Level-IV | When Turnover not exceeding 10 crore | When Borrowings not exceeding 2 crore |
(iii) Abovementioned information’s taken from appendix I of Compendium of AS updated on February 01, 2022
(iv) (a) Applicability from Level-I to Level-IV depends on turnover criteria + borrowing criteria (both).
+ (plus)
(b) Also applicability from Level-I to Level-IV depends on single criteria like either turnover criteria or borrowing criteria.
69. Briefs on AS’s applications for Level-I to Level-IV entity
| Accounting standards (AS) | Level I Entities | Level II Entities | Level III Entities | Level IV Entities |
| AS 1– Disclosure of Accounting Policies | Applicable | Applicable | Applicable | Applicable |
| AS 2– Valuation of Inventories | Applicable | Applicable | Applicable | Applicable |
| AS 3– Cash Flow statements |
Applicable | Not Applicable | Not Applicable | Not Applicable |
| AS 4– Contingencies and events occurring after Balance Sheet | Applicable | Applicable | Applicable | Applicable |
| AS 5– Net profit or loss for period, prior period items and change in accounting policies | Applicable | Applicable | Applicable | Applicable |
| AS 7– Accounting for Construction Contract | Applicable | Applicable | Applicable | Applicable |
| AS 9– Revenue Recognition | Applicable | Applicable | Applicable | Applicable |
| AS 10– Property, plant and equipment | Applicable | Applicable | Exemption from disclosure | Exemption from disclosure |
| AS 11– effects of change in foreign exchange rate | Applicable | Applicable | Exemption from disclosure | Exemption from disclosure |
| AS 12– Government Grants | Applicable | Applicable | Applicable | Applicable |
| AS 13–Accounting for Investments | Applicable | Applicable | Applicable | Exemption from disclosure |
| AS 14–Accounting for Amalgamations | Applicable | Applicable | Applicable | Not applicable |
| AS 15– Employee Benefits | Applicable | Exemption from disclosure | Exemption from disclosure | Exemption from disclosure |
| AS 16– Borrowing Costs | Applicable | Applicable | Applicable | Applicable |
| AS 17–Reporting on Financial Segments | Applicable | Not Applicable | Not Applicable | Not Applicable |
| AS 18– Disclosures of Related Party Transaction | Applicable | Applicable | Not Applicable | Not Applicable |
| AS 19–Accounting principles and disclosures on lease accounting | Applicable | Exemption from disclosure | Exemption from disclosure | Exemption from disclosure |
| AS 20– Earnings per share (EPS) | Applicable | Not Applicable | Not Applicable | Not Applicable |
| AS 21– Preparation and presentation of Consolidated Financial Statements (CFS) | Applicable | Not Applicable | Not Applicable | Not Applicable |
| AS 22–Accounting for Taxes | Applicable | Applicable | Applicable | Restricted for current tax provisions (only) |
| AS 23–Accounting for Investment in associates | Applicable | Not Applicable | Not Applicable | Not Applicable |
| AS 24– Discontinuing operations | Applicable | Applicable | Not Applicable | Not Applicable |
| AS 25– Interim Financial Reporting | Applicable | Not Applicable | Not Applicable | Not Applicable |
| AS 26– Intangible Assets | Applicable | Applicable | Applicable | Exemption from disclosure |
| AS 27– Joint Ventures (JVs) reporting of interest in Financial Statements | Applicable | Not Applicable | Not Applicable | Not Applicable |
| AS 28– Impairment of Assets | Applicable | Exemption from disclosure | Exemption from disclosure | Not Applicable |
| AS 29– Contingent Liabilities and contingent assets and provisions | Applicable | Applicable – exemption from disclosure | Exemption from disclosure | Exemption from disclosure |
- Level-I entity required to comply 100% ASs like presently 27 active AS.
70. Briefs on AS’s non-compliances for reporting by tax auditor + Statutory auditors
(i) Statutory + Tax auditors (both) required to mention in audit reports for observations + comments + discrepancies + also inconsistencies (all)
(ii) Sample for reporting by Statutory + Tax auditors (both) for non compliances of AS
- In our opinion and to best of our information’s and according to explanations given to us that aforesaid financial statements giving true and fair view in conformity with accounting principles generally being accepted in India for state of affairs of company on March 31st, 2023 and Profit for year ended on that date except followings:
(a) Accounting policy on fixed assets as per note no. 5(b) required by AS-10 issued by ICAI.
