Income Tax rules necessitate few
taxpayers to get their accounts audited under Section 44AB.
The threshold limit of Rs 1 crore for a tax audit is increased to Rs 5 crores
from AY 2021-22 and further to Rs.10 crore with effect from AY 2022-23 (FY
2021-22) if the taxpayer’s cash receipts are limited to 5% of the gross
receipts or turnover, and if the taxpayer’s cash payments are limited to 5% of
the aggregate payments.
The auditor has to furnish the audit report in the specified audit form along
with the detailed particulars.
Tax audit is a cross-examination
of the books of accounts of the taxpayer by a Chartered
Accountant (holding full-time Certificate of Practice) under the Income Tax Act
1961.
Section 44AB deals with the conditions under which Tax audit becomes mandatory
for some taxpayers.
The main purpose of a tax audit is to verify the accuracy of the financial
records and avoid any fraud or tax evasion.
The person conducting a tax audit
has to provide the findings in a report using specified ‘Audit Forms’
prescribed by the income tax department.
Section 44AB prescribes Forms 3CA and 3CB. Along with these two forms, the
auditor has to furnish a form 3CD. Let us discuss these forms in detail.
A taxpayer has to obtain the
audit report on or before 30th September of the relevant assessment year unless
otherwise extended.
However, due to the pandemic situation, the audit report for AY 2021-22, the
due date for submitting the audit report was extended to 15th Jan 2022.
Assessing Officer may impose penalty u/s 271B if the taxpayer doesn’t get his accounts audited or file the audit report. A minimum penalty can be 0.5% of the total sales, turnover or gross receipts, which can go up to Rs. 1,50,000. However, if the taxpayer gives reasonable cause for non-compliance, no penalty will be imposed.