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Tax audit report and form 3CA & 3CB

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Tax Audit as directed under section 44AB must be conducted by a Chartered Accountant holding a full-time Certificate of Practice. Tax audits verify that the taxpayer’s books of account are correct and that income is computed in accordance with the Income-tax Act’s regulations. Tax audit report is embellished in Form no. 3CA/3CB & Form no. 3CD.

When is form no. 3CA furnished?
When the assesse is compelled to have its accounts audited under any law other than the Income-tax law, the assesse must submit a tax audit report in Form 3CA. After the audit is completed, a Chartered Accountant submits Form 3CA. This form must be filed in conjunction with Form 3CD. 

Details to be furnished in form no. 3CA
Details of the assesse such as:

  • Name, address, PAN, etc.,
  • Date of audit report,
  • Annexure (audited balance sheet, profit and loss account, form 3CD),
  • A statement by the auditor that all the particulars filled in Form no. 3CA and annexure affixed are true to his understanding,
  • Audit remarks and qualifications found in form 3CD,
  • Auditor’s name, address, membership no, FRN no. and signature with seal/stamp.

When is form no. 3CB furnished?
If the assesse’s books of account are not obliged to be audited under any other law, an audit report in Form 3CB must be provided (i.e. law other than income tax law).

The chartered accountant declares in Form No. 3CB has examined the assesse’s financial statements for the period in question, formed an opinion on such audited financial statements that reflect true and fair view, and reports any observations/comments/ discrepancies/ inconsistencies discovered.

Details to be furnished in form 3CD:

  • Particulars of the assessee, i.e. name, address, PAN;
  • Date of audit report;
  • Annexure (Balance sheet, profit and loss account, Form 3CD)
  • A statement by the auditor that they have acquired all the information required for audit;
  • Reporting of detailed observations, discrepancies raised in form 3CD;
  • A statement that the accounts are continued at the branch and head office;
  • A statement that the details filled by the auditor are true to his understanding;
  • Auditor’s name, address, membership no, FRN No. and signature with seal/stamp

What is the target date for furnishing tax audit report?
The deadline for filing a tax audit report under section 44AB is the 30th September of the assessment year of the previous year (extended to the 30th November for AY 2021-22). Suppose the assesse must submit a report under section 92E relating to foreign or specified domestic transactions. In that case, the deadline for filing a tax audit report is 30th November of the relevant assessment year. Non-filing of a tax audit report carries a penalty of 0.5% of the turnover/gross earnings or Rs. 1.5 lakhs, whichever is higher. No penalty will be levied if the failure is attributable to a justifiable cause.

Penalty for not filing the audit report
Assessing officer may impose penalty u/s 271B if the taxpayer doesn’t get his accounts audited or file an audit report. A minimum penalty can be 0.5% of the total sales, turnover, or gross receipts, going up to Rs. 1, 50,000. However, no penalty will be imposed if the taxpayer gives reasonable cause for non-compliance.

At AJSH, we assist our clients in dealing with internal audits; government audits of various corporate matters (company incorporation, statutory audits, ROC compliance, company winding-up) in India by providing them adequate support and guidance from our end. If you have any questions or wish to know more about the tax audit reports and form 3CA & 3CB, kindly contact us.

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