(b) Accounting policy on taxation as per note no. 5(c) required by AS-22 issued by ICAI
(iii) Matter of emphasis
- Without qualifying our audit report stakeholder’s attention is invited that note number 25 when company’s process of reconciling accounting records with bank’s statements of current account no. 50xxxxxxxx7088 maintained with HDFC Bank Pusa Road, New Delhi- 110008
(C) Conclusion on obligations for TAR + AS (both)
71. Conclusion on obligations for TAR + AS (both)
- Obligations for TAR
(i) TAR applicable when resident taxpayer in India (Taxpayer) carrying business + having sales + turnovers + gross receipts (all together) exceeding 1 crore in previous year under section 44AB of Income Tax Act (ITA), 1961
(ii) TAR applicable when taxpayer carrying profession + having gross receipts exceeding 50 lac in previous year under section 44AB of ITA, 1961
(iii) TAR not applicable when Partner of partnership firm + also LLP (both) taxpayer not required to obtain TAR (individually) for remuneration’s receipt beside amount exceeding 1 crore under section 44AB
(iv) ICAI already constituted Taxation Audits Quality Review Board (TAQRB) for reviewing audit reports issued by Practicing Chartered Accountant (PCA) under ITA, 1961 + also GST, 2017 (both)
(v) Tax auditor required to prepare TAR in form no. 3CA or form no. 3CB specified in SA-700.
(vi) Tax auditor being advised to write about responsibility of taxpayer + also responsibility of tax auditor in specified space provided for observations under form 3CA(3) + 3CB(5) (all) when GN’s requirements specified in SA-700 not complied.
(vii) Tax auditor being advised to write qualifications + observations in specified space provided in form no. 3CA + 3CB (both).
(viii) Taxpayer responsible for preparation of financial statements + to give true and fair view for financial positions + financial performances specified in applicable ASs issued by ICAI.
(ix) Tax auditor responsible for expressing his opinion on financial statements based on audit conducted under Auditing Standards issued by ICAI.
(x) Tax auditor responsible for selecting procedures based on his judgment + assessment for risks of material misstatements about financial statements due to fraud + also error (all)
(xi) Tax auditor responsible for performing risk’s assessment after considering internal financial controls for preparation of financial statements to give true and fair view
(xii) Tax auditor responsible for appropriateness of used accounting policies + reasonableness of accounting’s estimates made by management + also evaluating overall (all).
(xiii) Taxpayer required to pay monetary penalty minimum @ 0.5% on total sales + turnovers + gross receipts (all together) or maximum 1.5 lac whichever lower under section 271B of ITA, 1961 for delay filling + non filling of TAR (both) under section 44AB of ITA, 1961.
(xiv) Taxpayer required to pay monetary penalty for late filling + also for not filling of TAR (both) after September 30th each year.
(xv) Form No. 3CA be filed by tax auditor when incomes under business or profession + also mandatory required for maintenance of books of accounts (both) for audit under any law like under Companies Act (CA) 2013.
(xvi) Form No. 3CB be filed by tax auditor when incomes under business or profession + also not mandatory required for maintenance of books of accounts (both) for audit under any law like under Partnership Act, 2013 (updated).
(xvii) Tax auditor required to write for qualifications in TAR to enable user of audited financial statements for computing qualification’s effect
(xviii) Tax auditor required to verify for true + also correctness (both) about information’s filled in form 3CD
(xix) Tax auditor permitted to rely on judicial (courts) judgments for taking any view under his observations
(xx) Taxpayer required to compute incomes chargeable under Profits and Gains from Business or Profession (PGBP) + also Incomes from other sources (both) on cash basis or mercantile basis for accounting being used by taxpayer.
(xxi) Taxpayer not permitted to use mixture of cash basis + also mercantile basis (hybrid basis) for accounting.
(xxii) Taxpayer required to use mercantile basis for accounting (only) under section 145(2) ICDS.
(xxiii) Cash basis not permitted for accounting under section 145(2) ICDS
(xxiv) Tax auditor not required to write for changes in accounting policies.
(xxv) Changes in accounting policies not treated changes in method of accounting therefore tax auditor not required to include in TAR.
(xxvi) Taxpayer required to fill information’s in form no. 3CD to compute valuation of closing stock under Accounting Standards–2 (AS-2) for preparing financial statements like under CA, 2013 when AS-2 already mandatory.
(xxvii) Taxpayer required to compute valuation of closing stock under prescribed exclusive method when taxes like GST not to be added in valuation of closing stock
(xxviii) Taxpayer required to compute valuation of closing stock under ICDS of section 145A of ITA, 1961 for computing taxable incomes for previous year when prescribed inclusive method to be used for inclusion of taxes (mandatory) like GST to be added in valuation of closing stock
(xxix) Taxpayer required to fill in form no. 3CD under section 44AB of ITA, 1961 + to re-compute taxable incomes for previous year through adding or subtracting effect of adjustment against difference between exclusive method and inclusive method for valuations of closing stock under ICDS + AS-2 (both)
- Obligations for AS
(i) Tax auditor + statutory auditors (both) required to ensure compliances of standards issued by Institute of Chartered Accountant of India (ICAI)
(ii) ICAI introduced 4 levels for implementation’s preparation for financial statements
(iii) Presently total 27 AS applicable from AS-1 to AS-29 (29 AS –2 AS = 27 AS) like AS-6 + AS-8 (both) not applicable
(iv) Applicability from Level-I to Level-IV depends on turnover criteria + borrowing criteria (both).
(v) Applicability from Level-I to Level-IV depends on single criteria like either turnover criteria or borrowing criteria
(vi) Statutory + Tax auditors (both) required to mention in audit reports for observations + comments + discrepancies + also inconsistencies (all)
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(Republished with amendments)
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