Recent Amendments in Tax Audit Reports
05.09.14
CA Devendra Jain
Amendments In The Tax Audit Reports
• Forms prescribed for reports u/s. Section 44AB :
- Form No. 3CA: Audit report in case of a person who is required under any
other law to get his accounts audited
- Form No. 3CB: Audit report in case of other persons
- Form No. 3CD: Statement of particulars required to be furnished (to be
annexed with Form No. 3CA or 3CB, as the case may be)
• The CBDT has notified the Income-tax (7th amendment) Rules, 2014 on 25 July
2014, which substitute the existing Form Nos. 3CA, 3CB and 3CD.
Amendments In The Tax Audit Reports
Time limit for filing of tax audit report u/s. 44AB (in respect of
assessees not subjected to TP provisions) has been extended to 30
November 2014 (vide Notification No. F.No.133/24/2014-TPL
dated 20 August 2014)
No express clarification about due date of return……?????
Notification clarifies that the tax audit report filed during the period
01 April 2014 to 24 July 2014 in old forms shall be valid.
Amendments In The Tax Audit Reports
Amendments in 3CA and 3CB
 New requirements in Form Nos. 3CA and 3CB:
The new Form Nos. 3CA and 3CB require any observations or qualifications in
Form No. 3CD to be disclosed in the audit report in Form Nos. 3CA or 3CB itself.
“In *my/our opinion and to the best of *my/our information and according to
examination of books of account including other relevant documents and
explanations given to *me/us, the particulars given in the said Form No.3CD are
true and correct subject to the following observations/qualifications, if any:
a. …………………………….…………………………….………………………
b. …………………………….…………………………….………………………
c. …………………………….…………………………….………………………”
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Amendments In The Tax Audit Reports
New clauses/Change in clauses in Form No. 3CD:
Clause 4: Whether the assessee is liable to pay indirect tax like excise duty,
service tax, sales tax, customs duty, etc. if yes, please furnish the registration
number or any other identification number allotted for the same
Clause 6: Previous year in relation to which tax audit is conducted is required
to be mentioned in the form of ____________ to ______________.
Clause 8: The relevant clause of section 44AB under which the audit has been
conducted is required to be mentioned:
Clause (a) For business
Clause (b) For profession
Clause (c) For S. 44AE/44BB/44BBB
Clause (d) For S. 44AD
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Amendments In The Tax Audit Reports
New clauses/Change in clauses in Form No. 3CD:
Clause 11(b): Details of books of accounts maintained and the address at which
the books of accounts are kept is required to be given. If the books are not kept
at one location, the addresses of locations along with the details of books of
accounts maintained at each location is required to be given.
Definition of Books of Accounts:
S.2(12A) "books or books of account" includes ledgers, day-books, cash
books, account-books and other books, whether kept in the written form or as
print-outs of data stored in a floppy, disc, tape or any other form of electromagnetic data storage device;
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Amendments In The Tax Audit Reports
New clauses/Change in clauses in Form No. 3CD:
Clause 11(c): Nature of the relevant documents examined along with the books
of accounts is required to be given
Clause 12: Applicability of Chapter XII-G (i.e. tonnage tax scheme), First
Schedule or any other relevant section is required to be mentioned if there are
any profits or gains assessable on presumptive basis.
Clause 13(c): The details of any change in the method of accounting employed
in the previous year and the effect thereof on the profit and loss needs to be
given in the prescribed format as given below:
Serial
number
7
Particulars
Increase in
profit (Rs.)
Decrease in
profit (Rs.)
Amendments In The Tax Audit Reports
New clauses/Change in clauses in Form No. 3CD:
Clause 14(b): The details of any deviation from the method of valuation of
closing stock prescribed under section 145A and the effect thereof on the profit
and loss needs to be given in the prescribed format as given below:
Serial
numbar
8
Particulars
Increase in
profit (Rs.)
Decrease in
profit (Rs.)
