Tax Audit - The dictionary meaning of the term "audit" is check, review, inspection, etc. There are various types of audits prescribed under different laws like company law requires a company audit, cost accounting law requires a cost audit, etc. The Income-tax Law requires the taxpayer to get the audit of the accounts of his business/profession from the view point of Income-tax Law.
Following assessee are required to get their accounts audited by a chartered accountant and to furnish (electronically) the audit report in a specified form on or before due date of furnishing return:]- Declares profits and gains for the previous year u/s 44AD; and
- His total sales / turnover / gross receipts in business does not exceed Rs 2 crore in the previous year,
- then, the provision of tax audit is not applicable.
5. An assessee covered u/s 44AD(4) and his income exceeds the maximum amount which is not chargeable to income-tax in any previous year
Penalty: If any assessee does not furnish such audit report on or before specified date (i.e. 30th September of assessment year1 ) then he is liable to pay penalty being lower of the following:- ½ percent of turnover or gross receipt; or
- Rs 1,50,000.
Tax Audit
One of the objectives of tax audit is to ascertain/derive/report the requirements of Form Nos. 3CA/3CB and 3CD. Apart from reporting requirements of Form Nos. 3CA/3CB and 3CD, a proper audit for tax purposes would ensure that the books of account and other records are properly maintained, that they faithfully reflect the income of the taxpayer and claims for deduction are correctly made by him. Such audit would also help in checking fraudulent practices. It can also facilitate the administration of tax laws by a proper presentation of accounts before the tax authorities and considerably save the time of Assessing Officers in carrying out routine verifications, like checking correctness of totals and verifying whether purchases and sales are properly vouched for or not. The time of the Assessing Officers saved could be utilised for attending to more important and investigational aspects of a case.