Tax audit is an examination/review of accounts of the business /profession from income tax viewpoint such as income, deductions, compliance with income tax law etc. Tax audit makes the income computation for filing the return easy.
It ensure proper maintenance and correctness of books of accounts and certification of the same by tax auditor.
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 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|
It may be noted that in such cases taxpayer need not get his accounts audited again for income tax law purpose. It is sufficient if accounts are audited under such other law before the due date of filing the return and prescribed audit report is furnished.
Tax auditor shall furnish his report in a prescribed form which could be either Form 3CA or Form 3CB where:
- Form No. 3CA is furnished when a person carrying on business or profession is already mandated to get his accounts audited under any other law.
- Form No. 3CB is furnished when a person carrying on business or profession is not required to get his accounts audited under any other law
In case of either of the audit report mentioned above, tax auditor is also required to furnish the prescribed particulars in Form No. 3CD which forms part of audit report.
Due Date:-The Due date for filing the Return of Income for persons liable to Tax Audit is 30th September of the year succeeding the relevant financial year. For the financial year ending on 31.03.2018 the due date is 30.09.2018.
Tax Audit report Submission:- If the assessee gets his account audited u/s 44AB and furnish the said report as required, than penalty u/s 271B shall not be levied even if th e return of income is filed after the due date specified u/s 139(1).
Non Compliance:- If any person fails to get his accounts audited as required under the provisions of section 44AB before the due date u/s 139(1), the AO may impose penalty which may be a sum equal to one-half percent of the total sales, turnover or gross receipts subject to a maximum of Rs. 1.5 Lakh
Auditors Responsibility:- It is the professional duty of the CA to ensure that the audit accepted by him gets completed on or before the due date. If there is any unreasonable delay on his part, he is answerable to ICAI, if the complaint is made by the client. However, if the delay in the completion of audit is attributable to his client, the tax auditor cannot be held responsible.
Communication with Previous Auditor: – A CA in practice shall be deemed to be guilty of professional misconduct, if he accepts a position as auditor previously held by another CA without first communicating with him in writing.
Assessee not bound to accept Tax Auditors View: – The opinion expressed by the tax auditor is not binding on the assessee.
If the tax auditor has qualified his report and expressed an opinion on a particular item, the assessee may take a different view while preparing his return of income. In such cases, it is advisable for the assessee to state his viewpoint and support the same by any judicial pronouncements on which he wants to rely.