Learn More About Tax Audit Report and Form 3CA, 3CB & 3CD

As per the rules and regulations of the Income Tax Act, every taxpayer has to maintain books of accounts as per the provisions of the IT Act. But how does it ensure that income is accurately calculated as per this act, and the books of accounts are kept by the provisions of the act?

Here comes the role of Tax Audit, which is an examination of your tax return wherein the accuracy of income and deductions is verified. As the name suggests, tax audit is the meticulous examination of your tax return and the authentication of the correctness of your income and deductions.

Under Section 44AB, Tax Auditing is done by a Chartered Accountant who is certified to practice his profession for full time i..e, the CA with a full-time Certificate of Practice. The tax audit is reported in Form no. 3CA/3CB & Form no. 3CD, and it should be submitted before the due dates.

Now we shall discuss the circumstances under which these forms are used to furnish the Tax Audit Reports

Form No. 3CA - Tax Audit Form When Accounts Are Audited Under Any Other Law

This Form is used to furnish the Tax Audit Report when any other law except the Income-tax law governs the verification of accounts of the assessee. This implies that Form No. 3CA is for the assessee whose accounts are audited under any law other than IT law.  A Chartered Accountant furnishes this form once the verification is done. Once furnished, it has to be submitted along with Form No. 3CD.

Form No. 3CB - Tax Audit Form When Accounts Are Audited Under IT Law

This Form is used to furnish the Tax Audit Report when the Income-tax law governs the verification of accounts of the assessee. This implies that Form No. 3CB is for the assessee whose accounts are audited under the IT law.  

A chartered accountant gives a positive declaration in Form No. 3CB about the assessee’s financial statement that it is duly examined for the period under consideration. In this Form, a CA present his views that such statements are true and fair along with his observations, comments, disparities & inconsistencies (if any).

Details To Be Furnished in Form No. 3CA And Form 3CB

Most of the details that need to be furnished in Form No. 3CA and Form 3CD are common. These are as follows:

1. Assessee Details such as Name, Address, PAN and so on

2. Date of Audit Report

3. Annexure  (Audited Profit & Loss Account, Balance Sheet and Form 3CD)

4. An auditor’s declaration that all the details furnished in Form No. 3CA and the annexure are true to his knowledge

5. Audit observations, comments and qualifications furnished in Form 3CD

6. Details of the Auditor such as Name, Address, FRN No., Membership No. and sign with a seal or stamp

Form No. 3CD - Statement of particulars

Form No. 3CD is a detailed statement of particulars of tax audit. It refers to the format in which every business and transaction-related detail has to be furnished.

Form No. 3CD  has a sum of 44 clauses where the auditor needs to report on different matters incorporated therein.

Form 3CD requires two additional details to be furnished, which are as follows:

1. Auditor’s declaration that he has received all the information necessary for the Audit

2.  An acknowledgement that the accounts are kept and managed at the branch and the head office

These 44 clauses are divided into two parts – Part A and Part B. The former part contains the basic factual information of the assessee, whereas the latter part contains the particulars of numerous compliances which required to be furnished under the income tax laws.

Due Date For Furnishing Tax Audit Report

Under Section 44AB, 30th September of the Assessment Year is the last date to file a Tax Audit report of the previous suitable Financial Year. However, the due date to file the Tax Audit Report for the assessee who needs to submit a report of international or specified domestic transactions under section 92E, is 30th November of the Assessment Year.

Penalty for Non-Filing a Tax Audit

When an individual fails to file tax audit report he is penalised with 0.5% of the turnover/ gross receipts or Rs. 1.5 Lakhs, whichever is less. However, if the reason behind non-filing a Tax Audit is valid then no penalty shall be leviable on him.

SAG Infotech is a good solution for choosing CA taxation software all over India. This company offers Gen Balance Sheet Software for 3CA-3CD/3CB-3CD. This is one such audit report form that needs to be filled out and submitted.