Amendments In The Tax Audit Reports
New clauses/Change in clauses in Form No. 3CD:
Clause 17: Details of any transfer of land or building or both for consideration
less than value adopted or assessed or assessable by any authority of a State
Government for the payment of stamp duty referred to in section 43CA or 50C
is required to be given in the prescribed format as shown below:
Details of
property
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Consideration
received or
accrued
Value adopted or
assessed or
assessable
Amendments In The Tax Audit Reports
New clauses/Change in clauses in Form No. 3CD:
Clause 19: Apart from the deductions specified earlier, deductions claimed
under sections 32AC, 35AD, 35CCC and 35CCD are also required to be
reported. In relation to all deductions claimed, the form also refers to
fulfillment of conditions specified under the relevant provisions of law, rules or
any other guidelines, circulars, etc. issued in this behalf.
S. 32AC Investment Allowance
S. 35AD Specified Business
S. 35CCC Exp. on agricultural extension project (guidelines prescribed under
Rules 6AAD and 6AAE )
S. 35CCD Exp. on skill development project (guidelines prescribed under Rules
6AAF and 6AAH )
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Amendments In The Tax Audit Reports
New clauses/Change in clauses in Form No. 3CD:
Clause 20(b): Details of contributions received from employees for various funds as
referred to in section 36(1)(va) is required to be given in the prescribed format as shown
below:
Serial
Nature of Sum
Due
The
The actual
number fund
received
date for actual
date of
from
payment amount payment to
employees
paid
the
concerned
authorities
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Amendments In The Tax Audit Reports
New clauses/Change in clauses in Form No. 3CD:
Clause 21(a): Detailed information with respect to amount
debited to the profit and loss account in respect of capital
expenditure, personal expenses, advertisement expenses,
expenditure incurred at clubs, penalty, etc. is required to be given.
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Amendments In The Tax Audit Reports
New clauses/Change in clauses in Form No. 3CD:
Clause 28: Whether during the previous year the assessee has received any
property, being share of a company not being a company in which the public
are substantially interested, without consideration or for inadequate
consideration as referred to in section 56(2)(viia), if yes, please furnish the
details of the same.
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Amendments In The Tax Audit Reports
New clauses/Change in clauses in Form No. 3CD:
Clause 29: Whether during the previous year the assessee received any
consideration for issue of shares which exceeds the fair market value of the
shares as referred to in section 56(2)(viib), if yes, please furnish the details of
the same.
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Amendments In The Tax Audit Reports
New clauses/Change in clauses in Form No. 3CD:
Clause 21(b): Detailed break-up of the amounts disallowable under section 40(a) is
required to be given.
Details required to be given for resident and non-resident payments.
In relation to disallowance for non-deduction of tax at source, the disallowance has
to be bifurcated between:
(a)tax not deducted; and
(b)tax deducted but not paid by the specified date; in addition, detailed information
in relation to payee, amount, date of payment and nature of payment has to be
provided.
Clause 21(d): Auditor required to specifically report on the expenditure covered
under section 40A(3) / 40A(3A) on the basis of the examination of books of
account and other relevant documents / evidence, instead of obtaining a certificate
from the taxpayer.
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Amendments In The Tax Audit Reports
New clauses/Change in clauses in Form No. 3CD:
Clause 31(c) : Reporting requirements have been amended to specifically
mention whether the taking or accepting loan or deposit or repayment of
the same were made by account payee cheque drawn on a bank or a
account payee bank draft based on the examination of books of accounts
and relevant documents
Certificate from the assessee regarding taking or accepting loan or deposit,
or repayment of the same through an account payee cheque or an account
payee bank draft which was required under the old clause 24(c) has been
deleted.
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Amendments In The Tax Audit Reports
New clauses/Change in clauses in Form No. 3CD:
Clause 32(c),(d),(e): Details of certain losses:
•Losses from speculation business or deemed speculation losses as referred to
in section 73; and
•Details of losses referred to in section 73A in respect of specified businesses
mentioned in section 35AD.
