Audit report

[Tax Audit Report]

Section 44AB requires the tax auditor to submit the audit report in the prescribed form and setting forth the prescribed particulars.
Sub-rule 1 of rule 6G provides that the report of audit of accounts of a person required to be furnished under section 44AB shall

(a) in the case of a person who carries on business or profession and who is required by or under any other law to get his accounts audited, be in Form No. 3CA

(b) in the case of a person who carries on business or profession, but not being a person referred to in clause (a), in Form No.3CB

[Tax Audit Report]

Sub-rule (2) of Rule 6G further provides that

the particulars which are required to be furnished under section 44AB shall be in Form No. 3CD.

[Tax Audit Report]

It may be be noted that earlier there were three forms of audit report

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Form No. 3CA
Audit report under section 44AB of the Income-tax Act, 1961, in a case where the accounts of business of a person have been audited under any other law.

Form No. 3CB
Audit report under section 44AB of the Income-tax Act, 1961 in the case of a person carrying on business.

Form No. 3CC
Audit report under section 44AB of the Income-tax Act, 1961, in the case of a person carrying on profession.

The revised Form No. 3CA is applicable to a person whose accounts of the business or profession have been audited under any other law carrying on either business or profession while Form No. 3CB is applicable to a person who carries on business or profession but who is not required by or under any other law to get his accounts audited.

Earlier the required particulars in the case of a person carrying on profession were to be furnished in Form No. 3CE.

The new Form No. 3CD is applicable in respect of persons carrying on business and/or profession.

[GJAFCA]

The principal tax auditor should submit his consolidated report on the registered office/head
office and branch accounts and report in his tax audit report as under :

"I/We have taken into consideration the audit report and the audited statements of accounts, and particulars received from the auditors, duly appointed under the relevant law, of the branches not audited by me/us"

[GJAFCA]

An assessee may have one or more branches outside India. The accounts of such branches are normally audited by the professional accountants overseas. The results of such branches are also
incorporated in the consolidated accounts prepared in this country. In the case of foreign branches the relevant information in respect of such branches as is required by Form No. 3CD, may be obtained by the tax auditor in India from the assessee who should obtain the same from the overseas auditor who had audited the accounts of such foreign branches. The tax auditor in India while certifying the information in Form No. 3CD may rely upon the information obtained by him from the overseas auditor and while submitting his consolidated report in Form No.3CD he should specifically point out in his audit report as under:-

"I/We have taken into consideration the audit report and the audited statements of accounts, and particulars received from the auditors, appointed under the relevant law, of the overseas branches not audited by me/us".

If the assessee is unable to obtain relevant information in respect of the overseas branches duly certified by the overseas auditor, the relevant facts should be suitably disclosed and reported upon.

[GJAFCA]

The auditor may have a difference of opinion with regard to the particulars furnished by the assessee and he has to bring these differences under various clauses in Form No.3CD.

[GJAFCA]

An individual having more than one proprietorship concern under different trade name and seperate books of account covered under section 44AB of the income tax act due to total turnover of Rs. 40 lacs of all such concerns have two options:

1.Get the financial statements prepared for each concern seperately and get it audited seperately by the tax auditor as in the case of branch of any assessee.

2. Get the books of accoun consolidated and then get the same audited.

But it should be remembered that now in e filing seperate balance sheet and profit and loss account can not be filed hence for the purpose of the ITR form, the assessee would have to compile the balance sheet and profit and loss account of all the concerns together.

[gopalji]

The auditors report must state the following information ath the place of signature of each report signed on or after April 1, 2010 keeping in view the requirement of SA 700 "The Auditor's report on Financial Statements" as well as the decision of the council taken on January 13, 2010 in its council meeting:

Name of the Firm
Registration Number of the firm
Chartered Accountants



Name of the member signing the report)
Designation of the member
Membership Number

Place of Signature (The place where auditors have signed the report not the HO or BO of the Auditors)
Date

[gopalji]

Attention is invited to the following extracts from para 13.9 of the Guidance Note on Tax Audit.

"It may be pointed out that report under section 44AB should not normally be revised. However, sometimes a member may be required to revise his tax audit report on grounds such as:

(i) revision of accounts of a company after its adoption in annual general meeting.
(ii) change of law e.g., retrospective amendment.
(iii) change in interpretation, e.g. CBDT Circular, judgements, etc.

In case where a member is called upon to report on the revised accounts, then he must mention in the revised report that the said report is a revised report and a reference should be made to the earlier report also. In the revised report, reasons for revising the report should also be mentioned. [Reference may also be made to Guidance Note on Revision of the Audit Report (Handbook of Auditing Pronouncement Volume II, page 472)