As per section 44AB of the Income tax act, certain persons are required to get their accounts audited till 30th September by the Chartered Accountant and furnish a report of such audit in the prescribed form duly verified and signed by the CA. Every person-
1. carrying on business and his total sales, turnover or gross receipts exceed Rs. 100 lakhs in the previous year, or
2. carrying on profession and his gross receipts exceed Rs. 50 lakhs in the previous year, or
3. who is governed by the provisions of section 44AE, 44BB or 44BBB and has claimed his income to be lower than the presumptive income deemed under the relevant section in the previous year, or
4. who is governed by the provisions of section 44ADA and has claimed his income to be lower than the presumptive income deemed under the relevant section and his income exceeds the maximum amount which is not chargeable to income tax in the previous year
5. who is governed by the provisions of section 44AD and has claimed his income to be lower than the presumptive income deemed under the relevant section and his income exceeds the maximum amount which is not chargeable to income tax in the previous year. It must be noted that even if the assessee has opted for presumptive scheme under section 44AD, tax audit would be required, if the turnover / total sales is more than INR 2 Crore.
are required to undertake compulsory tax audit.
In case where such person is required to get his accounts audited by the CA under any other law then it shall be sufficient compliance with the provisions of section 44AB if such person gets the accounts audited under such other law on or before 30th September and furnish the report of audit as required under such other law and further report in the form prescribed under this section. However, if the previous year for which tax audit is required to be done, is different from the accounting year for which the audit was done under any other law then the tax audit would require to be conducted again as per the Income Tax Act.
As per Rule 6G, tax audit report is to be furnished in Form 3CA & Form 3CB and the particulars required to be furnished along with these tax reports should be in Form 3CD.
The section shall not apply to a person who derives income of nature referred to in section 44B (applicable to Non Resident in shipping operations business) and section 44BBA (applicable to Non Resident in aircraft operations business).
ICAI through a Guidance Note clarified the following points:
1. Where a person is carrying on more than one businesses or more the one professions – the total turnover of all the businesses or professions shall be clubbed together and tax audit shall be liable to be conducted if the total turnover exceeds prescribed limits.
2. Where a person is carrying on business as well as profession and the turnover of the business say is Rs. 120 lakhs and the gross receipts of the profession say is Rs. 42 Lakhs. In such a case, ICAI has clarified through a guidance note that the assessee is liable to get the tax audit done of both the business as well as profession because the turnover from the business exceed the limit of Rs. 100 lakhs. However, if his total Turnover say was Rs. 95 Lakhs and gross receipts from profession say was Rs. 42 Lakhs, he would not be required to get his tax audit done.
3. In case where a person has a total turnover of say Rs. 98 Lakhs and has sold a Car for say Rs. 8 Lakhs. In such a case, the total amount on adding up becomes Rs. 106 Lakhs i.e. above Rs. 100 lakhs. Confusion arises whether the person is liable to get an audit done in this case and ICAI has clarified that the turnover will not include any amount on the sale of the fixed asset as it was held by the person for business use and not for the purpose of sale.
ICAI has further clarified that the amount received from the following items shall not be included while computing the Total Sales/Total Turnover/ Gross Receipts:-
As per Income Tax Notification No. 34 dated 1st May 2013, e-filing of Tax Audit report is mandatory from the assessment year 2013-14 onwards.
1. Chartered Accountants eligible to sign the tax audit report shall get themselves registered as Tax professionals on Income Tax E-filing Portal:
a. Click “Registered Yourself” button.
c. Select “Chartered Accountant” under “Tax professional” and click “continue”.
d. The Registration Form will require CA’s Membership Number, enrolment date as CA, Name (Surname, First Name and middle name), Date of Birth, your PAN and E-mail ID. Fill in the required details and press “continue”.
e. As soon as CA register himself, he will receive an activation link on email id provided during registration. Then he will have to click on the link to complete the registration process.
f. Once registration process get complete, CA can then login by using user id as ARCA (authorized representative CA) prefixing with your membership number. Eg: ARCA659365.
2. Assessee then add the CA who is going to or has signed his tax audit report:
a. Login with the user id and password of the assesse and go to “my account” menu. Enter the membership number of CA from whom the assessee want or got his accounts audited under “Add CA” menu and system will automatically reflects the name of the CA (if CA has got himself registered as tax professional as mentioned in step 1).
b. Select the form name and enter the code under “Captcha Code” menu and press the button “Submit”.
c. Confirmation message with transaction ID will appear on the screen and email will be delivered to the selected CA.
3. Downloading the excel utility form of the tax audit report:
a. Login with the user id and password of the CA and go to “downloads” menu.
b. Download the required excel utility form of the tax audit report.
c. Fill the form and validate the same. If there is any mistake, the same will get highlighted once you validate the form.
d. After successful validation of the form, a button for generating the XML file will appear.
e. Click the button and save the XML file.
f. Balance Sheet and Profit and Loss Account is required to be attached or uploaded (in PDF format) with the XML file of tax audit report. Therefore prepare the final balance sheet and profit and loss account.
4. After preparing all the documents, upload it on e-filing portal of income tax i.e. https://incometaxindiaefiling.gov.in:
a. Login with the user id and password of the CA and go to “upload form” under “e-file” menu.
b. Fill out required details and upload the XML file of Tax Audit report & PDF file of Balance Sheet and Profit & Loss Account (The maximum size of PDF documents to be uploaded is 20MB). Both PDF files and XML file are to be uploaded together.
5. On completion of uploading process, the return will be assigned to assessee. Assessee needs to approve the tax report uploaded for submitting it to the income tax department. Till then the report is not considered as submitted to income tax department:
a) Login with the user id and password of assessee and go to the “Worklist” menu.
b) List of reports uploaded by CA “Pending approvals” will appear.
c) Click on “view form” to view the form and attachments. For approving the report, assesse needs to select “Approve” and affix his digital signature.
d) Then go to the “worklist” menu and it will show the statement “Successfully e-filed”.
e) Assesse can also reject the return. However, reasons for rejections must be mentioned at the time of rejection.
Tax Audit Report cannot be revised under normal circumstances. However in the following circumstances it can be revised:
1. Revision of accounts of a company after its adoption in the AGM.
2. Change in law with retrospective effect
3. Change in interpretation of law (CBDT Circular, Notifications, and Judgements etc.)
In case of revision of Tax Audit report, the auditor shall state that it is a revised report and shall also states the reason for the revision.
Compiled by CA Kunal Jain. He can be approached for any queries and suggestions at email@example.com, 9953441023.
(Republished With Amendments)