Why Tax Audit ?

IT Act,1961  contains a no.of provisions, which require audit for tax purposes.

(i.e) Sec.12A, 80IA etc.,

Tax authorities have their specific information, requirements, which may not necessary be fulfilled by general purpose

financial statements prepared by companies primarily for the use of shareholders.

Therefore,

Special statements for the specific use of tax authorities are prepared in many cases and the auditors are called upon to report on them.

The audit to be conducted by CAs under various provisions of IT Act,1961.

Thus collectively constitute "TAX AUDIT"

Purpose of Tax Audit (Circular 337 Dated:06.07.1984)

Sec.44AB of the IT act,1961 was introduced by sec.11 of the finance act,1984 w.e.f 01.04.1985 (i.e) A.Y 1985-86

To ensure that books of accounts and other records are properly maintained by the assessee.

To ensure that books of accounts reflect correct income of tax payer and claims for deduction are correctly made

to him.

To facilitate the administration of tax laws by a proper presentation of accounts before the tax authorities   and

To save AO's time in carrying out routine verification like checking, corrections of totals

and verifying that purchase and sales are properly vouched or not.

Note :

Sec.44AB is constitutionally valid and it is not violative of articles 14 and 19(1) (9) of constitution of

india.

A.S.Sharma Vs. Union of India (AP) ……….