Transcript Presentation on Tax Audit Report

AMENDMENTS TO TAX AUDIT REPORT
Compiled By :
CA S.K. Bansal
Sr Partner SANMARKS & Associates
The existing Form No. 3CA, Form No. 3CB and Form
No. 3CD have been substituted vide notification no.
33/2014 dated 25.07.2014 with immediate effect.
Vide Order no. F.No. 133/24/2014-TPL dated 20-082014,the CBDT has
a) Extended the date of obtaining and furnishing
the tax audit report under sec. 44AB for A/Y 201415 from 30th September to 30th November 2014
.
b) Also provided that TAR filed during 1-4-2014 to
24-07-2014 in the pre revised forms shall be
treated as valid TAR.
ISSUES
A) No extension of due date of filing of ITR which
remains unchanged i.e. 30th Sep 2014.
B) TAR released by Auditors upto 24-07-2014 but not
filed with I T Deptt- Will have to be revised.
Advised to state following in 3 CA or 3 CB
“ This report alongwith particulars in the annexed
Form 3CD have been issued in lieu of Audit Report
already issued on _________________ in view of
Notification No 33/2014 dted 25-07-2014 issued
by the C.B.D.T.”
C) Problems will be there for non corporate
assessees if ITR filing date is not extended since
they are required to get their accounts audited
U/S 44 AB only.
D) Even Corporate assessees will face problems in
correct compiling and filing of their ITRs until
and unless TAR is issued by the auditors.
E) Till now, there is no change in the ITR Form 4, 5
and 6 w.r.t. the date of furnishing of TAR.
Utility for filing TAR has since been released.
Changes in Form No. 3CA
A)Period Of Statement of Profit & Loss
account to be mentioned
“the audited *profit and loss account / income
and expenditure account for the period
beginning from ----------------------to ending on ----------------------------.
B) Observations and Qualifications to be
mentioned
In *my / our opinion and to the best of *my/
our information and according to examination
of books of account including other relevant
documents and explanations given to *me / us,
the particulars given in the said Form No.3 CD
are true and correct
subject
to
the
following observations/qualifications, if any:
 a.
 b.
C
The words [and the annexure thereto] deleted
Changes in Form No. 3CB
A) Period of Profit & Loss account to be
mentioned:
I / we have examined the balance sheet as on,
____, and the *profit and loss account /
income and expenditure account for the period
beginning from ----------------------to ending on ----------------., attached herewith_____________
Name), _______________(Address),
____________(Permanent Account Number).
B) Observations and Qualifications to be
mentioned:
5. In *my/our opinion and to the best of *my / our
information and according to explanations given
to *me/ us, the particulars given in the said
Form No.3 CD are true and correct subject to
following
observations/qualifications, if any:
 a.
 b.
 c.
 The words [and the annexure thereto] deleted
Changes in 3CD Report
 The Revised Form 3CD has 41 clauses as against
32 clauses prior to this notification.
The key changes made are :
 Addition of 9 new clauses
 Modification in some existing clauses.
 Doing away with requirement for certification
by client/ auditee- Section 40 (A) (3) & Section
269 SS and 269T
Two new clauses in PART (A)
Clause No 4
Whether the assessee is liable to pay indirect
tax like excise duty, service tax, sales tax,
customs duty etc. if yes, please furnish the
registration number or any other identification
number allotted for the same
Clause No 8
Indicate the relevant clause of section 44AB
under which the audit has been conducted
Previous year from……………..to ………..
Furnish the address where books of accounts are
kept
Clause No 11 (b)
List of books of account maintained and the address
at which the books of accounts are kept.
(In case books of account are maintained in a
computer system, mention the books of
account generated by such computer system. If
the books of accounts are not kept at one
location, please furnish the addresses of
locations along with the details of books of
accounts maintained at each location.
Clause no. 11 (C)
List of books of account and nature of relevant
documents examined.
Clause no. 12
Whether the profit and loss account includes
any profits and gains assessable on
presumptive basis, if yes, indicate the amount
and the relevant section (44AD, 44AE, 44AF,
44B, 44BB, 44BBA, 44BBB, Chapter XII-G, First
Schedule or any other relevant section.)
