A tax audit is an exercise where certified auditors assess the books of accounts of an assessee. This is to ensure that the assessee has maintained the books of accounts accurately, as per law, to reflect the true income earned during the particular Financial Year (FY). Tax calculations can also be verified here. Section 44AB of the Income Tax Act consists of the provisions related to the audit of accounts of specified assessees carrying out business or profession. In this article, we will discuss the provisions mentioned u/s 44AB in brief.
As per Section 44AB (E) of the Income Tax Act, every person who is:
After a thorough review of the books of accounts, a Chartered Accountant (CA) furnishes a tax audit report for the assessee. This tax audit report needs to be filed/submitted electronically by the CA to the Income-tax Department. Once filed, the taxpayer has to approve the report from his income tax e-filing account. The report generally points out the observations of the Auditor perceived while auditing the assessee’s books of accounts.
Tax auditor can furnish audit report either in:
In addition to this, the tax auditor must furnish the statement of particulars in Form No. 3CD, which is also a part of the audit report. *If an assessee needs to be audited under any other law in force, audit procedures need not be repeated. That means it will be sufficient if such person gets the accounts of their business or profession audited under such other law. However, a report by the chartered accountant in the form prescribed under section 44AB, i.e., Form No. 3CA and Form 3CD will be required, to comply with the provisions of section 44AB.
The tax audit report should be filed on or before the due date of filing the Income Tax Return (ITR). Generally, 30 of September of the relevant Assessment Year is the due date to file Income Tax Returns. However, for the AY 2020-21 (FY 2019-2020), the due date to file the applicable ITR (tax audit cases) is extended to 31 October 2020.
If an assessee who is supposed to undergo a tax audit u/s 44AB, fails to file the Audit Report, he/she will be liable to pay:
**However, no penalty will be imposed if a reasonable cause for such failure is shown.
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