Tax Audit

Tax Audit:

Section 44AB gives the provisions relating to the class of taxpayers who are required to get their accounts audited from a chartered accountant. The audit under section 44AB aims to ascertain the compliance of various provisions of the Income-tax Law and the fulfillment of other requirements of the Income-tax Law. The audit conducted by the chartered accountant of the accounts of the taxpayer in pursuance of the requirement of section 44 AB​ is called tax audit.

The chartered accountant conducting the tax audit is required to give his findings, observation, etc., in the form of audit report. The report of tax audit is to be given by the chartered accountant in form nos. 3CA/3CB and 3CD. ​

Objective of Tax Audit:

One of the objectives of tax audit is to ascertain/derive/report the requirements of Form nos. 3CA/3CB and 3CD. Apart from reporting requirements of Form nos. 3CA/3CB and 3CD, a proper audit for tax purposes would ensure that the books of accounts and other records are properly maintained, that they truly reflect the income of the taxpayer and claims for deduction are correctly made by him. Such audit would also help in checking fraudulent practices. It can also facilitate the administration of tax laws by a proper presentation of accounts before the tax authorities and considerably save the time of Assessing Officers in carrying out routine verification like checking correctness of totals and verifying whether purchases and sales are properly vouched for or not. The time of the Assessing Officers saved could be utilized for attending more important and investigational aspects of a case.​

All persons who are required to get their accounts audited under section 44AB of the Income Tax Act are covered under Tax Audit.

Form nos. 3CA/3CB and 3CD:

The report of the tax audit conducted by the chartered accountant is to be ​furnished in the prescribed form. The form prescribed for audit report in respect of audit conducted under section 44AB is Form no. 3CB and the prescribed particulars are to be reported in Form no. 3CD.

In case of persons covered under previous FAQ, i.e., who are required to get their accounts audited by or under any other law, the form prescribed for audit report is Form no. 3CA/3CB and the prescribed particulars are to be reported in Form no. 3CD.

Due Dates:

A person covered by section 44AB should get his accounts audited and should obtain the audit report on or before 30th September of the relevant assessment year. For example, Tax audit report for the financial year 2019-20 corresponding to the assessment year 2020-21 should be obtained on or before 30th September, 2020.
​The tax audit report is to be electronically filed by the chartered accountant to the Income-tax Department. After filing of report by the chartered accountant, the taxpayer has to approve the report from his e-fling account with Income-tax Department (i.e., at www.incometaxindiaefiling.gov.in).