Clause no. 13 ( c )
Effect on Profit & loss due to change in method of
accounting to be furnished in tabular format as
below:Serial
Number
Particulars
Increase in Decrease in
Profit (Rs.) Profit (Rs.)
Clause no. 14 (b)
Effect on Profit & loss due to deviation from the
method of valuation of closing stock prescribed
under section 145 A to be furnished in tabular
format as below:Serial
Number
Particular Increase
s
in Profit
(Rs.)
Decrease
in Profit
(Rs.)
Clause 17 (New)
 Where any land or building or both is
transferred during the previous year for a
consideration less than value adopted or
assessed or assessable by any authority of
a State Government referred to in section
43CA or 50C, please furnish:
Details of
Property
Consideration
received or
accured
Value adopted
or assessed or
assessable
Clause 19
Additional disclosures for
35(2AB),35AD,35CCCand35CCD
Section
32AC
33AB
33ABA
35(1)(i)
35(1)(ii)
35(1)(iia)
Amount
debited
to
profit
and loss
Account
Sec.32AC
,
35(2AA),
Amounts admissible as per the provision of the
Income-tax Act, 1961 and also fulfils the
conditions, if any specified under the
conditions, if any specified under the relevant
14 provisions of Income-tax Act, 1961 or
Income-tax Rules,1962 or any other guidelines,
circular, etc., issued in this behalf.
35(1)(iii)
35(1)(iv)
35(2AA)
35(2AB)
35ABB
35AC
35AD
35CCA
35CCB
35CCC
35CCD
35D
35DD
35DDA
35E
Clause No 20 (b) :
Details of contributions received from
employees for various funds as referred to in
section 36(1)(va):
Serial
numb
er
Nature Sum
of Fund Received
from
Employees
Due date for
Payment
The
actual
amount
paid
The
actual
date of
payment
to the
concerne
d
authoritie
s
Clause No. 21 (a) Please furnish the details of
amounts debited to profit & loss account
being in the nature of Capital, Personal,
Advertisement
expenditure
etc.
Nature
Serial number
Particulars
Amount in Rs.
Expenditure incurred at
clubs being for club
services and facilities
used.
Expenditure by way of
penalty or fine for violation
of any law for the time
being force
Expenditure by way of any
other penalty or fine not
covered above
Expenditure incurred for
any purpose which is an
offence or which is
prohibited by law
Clause no. 21 (b)
 Amounts inadmissible under section
40(a): (i) as payment to non-resident referred to
in sub-clause (i)
 (A) Details of payment on which tax is not
deducted:
 (I) date of payment
 (II) amount of payment
 (III) nature of payment
 (IV) name and address of the payee
(B) Details of payment on which tax has
been deducted but has not been paid
during the previous year or in the
subsequent year before the expiry of time
prescribed under section 200(1)
(I) date of payment
(II) amount of payment
(III) nature of payment
(IV) name and address of the payee
(V) amount of tax deducted
(ii) as payment referred to in sub-clause (ia)
A) Details of payment on which tax is not
deducted:
(I) date of payment
(II) amount of payment
(III) nature of payment
(IV) name and address of the payee
(B) Details of payment on which tax has
been deducted but has not been paid
on or before the due date specified in
sub- section (1) of section 139.