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Amendments In The Tax Audit Reports
New clauses/Change in clauses in Form No. 3CD:
Clause 33: Details of deduction claimed under section 10AA are required to be
provided in addition to deductions under Chapeter VIA. In relation to all
deductions / tax holidays claimed, the forms also refers to fulfilment of
conditions specified under the relevant provisions of law, rules or any other
guidelines, circulars, etc. issued in this behalf.
Clause 34: (a) Details required to be given in prescribed formats where assessee
is required to deduct or collect tax under the provisions of Chapter XVII B or
Chapter XVII-BB
(b) details of statements of TDS or TCS not filed within the prescribed time
limits needs to be reported in prescribed formats
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(c) details of payment of interest u/s. 201(1A) or 206C(7) needs to be reported
in prescribed formats
Amendments In The Tax Audit Reports
New clauses/Change in clauses in Form No. 3CD:
Clause 36: Dividend received by a domestic company from its subsidiary that is
reduced for the purpose of payment of dividend distribution tax.
Clause 37, 38 and 39: Disclosure required for details of any disqualification or
disagreement on any matter / item / value / quantity as reported / identified by:
• Cost auditor
• Auditor that conducted audit under the Central Excise Act, 1944
• Auditor that conducted audit under section 72A of the Finance Act, 1994 in
relation to valuation of taxable services.
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Amendments In The Tax Audit Reports
New clauses/Change in clauses in Form No. 3CD:
Clause 40: The accounting ratios of preceding financial year are additionally
required to be disclosed. Moreover, the total turnover for the current financial
year as well as for the preceding financial year is required to be reported
Clause 41: Details of demand raised or refund issued under any tax laws other
than Income-tax Act, 1961 and Wealth tax Act, 1957, along with details of
relevant proceedings are required to be reported.
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Amendments In The Tax Audit Reports
Clause No. Clause No.
as per old as per new
Form 3CD Form 3CD
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Contents of relevant clause
1–3
1–3
-
4
4–6
5–7
-
8
Indicate the relevant clause of section 44AB under which the
audit has been conducted
7
9
(a) If firm or association of persons, indicate names of
partners/members and their profit sharing ratios.
(b) If there is any change in the partners or members or in their
profit sharing ratio since the last date of the preceding year, the
particulars of such change
8
10
(a) Nature of business or profession (if more than one business or
profession is carried on during the previous year, nature of every
business or profession)
(b) If there is any change in the nature of business or profession,
the particulars of such change.
Name, address and PAN of the assessee
Whether the assessee is liable to pay indirect tax like excise
duty, service tax, sales tax, customs duty, etc. if yes, please
furnish the registration number or any other identification
number allotted for the same.
Status of the assessee, previous year and assessment year
Amendments In The Tax Audit Reports
Clause No.
as per old
Form 3CD
22
Clause No.
as per new
Form 3CD
Contents of relevant clause
9
11
Details vis-à-vis books of accounts and relevant documents
maintained
10
12
Whether the profit and loss account includes any profits and gains
assessable on presumptive basis, if yes, indicate the amount and the
relevant section (44AD, 44AE, 44AF, 44B, 44BB, 44BBA, 44BBB,
Chapter XII-G, First Schedule or any other relevant section.)
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13
(a) Method of accounting employed in the previous year
(b) Whether there had been any change in the method of accounting.
(c) If answer to (b) above is in the affirmative, give details of such
change, and the effect thereof on the profit or loss. (d) Details of
deviation, if any, from accounting standards prescribed under
section 145 and the effect thereof on the profit or loss.
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(a) Method of valuation of closing stock employed in the previous
year.
(b) In case of deviation from the method of valuation prescribed
under section 145A, and the effect thereof on the profit or loss,
please furnish details of increase / decrease in profit.
