Taxmann Guide to Tax Audit By Srinivasan Anand G Edition April 2023

Taxmann Guide to Tax Audit Srinivasan Anand G Edition April 2023

Taxmann Guide to Tax Audit Srinivasan Anand G Edition April 2023

This book comprehensively provides the following:

[Commentary on Tax Audit u/s 44AB] with reference to its applicability to various assessees and appointment of the tax auditor

[Clause-wise Detailed Commentary] on the following:

• Form 3CA
• Form 3CB
• Form 3CD
• Clause 30C of Form 3CD pertaining to GAAR explained with foreign case laws

[Detailed Discussion on Presumptive Tax Provisions with Pros & Cons] of the following sections:

• Section 44AD
• Section 44ADA
• Section 44AE

[Income Computation and Disclosure Standards (ICDS)] explained with the following:

• Application Guide for each ICDS
• Difference between Ind AS/AC & ICDS
• Statements showing adjustments for variations between Ind AS/AS & ICDS

[Tax Audit Ready Reckoner] on the following topics:

• Management Representation Letters which are to be obtained by the tax auditor for each Clause of Form No. 3CD
• Notes/Comments/Disclaimers to be given regarding each Clause of Form No. 3CD in Clause (3) of Form No. 3CA & Clause (5) of Form No. 3CB
• Audit of Cash Transactions
• Audit of Share Capital
• Audit of Loans, Borrowings and Deposits
• Sale of Immovable Property
• Applicability of various clauses to different assessees
• Clause of Form 3CD not applicable to assessees following cash basis of accounting
• Form 3CD – Clause-wise applicability reckoner of ICDS
• Statutory provisions relevant to various clauses of Form 3CD

The Present Publication is the 15^th Edition and has been amended by the Finance Act 2023. This book is authored by CA Srinivasan Anand G. with the following noteworthy features:

• [Practice Pointers] which includes common errors in reporting detected by the ICAI while scrutinising tax audit reports for each Clause of Form No. 3CA, Form No. 3CB and Form No. 3CD
• [Consequential Effects on Other Clauses] while reporting in each Clause of Form No. 3CD
• [Tax Audit of Companies]; relevant clauses in statutory audit report & CARO report, which are to be cross-checked
• [Requirements of various Clauses] of Form 3CA, Form 3CB & Form 3CD are discussed with reference to the following:
• e-Filing Utility requirements
• Relevant Legal Provisions
• Case Laws
• CBDT Clarification
• Views of the ICAI
• [Checklists] are provided for various clauses of Form 3CD

The structure of this book is as follows:

Chapters  – 14 provide the obligation of an entity to get the accounts audited u/s 44AB, which is explained in light of presumptive taxation provisions along with the following:

• Case Laws
• Latest ITR Forms
• Views of the ICAI

Chapters 15 – 65 provide a clause-wise commentary on Form 3CD with a Tax Audit checklist for each clause. Linkages with other clauses of Form 3CD, i.e., how remarks on a particular clause impact report under other clauses, are provided in this book. Each clause is explained in light of the following:

• e-Filing utility requirements
• Relevant Legal Provisions
• Case Laws
• CBDT’s Clarifications
• ICDS
• Views of the ICAI

The detailed contents of this book are as follows:

