Form No. 3CD

[Tax Audit Report]

The statement of particulars given in Form No. 3CD as annexure to the audit report contains thirty two clauses.

The tax auditor has to report whether the particulars are true and correct.

This Form is a statement of particulars required to be furnished under section 44AB.

The same is to be annexed to the reports in Forms No. 3CA and 3CB in respect of a person who carries on business or profession and whose accounts have been audited under any other law and in respect of person who carries on business or profession but who is not required by or under any other law to get his accounts audited respectively.

[GJAFCA]

The assessee is required to compile the form 3 CD and submit the same to the tax auditors duly authenticated by him for the verification of the auditors.

There is a misunderstanding that auditors are required to compile this statement. It is not true as in the case of financial statements which are the responsibility of the management,

[Tax Audit Report]

The tax auditor should obtain from the assessee
the statement of particulars in Form No. 3CD duly authenticated by him.

It would be advisable for the assessee to take into consideration the following general principles while preparing the statement of particulars

(a) He can rely upon the judicial pronouncements while taking any particular view about inclusion or exclusion of any items in the particulars to be furnished under any of the clauses specified in Form No.3CD.

(b) If there is a conflict of judicial opinion on any particular issue, he may refer to the view which has been followed while giving the particulars under any specified clause.

(c) The Accounting Standards (AS), Guidance Notes, Statements of Auditing Practices (SAP) issued by the Institute from time to time should be followed.

[Tax Audit Report]

While furnishing the particulars in Form No.3CD it would be advisable for the tax auditor to consider the following

(a) If a particular item of income/expenditure is covered in more than one of the specified clauses in the statement of particulars, care should be taken to make a suitable cross reference to such items at the appropriate places.

(b) If there is any difference in the opinion of the tax auditor and that of the assessee in respect of any information furnished in Form No. 3CD, the tax auditor should state both the view points and also the relevant information in order to enable the tax authority to take a decision in the matter.

(c) If any particular clause in Form No.3CD is not applicable, he should state that the same is not applicable.

(d) In computing the allowance or disallowance, he should keep in view the law applicable in the relevant year, even though the form of audit report may not have been amended to bring it in conformity with the amended law.

(e) In case the prescribed particulars are given in part or piecemeal to the tax auditor or relevant form is incomplete and the assessee does not give the information against all or any of the clauses, the auditor should not withhold the entire audit report. In such a case, he can qualify his report on matters in respect of which information is not furnished to him.
In the absence of relevant information, the tax auditor would have no option but to state in his report that the relevant information has not been furnished by the assessee.

(f) The information in Form No. 3CD should be based on the books of accounts, records, documents, information and explanations made available to the tax auditor for his examination.

[GJAFCA]

Is there any change in form 3 CD for the financial year 2009 or 2010?

Yes, clause 17A has been inserted by the IT (Tenth Amendment) Rules 2009 w.e.f. 13.04.2009 hence all the reports signed on or after 13th April 2009 needs to incorporate the change as per this clause as under:

Amount of interest inadmissible under section 23 of the Micro, Small and Medium Enterprises Development Act, 2006.

Section 23 of the aforesaid Act states as under:

Notwithstanding anything contained in the Income-tax Act, 1961, the amount of interest payable or paid by any buyer, under or in accordance with the provisions of this Act, shall not, for the purposes of computation of income under the Income-tax Act, 1961, be allowed as deduction.

[GJAFCA]

One can download form 3 CD in word format, easy to use and fill with your comments.

[Tax Audit Report]

One can download form 3 CD in excel format, easy to use and fill with your comments.