(I) date of payment
(II) amount of payment
(III) nature of payment
(IV) name and address of the payer
(V) amount of tax deducted
(VI) amount out of (V) deposited, if any
(iii) under sub-clause (ic) [Wherever applicable]
(Being any sum paid on a/c of FBT)
(iv) under sub-clause (iia)
(Being any sum paid on a/c of Wealth Tax)
(v) under sub-clause (iib)
(Being royalty, licence fee service fee etc which
is to be borne by a State Govt Undertaking ot the
State Govt)
(vi) under sub-clause (iii)
(being salary payable outside
India OR to a non resident w/o TDS)
(A) date of payment
(B) amount of payment
(C) name and address of the payee
(vii) under sub-clause (iv)
(viiii) under sub-clause (v)
(being any tax actually paid
by an employer U/S 10 (10CC)
Clause No 21 (d) .Dispensing with the
requirement of obtaining certificate from the
assessee
 Now Auditor is not required to report whether
or not he has obtained any certificate from
Assessee Under section 40 A (3)
Clause No. 21 (d)
 (A) On the basis of the examination of books of
account and other relevant documents/evidence,
whether the expenditure covered under section
40A(3) read with rule 6DD were made by account
payee cheque drawn on a bank or account payee bank
draft. If not, please furnish the details:
Serial Date of Nature of Amount Name and Permanent
payment Payment
Account Number of the
payee,if available
(B) On the basis of the examination of books of account
and other relevant documents/evidence, whether the
payment referred to in section 40A(3A) read with rule
6DD were made by account payee cheque drawn on a
bank or account payee bank draft If not, please furnish
the details of amount deemed to be the profits and
gains of business or profession under section
40A(3A);
Serial Date of
Nature
payment of
Payme
nt
Amount Name and Permanent
Account Number of the
payee,if available
Clause No. 24 Amounts deemed to be profits
and gains under section 32AC or 33AB or
33ABA or 33AC.
(Sec. 32 AC provides for deduction for
investment in new plant & machinery. If such
P/M is sold within a period of five years, then
deduction already allowed shall be deemed as
income.)
Clause No 28 New
Whether during the previous year the
assessee has received any property, being
share of a company not being a company
in which the public are substantially
interested, without consideration or for
inadequate consideration as referred to in
section 56(2)(viia), if yes, please furnish
the details of the same.
Clause No 29. – New
Whether during the previous year
the assessee received any
consideration for issue of shares
which exceeds the fair market value
of the shares as referred to in section
56(2)(viib), if yes, please furnish the
details of the same.
Clause No 31. Dispensing with the requirement of
obtaining certificate from the assessee
Now Auditor is not required to report whether or not
he has obtained any certificate from Assessee Under
section 269SS and 269T of the Income Tax Act,1961.
Clause 31 (C )
Whether the taking or accepting loan or deposit,
or repayment of the same were made by
account payee cheque drawn on a bank or
account payee bank draft based on the
examination of books of account and other
relevant documents
Clause No. 32 ( c ) --New
Whether the assessee has incurred
any speculation loss referred to in
section 73 during the previous year, If
yes, please furnish the details of the
same.
Clause No. 32 ( d ) -- New
Whether the assessee has incurred
any loss referred to in section 73A in
respect of any specified business
during the previous year, if yes,
please furnish details of the same.
Clause No. 32 (e) NEW
In case of a company, please state that
whether the company is deemed to be
carrying on a speculation business as
referred in explanation to section 73, if
yes, please furnish the details of
speculation loss if any incurred during
the previous year.
ClauseNo.33 Details of deduction admissible
under Chapter VIA or Chapter III
 Section-wise details of deductions, if any, admissible
under Chapter VIA or Chapter III (Section 10A,
Section 10AA).
Section under
which
deduction is
claimed
Amounts admissible as per the
provision of the Income-tax Act, 1961
and fulfils the conditions, if any,
specified under the relevant provisions
of Income-tax Act, 1961 or Income-tax
Rules,1962 or any other guidelines,
circular, etc, issued in this behalf.
Clause No. 34 (a) Whether the assessee is required to deduct or collect tax as per
the provisions of Chapter XVII-B or Chapter XVII-BB, if yes please furnish:
Tax
Sec.
Deducti
on and
collecti
on
account
number
(TAN)
Nature
Of
Payme
nt.