12A
15
Details of the capital asset converted into stock-in-trade
Amendments In The Tax Audit Reports
Clause No. Clause No.
as per old as per new
Form 3CD Form 3CD
23
Contents of relevant clause
13
16
Amounts not credited to the profit and loss account, being, (a) the
items falling within the scope of section 28; (b) the proforma
credits, drawbacks, refund of duty of customs or excise or service
tax, or refund of sales tax or value added tax where such credits,
drawbacks or refunds are admitted as due by the authorities
concerned; (c) escalation claims accepted during the previous year;
(d) any other item of income; (e) capital receipt, if any.
-
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Where any land or building or both is transferred during the
previous year for a consideration less than value adopted or
assessed or assessable by any authority of a State Government
referred to in section 43CA or 50C, please furnish: Details of
property, Consideration received or accrued and value adopted or
assessable.
Amendments In The Tax Audit Reports
Clause No. Clause No.
as per old as per new
Form 3CD Form 3CD
Contents of relevant clause
15
19
Amounts admissible u/s. 32AC, 33AB, 33ABA, 35(1)(i), 35(1)(ii),
35(1)(iia), 35(1)(iii) 35(1)(iv), 35(2AA), 35(2AB), 35ABB, 35AC,
35AD, 35CCA, 35CCB, 35CCC, 35CCD, 35D, 35DD, 35DDA, 35E
alongwith amount debited to the P&L A/c. and amounts admissible
as per the Income-tax Act, 1961.
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(a) Any sum paid to an employee as bonus or commission for
services rendered, where such sum was otherwise payable to
him as profits or dividend.[Section 36(1)(ii)]
(b) Details of contributions received from employees for various
funds as referred to in section 36(1)(va) in the given format.
17(a) – 17(e)
21(a)
Details of amounts debited to the profit and loss account, being in
the nature of capital, personal, advertisement expenditure,
expenditure incurred at clubs being cost for club services and
facilities used, expenditure by way of penalty or fine for violation of
any law for the time being force, expenditure by way of any other
penalty or fine not covered above, expenditure incurred for any
purpose which is an offence or which is prohibited by law.
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Amendments In The Tax Audit Reports
Clause No. Clause No.
as per old as per new
Form 3CD Form 3CD
25
Contents of relevant clause
17 (f)
21 (b)
Amount inadmissible u/s. 40 (a)
17 (g)
21 (c)
Amounts debited to profit and loss account being, interest, salary,
bonus, commission or remuneration inadmissible u/s. 40(b)/40(ba)
and computation thereof.
17 (h)
21 (d)
Disallowance / deemed income u/s. 40A(3)
17 (i)
21 (e)
Provision for payment of gratuity not allowable u/s. 40A(7)
17 (j)
21 (f)
Any sum paid by the assessee as an employer not allowable u/s.
40A(9)
17 (k)
21 (g)
Particulars of any liability of a contingent nature
17 (l)
21 (h)
Amount of deduction inadmissible in terms of section 14A in
respect of the expenditure incurred in relation to income which does
not form part of the total income.
17(m)
21 (i)
Amount inadmissible under the proviso to section 36(1)(iii).
Amendments In The Tax Audit Reports
Clause No. Clause No.
as per old as per new
Form 3CD Form 3CD
26
Contents of relevant clause
17A
22
Amount of interest inadmissible under section 23 of the Micro,
Small and Medium Enterprises Development Act, 2006.
18
23
Particulars of payments made to persons specified u/s. 40A(2)(b)
19
24
Amounts deemed to be profits and gains u/s. 32AC or 33AB or
33ABA or 33AC.
20
25
Any amount of profit chargeable to tax u/s. 41 and computation
thereof.
21
26
Disallowance u/s. 43B
22
27
(a) Amount of Central Value Added Tax credits availed of or
utilized during the previous year and its treatment in the P&L
Account and treatment of outstanding Central Value Added Tax
credits in the accounts.
(b) Particulars of income or expenditure of prior period credited or
debited to the P&L Account.
