Tax Audit related compliance
Sinimol George (Articled Assistant) (30 Points)
03 July 2019Sinimol George (Articled Assistant) (30 Points)
03 July 2019
Krishna Chaudhary
(Accountant)
(4531 Points)
Replied 12 July 2019
debora M
(BUSINESS DEVELOPMENT MANAGER)
(1697 Points)
Replied 17 July 2019
What is tax audit?
The provisions for an Income Tax audit are covered under section 44AB of the Income Tax Act of 1961. The Income Tax audit is an examination of an individual’s or organisation’s tax returns by any outside agency to verify that all the income, expenditure and deduction information are filed correctly. Tax audits have been made mandatory by the Income Tax Act that states that all taxpayers are required to get the accounts of their business or organization audited according to the provision of the act.
Under section 44AB, the audit aims to ascertain the factual veracity of returns filed and the accomplishment of other requirements as per applicable rules. The Chartered Accountant performing the tax audit has to submit all his/her findings and observations in the form of an audit report. The audit report is given as per format available in the form numbers 3CA/3CB and 3CD.
Objectives of Tax Audit:
The objectives of Tax Audit are as follows:
What is the Penalty for not getting the accounts audited?
According to the section 271B, if a person who is required to comply with the section 44AB fails to get their accounts audited in any given year, the following penalties are imposed on that person:
However, according to the section 273B, no penalty would be imposed on the person if valid reason for such failure is proved.
Thus, tax audit is a very important requirement for individuals who are required to undergo such an audit. Failure to comply with the income tax rules would attract penalty and individuals wishing to avoid any penalty should ensure full compliance with all the rules of the income tax audit.