Total
amount
of
payme
nt or
receipt
of the
nature
specifie
d in
column
(3)
Total
amt
on
which
tax
was
reqd
to be
deduc
ted or
collect
ed out
of (4)
Total
amt
on
which
tax
was
deduc
ted or
collect
ed at
specifi
ed
rate
out of
(5)
Amt of
tax
deduc
ted or
collect
ed out
of (6)
Total
amt
on
which
tax
was
deduct
ed or
collect
ed at
less
than
specifi
ed
rate
out of
(7)
Amt of
Tax
Deduc
ted or
collect
ed on
(8)
Amt of
tax
deduc
ted or
collect
ed not
deposi
ted to
the
credit
of
centra
l govt
out of
(6)
and
(8)
(1)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
(10)
(2)
Clause no . 34 (b) NEW
whether the assessee has furnished the statement
of tax deducted or tax collected within the
prescribed time. If not, please furnish the details:-Tax deduction
and collection
Account
Number(TAN)
Type Due date
of
for
For furnishing
m
Date of
furnishing,
if
furnished
Whether the statement
of tax deducted or
collected
contains
information about all
transactions which are
required to be reported
Clause No.34(c) NEW
whether the assessee is liable to pay interest
under section 201(1A) or section 206C(7). If yes,
please furnish:
Tax
deduction
and
collection
Account
Number
(TAN)
Amount of interest under
section 201(1A)/206C(7)
is payable
Amount paid out of
column (2) along
with date of
payment.
Clause No. 36 More Details of tax on distributed
profits under section 115-O
 In the case of a domestic company, details of tax on
distributed profits under section 115-O in the
following form : (a) total amount of distributed profits;
 (b) amount of reduction as referred to in section 115O(1A)(i);
 (c ) amount of reduction as referred to in section 115-
O(1A)(ii);
 (d) total tax paid thereon;
 (e) dates of payment with amounts.
Clause No. 37 Details of disqualification or
disagreement identified and reported by Cost
Auditor
Whether any cost audit was carried
out, if yes, give the details, if any, of
disqualification or disagreement on
any matter/item/value/quantity as
may be reported/identified by the
cost auditor.
Clause No. 38 Details of disqualification or
disagreement identified or reported by auditor under
Central Excise Act 1944
Whether any audit was conducted
under the Central Excise Act, 1944, if
yes, give the details, if any, of
disqualification or disagreement on
any matter/item/value/quantity as
may be reported/identified by the
auditor.
Clause No. .39 Details of disqualification or
disagreement identified or reported by audit
under section 72A of the Financial Act 1994
Whether any audit was conducted under
section 72A of the Finance Act,1994 in
relation to valuation of taxable services,
Finance Act,1994 in relation to valuation
of taxable services, if yes, give the details,
if any, of disqualification or disagreement
on any matter/item/value/quantity as may
be reported/identified by the auditor.
Clause No. 40 Details of total turnover and
accounting ratios for the Previous year and
Preceding Previous year to be mentioned
Serial
Number
Particulars
1.
Total turnover of
the aseesee
2.
Gross profit/turnover
3.
Net profit/turnover
4.
Stock in
trade/turnover
5.
Material consumed/
finished goods
produced
Previous Year
Preceding
Previous Year
Clause No. 41 –NEW Details of demand raised or
refund issued
Please furnish the details of demand
raised or refund issued during the
previous year under any tax laws
other than Income tax Act, 1961 and
Wealth tax Act, 1957 along with
details of relevant proceedings.
Example on Clause 34 (a)
 1. TAN
 2. Section
 3.Nature of Payment
 4.Total amount of payment or
receipt of the nature specified
In column (3)
:ABCD01567Q
:194-C
:Payments to Contractors
: Rs. 5 Crores
 5. Total amount on which tax was : Rs. 4 Crores.
required to be deducted or
collected out of (4)
 6. Total amount on which tax
: a) Rs. 3 Cr. @ 1%
was required to be deducted or b) Rs. 1 Cr.@2%
collected at specified rate out
of (5)
 7.Amount of tax deducted
: Rs. 4.00 Lacs
or collected out of (6)
 8. Total amount on which tax
: Rs. 50.00 Lacs
was deducted or collected at
less than specified rate out of (7)
 9.Amount of tax deducted
: Nil
or collected on (8)
 10.Amount of tax deducted
: NIL
or collected not deposited to the
credit of Central Govt. out of (6)
and (8)
Issue
1. The default of short deduction of TDS to the tune of Rs.
50.00 Lacs should be reported in the column 9 or not.
 2. If not in Column no. 9, then where to report ?
 3. Substantial amount of time will be consumed in
compiling the details required in case of medium size and
large size assessee.