-
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Whether during the previous year the assessee has received any
property, being share of a company not being a company in which
the public are substantially interested, without consideration or for
inadequate consideration as referred to in section 56(2)(viia).
Amendments In The Tax Audit Reports
Clause No. Clause No.
as per old as per new
Form 3CD Form 3CD
27
Contents of relevant clause
-
29
Whether during the previous year the assessee received any
consideration for issue of shares which exceeds the fair market
value of the shares as referred to in section 56(2)(viib).
23
30
Details of any amount borrowed on hundi or any amount due
thereon (including interest on the amount borrowed) repaid,
otherwise than through an account payee cheque. [Section 69D]
24
31
Particulars of each loan or deposit in an amount exceeding the limit
specified in section 269SS taken or accepted during the previous
year.
Amendments In The Tax Audit Reports
Clause No. Clause No.
as per old as per new
Form 3CD Form 3CD
28
Contents of relevant clause
25
32
(a) Details of brought forward loss or depreciation allowable in the
prescribed format
(b) Whether a change in shareholding of the company has taken
place in the previous year due to which the losses incurred prior
to the previous year cannot be allowed to be carried forward in
terms of section 79.
(c) Whether the assessee has incurred any speculation loss referred
to in section 73 during the previous year, If yes, please furnish
the details of the same.
(d) Whether the assessee has incurred any loss referred to in
section 73A in respect of any specified business during the
previous year, if yes, please furnish details of the same.
(e) In case of a company, please state that whether the company is
deemed to be carrying on a speculation business as referred in
explanation to section 73, if yes, please furnish the details of
speculation loss if any incurred during the previous year.
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33
Section-wise details of deductions, if any, admissible under Chapter
VIA or Chapter III (Section 10A, Section 10AA)
Amendments In The Tax Audit Reports
Clause No. Clause No.
as per old as per new
Form 3CD Form 3CD
29
Contents of relevant clause
27
34
(a) Whether the assessee is required to deduct or collect tax as per
the provisions of Chapter XVII-B or Chapter XVII-BB, if yes
furnish requisite details.
(b) whether the assessee has furnished the statement of tax
deducted or tax collected within the prescribed time. If not,
furnish requisite details
(c) whether the assessee is liable to pay interest under section
201(1A) or section 206C(7). If yes, furnish requisite details.
28
35
(a) In the case of trading concern, quantitative details of principal
items of goods traded
(b) In the case of a manufacturing concern, give quantitative details
of the principal items of raw materials, finished products and
by-products
29
36
In the case of a domestic company, details of tax on distributed
profits under section 115-O in the following form :(a) total amount of distributed profits;
(b) amount of reduction as referred to in section 115-O(1A)(i);
(c) amount of reduction as referred to in section 115-O(1A)(ii);
(d) total tax paid thereon;
(e) dates of payment with amounts
Amendments In The Tax Audit Reports
Clause No. Clause No.
as per old as per new
Form 3CD Form 3CD
30
Contents of relevant clause
30
37
Whether any cost audit was carried out, if yes, give the details, if
any,
of
disqualification
or
disagreement
on
any
matter/item/value/quantity as may be reported/identified by the cost
auditor
31
38
Whether any audit was conducted under the Central Excise Act,
1944, if yes, give the details, if any, of disqualification or
disagreement on any matter/item/value/quantity as may be
reported/identified by the auditor
-
39
Whether any audit was conducted under section 72A of the Finance
Act, 1994 in relation to valuation of taxable services, Finance Act,
1994 in relation to valuation of taxable services, if yes, give the
details, if any, of disqualification or disagreement on any
matter/item/value/quantity as may be reported/identified by the
auditor
32
40
Details regarding turnover, gross profit, etc., for the previous year
and preceding previous year
-
41
The details of demand raised or refund issued during the previous
year under any tax laws other than Income-tax Act, 1961 and
Wealth tax Act, 1957 alongwith details of relevant proceedings.
Questions?
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Thank You
dhjainassociates@gmail.com
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