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 15th 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.