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Karniti Part III-Rush hours of E-Filing of Income Tax Audit

CA Umesh Sharma 
on 24 September 2013

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Keeping this conversation between Lord Krishna and Arjuna as the foundation we will learn certain basic financial and tax matter. Let us try to get answers to our questions in a bit different and joyful manner. The character of Arjuna will be played by the common man or tax payer and the character of Lord Shri Krishna the Expert for giving solutions to all problems. Conversation is named as “KARNITI”.

Arjuna: Lord Krishna, In this last week of September month some taxpayers devotees are very busy on their computers for finalizing account of 31st March.

Lord Krishna: Arjuna,, please note that, The last date for filing Tax Audit Report and Income Tax Return is 30th September. But from this year 2012-13 Tax Audit Report is required to be “e-filed”.

Arjuna: Ok, Now a days Tax laws are giving more stress on E- filing of data. Please explain me, Krishan, which taxpayers are required to get its books of accounts audited and e- file tax audit report?    

Lord Krishna: As per Income Tax Act, a businessman whose annual turnover exceeds Rs. 1 crore is required to get its accounts audited and e-file tax audit report. Further keep in mind, that person having turnover less than Rs. 1 crore and profit below 8% is also required to get his books audited. Further, Professionals such as Doctors, Architects, Chartered Accountants, etc are required to get its accounts audited, if their annual turnover exceeded Rs. 25 Lakhs.

Arjuna: Govinda, What is new in this system of e –filing tax audit report?

Lord Krishna: Dear Parth, understand carefully, Chartered Accountant have to e-file tax audit report in a specified format prescribed by Income Tax Dept, along with his digital signature on the Income Tax Departments web site. Along with tax audit report, audited Balance Sheet, Profit and Loss account, Company audit report, etc  will have to be uploaded. Afterwards taxpayer is required to approve the uploaded tax audit report with his own digital signature. One more important aspect in this is Income Tax Return is to be filed only after e-filing Tax Audit Report. Taxpayer and Chartered Accountant can check all the details of reports filed in the personal account with Income Tax Department.    

Arjuna: Krishna, it’s interesting to know that, many taxpayers did not came out from their old practices and it is difficult to change them. Old practices like incomplete information provided for tax audit, unavailability of documents, late setting, etc. In spite of all this, Audit is carried out after passing through all these difficulties by Auditors. Every year taxpayer and his auditor are in a rush to complete the audit within time. Many taxpayers have the habit of completing the audit in any way and want to get relieved from it. Now unless all information is provided audit report cannot be e-filed or uploaded. But, Krishna Income Tax Dept is still updating format of efile of audit, which is a cause of concern and the audit process is getting delayed. Further, Many taxpayers say, “my CA takes care of all , why should I worry and take tension”.

Lord Krishna: Listen Arjuna, it is responsibility of the taxpayer to keep accounts and provide all details such as bills, Bank statements, Income Tax, TDS, Sales Tax, Service Tax, PF etc. and submit to the auditor. Keeping in mind auditor is our friend, taxpayer should give him all the required information of accounts and get accounts audited by following rules and regulations of the Income Tax Act. Due to this books will show exact financial position of business and compliance of rules and regulations will be there.  Further, if tax audit report is not e- filed before due date then the penalty of 0.5% of turnover up to maximum of Rs. 1.5 Lakhs can be imposed.

Arjuna: Krishna, then what will be the responsibility of tax auditor?

Lord Krishna: Arjuna, Taxpayer is responsible for maintaining proper books of accounts. Auditor’s responsibility is to check and certify that the balance sheet and profit and loss account shows true and fair view or not. So that income tax is computed correctly and return can be filed. Please note, once tax audit report is e- filed it cannot be rectified, so be careful. Auditor should perform his work judicially, independently and transparently. Government had given big responsibility on shoulders of tax auditors. Arjuna, also note that, a practicing CA can only undertake 45 tax audits in a year. Further, due to e- filing of data, Income Tax Department gets lots of information; hence it became easy to find the tax evaders and non-compliers. Income tax audit report helps government for getting all the required information and strengthens in tax assessment process.     


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