Tax Audit Report & its penalty for non filing
Applicability of Tax Audit
Following categories of taxpayers are required to get tax audit done:
Following categories of taxpayers are required to get tax audit done:
| Category of person | Threshold |
| Carrying on business (not opting for presumptive taxation scheme*) | Total sales, turnover or gross receipts exceeds Rs 1 crore |
| Carrying on business (opting presumptive taxation scheme under section 44AD*) | Total sales, turnover or gross receipts exceeds Rs 2 crore |
| Carrying on profession | Gross receipts exceeds Rs 50 lakhs |
| Carrying on the business eligible for presumptive taxation under Section 44AE*, 44BB* and 44BBB* | Claims profits or gains lower than the prescribed limit under respective presumptive taxation scheme |
| Carrying on the profession eligible for presumptive taxation under Section 44ADA | Claims profits or gains lower than the prescribed limit under presumptive taxation scheme and income exceeds maximum amount not chargeable to tax |
| Carrying on the business and is not eligible to claim presumptive taxation under Section 44AD due to opting for presumptive taxation in one tax year and not opting for presumptive tax for any of the subsequent 5 consecutive years | If income exceeds maximum amount not chargeable to tax in subsequent 5 consecutive tax years from the tax year where presumptive taxation is not opted for |
An assessee is liable to get the Tax Audit done by a Chartered Accountant mandatorily, if in the previous year:
If a person is carrying a business & his total turnover exceeds Rs. 1 Crore (limit increased wef 1st April, 2012) or
If a person carrying a business& his Gross Receipt exceed Rs. 50 lakh (Applicable from the F.Y 16-17 onwards) or
The person is carrying a business or profession & is covered u/s 44AD, 44ADA, 44AE, 44AF, 44BB or 44BBB & claims that his income is lower than the deemed profits under the relevant sections
The Due date for filling of Tax Audit Report is 30th Sep of the assessment year of every financial year.
For Eg: For F.Y 17-18, Due date for Tax Audit Report is 30th Sep, 2018.
Details to be furnished in Form 3CA
1. Details of the assessee such as Name, Address, and PAN etc.
2. Date of Audit Report,
3. Annexure (Audited Balance Sheet, Profit and loss Account, Form 3CD),
4. A declaration by the auditor that all the details filled in Form no. 3CA and annexure attached are true to his knowledge,
5. Audit observations and qualifications found in form 3CD,
6. Auditor’s name, Address, Membership No, FRN No. And signature with seal/stamp.
When 3CB form is furnished:
Audit Report in for, 3CB is furnished when auditing of accounts of assessee is not required under any other law except Income Tax Law
In this form CA gives a declaration that he had examined the financial statements of the assessee & that the statement reflect true & fair view & reports the observations, comments, discrepancy, and inconsistency if figured out.
Details to be furnished in Form 3CD
1. Details of the assessee i.e. Name, address, PAN;
2. Date of audit report;
3. Annexure (Balance Sheet, Profit and Loss Account, Form 3CD)
4. A declaration by the auditor that they have obtained all the information required for Audit;
5. Reporting of detailed observations, discrepancies mentioned in form 3CD;
6. A declaration that the accounts are maintained at the branch and head office;
7. A declaration that the details filled by the auditor are true to his knowledge;
8. Auditor’s name, Address, Membership No, FRN No. And signature with seal/stamp
Form 3CD:
It describe the format of the audit report which is filled by CA under section 44AB of Income Tax Act, 1961. The Form is a part of the process of filing Income Tax Returns in India and is an Annexure to the Audit Report. Form 3CD contains 44 Clauses. It is required to be attached with Forms 3CA or 3CB, as applicable.
It is divided into 2 parts:
1. Part A covers the basic factual details about the assesses and
2. Part B requires the particulars of various compliance under the provisions of Income Tax Law.
Penalty for Non Compliance of Section 44AB
If any person falls under the section & fails to get audited of his account before the due date, then they will be liable for a penalty of 1/2% of the turnover or the gross receipts up to a maximum penalty of Rs. 1, 50,000.
However, Section 273B states that there is no penalty shall be levied under section 271B if there is a reasonable cause of such failure, which causes are accept by Tribunals/Courts as reasonable Cause are:
1. Resignation of the Tax Auditor and Consequent Delay
2. Death or physical inability of the partner in charge of the Accounts
3. Labor Problems such as strikes, lock-outs for a long period
4. Loss of Accounts because of Fire/Theft etc. beyond the control of the Assesses
5. Natural Calamities
Hope the information will assist you in your Professional endeavors.
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