44 ab tax audit and financial year

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Amjum (Querist)

11 October 2012 This is a question from Practice Manual, can any one give more clarity for this answer

XYZ Private Limited is engaged in the wholesale business of buying and selling silk sarees.
The accounts are maintained under the Companies Act from 1st October to 30th September
each year. The Chief Accountant of the Company is requesting the tax auditor to conduct tax
audit U/S 44AB of the I.T. Act for the period for which accounts have been maintained under
the Companies Act. As the tax auditor of XYZ Private Limited, how will you react to the Chief
Accountant’s request?

CA Manish

CA Manish (Expert)

11 October 2012 Sec 3(1) Save as otherwise provided in this section, "previous year" for the purposes of this Act, means the financial year immediately preceding the assessment year.

Sec 2(9) "assessment year" means the period of twelve months commencing on the 1st day of April every year .

Therefore in Income Tax Act F Y is always start from 1st apr.

Therefore Audit u/s 44AB is to be done for the F Y only.

Amol S Joglekar

Amol S Joglekar (Expert)

11 October 2012 Income tax recognises only one financial year. Tax audit is done as per the norms of income tax and hence it should cover the period starting from 1st April and ending on 31st MArch of the folowing year.

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