• Section 44AB – Audit of accounts of certain persons carrying on business or profession
• Persons carrying on business who are obliged to comply with provisions of Section 44AB as regards compulsory audit of accounts
• Turnover-linked compulsory audit obligations u/s 44AB(a) on certain persons carrying on business
• Compulsory audit obligations u/s 44AB(c)/(e) on certain persons carrying on business regardless of their turnover/gross receipts/sales (non-turnover-linked audit obligations)
• Persons carrying on business who are exempt from tax audit (compulsory audit obligations u/s 44AB)
• Presumptive tax regime under section 44AD for eligible businesses carried on by resident individuals, HUFs & firms
• Presumptive tax regime u/s 44AE for assessees owning goods carriages and plying, hiring or leasing them
• When a person carrying on a profession is required to get his accounts audited u/s 44AB(b) & u/s 44AB(d)
• Presumptive tax regime available under the Act to persons carrying on specified professions
• Turnover or gross receipts
• Obligations cast by section 44AB
• Preparation of financial statements
• Form No. 3CA
• Form No. 3CB
• Form No. 3CD
• Name of the Assessee
• Address of the Assessee
• PAN or Aadhaar Number
• Registrations under indirect tax laws (Clause 4)
• Status (Clause 5)
• Previous Year (Clause 6)
• Assessment Year (Clause 7)
• Clause 8 of Form No. 3CD; relevant clause of section 44AB under which tax audit is applicable
• Clause 8A of Form No. 3CD: whether the assessee has opted for taxation under section 115BA/ 115BAA/115BAB/115BAC/115BAD?
• Clause 9 of Form No. 3CD: Details regarding firms/AOPs/LLPs
• Clause 10 of Form No. 3CD: Nature of business/profession
• Clause 11 of Form No. 3CD: Books of Account
• Clause 12 of Form No. 3CD: Presumptive Income
• Clause 13 of Form No. 3CD: Method of Accounting & Compliances
• Clause 14 of Form No. 3CD: Method of Stock Valuation
• Clause 15 of Form No. 3CD: Capital Asset converted into Stock-In-Trade
• Clause 16 of Form No. 3CD: Amounts not credited to Profit and Loss Account
• Property (land or building or both) transferred at less than stamp duty value – Clause 17 of Form No. 3CD
• Cause 18 of Form No. 3CD: Depreciation
• Clause 19 of Form No. 3CD: Amounts Deductible under sections 33AB, 33ABA, etc.
• Clause 20 of Form No. 3CD: Bonus/Employees Contribution to PF
• Clause 21 of Form No. 3CD: Amounts Debited to Profit and Loss Account
• Clause 22 of Form No. 3CD: Amount of Interest Inadmissible under section 23 of MSMED Act, 2006
• Clause 23 of Form No. 3CD: Payments to Persons Specified under section 40a(2)(b)
• Clause 24 of Form No. 3CD: Amounts Deemed to be Profits and Gains under Section 32AC/32AD/33AB/33ABA/33AC
• Clause 25 of Form No. 3CD: Amounts Deemed to be Profits and Gains under section 41
• Clause 26 of Form No. 3CD: Sums covered by section 43B
• Clause 27 of Form No. 3CD: CENVAT Credit or Input Tax Credit (ITC) or prior period items
• ‘Gifts’ of unlisted shares received by LLPs/firms/companies on or before 31-3-2017 – Clause 28 of Form No. 3CD
• Share premium received by closely held companies in excess of FMV Taxable – section 56(2)(viib) – Clause 29 of Form No. 3CD
• Amount chargeable under section 56(2)(ix) – Clause 29A
• Gifts/deemed gifts chargeable under section 56(2)(x) – Clause 29B
• Hundi transactions – Clause 30 of Form No. 3CD
• Clause 30A of Form No. 3CD: Secondary Transfer Pricing Adjustments
• Clause 30B of Form No. 3CD: Thin Cap Adjustments
• GAAR (General Anti Avoidance Rules)
• Clause 31 of Form No. 3CD: Acceptance/Repayment of Loan/Deposit/Specified Sum
• Clause 32 of Form No. 3CD: Unabsorbed Loss/Depreciation
• Clause 33 of Form No. 3CD: Chapter VI-A deductions
• Clause 34 of Form No. 3CD: Audit of Compliance with TDS Provisions
• Clause 35 of Form No. 3CD: Quantitative Details
• Clause 36 of Form No. 3CD: Dividend Distribution Tax
• Clause 36A of Form No. 3CD: Deemed Dividend u/s 2(22)(e)
• Clause 37 of Form No. 3CD: Cost Audit Report
• Clause 38 of Form No. 3CD: Central Excise Audit Report
• Clause 39 of Form No. 3CD: Service Tax Audit for Valuation for Services
• Clause 40 of Form No. 3CD: Accounting Ratios
• Details of demands raised or refunds issued under tax laws: Clause 41 of Form No. 3CD
• Clause 42 of Form No. 3CD: Furnishing of Form Nos. 61, 61A and 61B
• Clause 43 of Form No. 3CD: Furnishing of Country by Country Report (CBCR) u/s 286
• Clause 44 of Form No. 3CD: Break-up of Total Expenditure of Entities Registered or not Registered under GST
• Finance Act, 2023 amendments to key provisions of the Act affecting tax audit with effect from AY 2024-25

About the Author

Srinivasan Anand G is a Practicing Chartered Accountant. He has qualified in the exams of all three premier professional institutes, i.e. ICAI, ICWAI & ICSI.

He is associated as a guest faculty with various institutes such as Regional Training Institute, Comptroller & Auditor General of India, Western Coalfields Ltd., Punjab National Bank, Zonal Training Centre. He has also spoken at Study Circle Meetings organized by Nagpur Branch of ICAI.