Tax Audit E-filing (Section 44AB) Mandatory

Hi friends.....I think you all are aware of the term Tax Audit....but what is Tax audit....? what is the Due date for filing the returns.....?? Is Tax Audit Report mandatory....??? etc....are the questions running in some minds....right...??? Let me explain you in brief  on what is Tax Audit...Due Date...etc. 

What is TAX AUDIT....??

An Assessee is liable to get his Tax Audit done by a Chartered Accountant mandatorily, if in the previous year,

1. The Person is carrying on business and his Total Sales/Turnover exceeds Rs. 1 Crore (or)
2. The Person is carrying on Profession, and his Gross Receipts exceed Rs. 25 Lakhs (or)
3. The Person is carrying on business or profession and is covered under the provisions of section 44AD, 44AE, 44AF, 44BB or 44BBB and claims that his income from the said business is lower than the deemed profits and gains computed under the relevant section.

What is the Due Date for filing Tax Returns....??

The Due Date of filing of Income Tax Return of an Assessee liable to get his Tax Audit done under Section 44AB is 30^th September. 

For all other assessee’s who are not liable to get their Tax Audit done under Section 44 AB – the Due Date of filing of Income Tax Return is 31^st July.

Tax Audit Report E-filing

E-filing of Tax Audit report is mandatory from the assessment year 2013-14. There is a step-by-step procedure for this. Its easy but should be carefully done as revising the Report is not that easy. The chartered accountant conducting the tax audit would also be required to prepare the tax audit report in electronic format.

Is Revision Possible for Tax Audit Report....??

Tax Audit Report e-filed cannot be revised under normal circumstances. However, in case the Accounts are revised in the following circumstances, the Audit Report e-filed can also be revised:-

• Revision of Accounts of a Company after its adoption in the Annual General Meeting
• Change in Law with Retrospective effect
• Change in Interpretation of Law 

In case the Tax Audit report e-filed is revised, the Auditor shall state that it’s a Revised Report and shall also state the reasons for the same.

Forms Used in Tax Audit

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.

• Form 3CA & Form 3CD These Forms are used in case where the Accounts of the business or profession of a person have already been audited under any other Law.
• Form 3CB & Form 3CD These Forms are used in case where the Accounts of the business or profession have not been audited earlier.

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:-

• Sale Proceeds of Fixed Assets
• Any expense which is reimbursable to the Agent by the Client
• Sale Proceeds of Assets held as Investments
• Income by way of Interest unless assessable as Business Income
• Rental Income

Penalty for Non Compliance of Section 44AB

• Non Compliance of the provisions of  act shall attract Penalty under section 271B of the Income Tax Act. If any person required to get his audit done under section 44AB fails to do so before the specified date shall be liable for penalty of ½% of the turnover/gross receipts subject to a maximum penalty of Rs. 1,50,000
• However, Section 273B states that no penalty shall be levied under section 271B if there is a reasonable cause for such failure. 
• Some instances which have been accepted by the Tribunals/Courts as Reasonable Cause' are:-

1. Resignation of the Tax Auditor and Consequent Delay
2. Natural Calamities
3. Labour Problems such as strikes, lock-outs for a long period
4. Loss of Accounts because of Fire/Theft etc. 
5. Death or physical inability of the partner in charge of the Accounts

What is the Limitation on CA’s for the number of Tax Audits

The Maximum number of Tax Audit Assignments under Section 44AB which can be taken by a CA has been restricted to 45 by ICAI. Thus if a firm has 3 partners, the maximum number of Tax Audits that can be taken by a firm would be 45*3=135. 

Point to be Noted

1. In case an Assessee is liable to get his Accounts audited by an Accountant under any other Law for the same accounting period, the assessee is not mandatorily required to get his audit done again and is only required to submit a report. 
2. However, if the Accounting Year is different from the Accounting Year for which the Audit was done under any other Act, the Tax Audit would be required to be conducted again as per the Income Tax Act.