TAX AUDIT U/S 44AB UNDER INCOMR TAX ACT

Tax Audit u/s 44AB- 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 (Limit increased wef 1^st April 2012) or

2.      The Person is carrying on Profession, and his Gross Receipts* exceed Rs. 25 Lakhs (Limit increased wef 1st April 2012) or

3.      The Person is carrying on business or profession and is covered under the provisions ofsection 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.

*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

§  Sale Proceeds of Assets held as Investments

§  Rental Income

§  Income by way of Interest unless assessable as Business Income

§  Any expense which is reimbursable to the Agent by the Client

Form required in compliance of Sec.44AB-

1.      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. (Download excel utility for efiling tax audit report in Form 3CA & Form 3CD)

2.      Form 3CB & Form 3CD– These Forms are used in case where the Accounts of the business or profession have not been audited earlier.

Due Date of filing Tax Audit Report- The Due Date of filing the Tax Audit Report under Section 44AB is 30^th September of the Assessment Year. However, for AY 2014-15 the due date for filing Tax Audit Report has been extended from 30th Sept 2014 to 30th Nov 2014 (Notification No. 133/24/2014).

Penalty for Non-compliance of Sec.44AB- Non Compliance of the provisions of this 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.      Death or physical inability of the partner in charge of the Accounts

3.      Labour Problems such as strikes, lock-outs for a long period

4.      Loss of Accounts because of Fire/Theft etc. beyond the control of the Assessee

5.      Natural Calamities

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

1.      Revision of Accounts of a Company after its adoption in the Annual General Meeting

2.      Change in Law with Retrospective effect

3.      Change in Interpretation of Law (e.g.: CBDT Circular, Notifications, Judgements etc.)

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

Know more about information: Business financial services and Company Registration  

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