1. The document is a summer internship project report submitted by Raumil Hirenbhai for their MBA program. 2. The report analyzes the taxation and auditing services of Pankaj B Shah & Co, a chartered accountancy firm in Ahmedabad. 3. Raumil assisted the CA in conducting tax audits for 3 major clients and analyzed the clients' financial statements, tax computations, and the services provided by the accounting firm.

1. Summer Internship Project Report
On
A Study on Taxation and Auditing Servies
At
Panjaj B Shah & Co (Chartered Accountants)
Submitted to
Institute Code:-
Institute Name:-
Under the Guidance of :-
In partial fulfilment of the Requirement of the award of the Degree of
Master of Business Administration (MBA)
Offered By
Gujarat Technological University
Ahmedabad
Prepared by:- Shah Raumil Hirenbhai
Enrolment No :- 228040592066
MBA (Semester II)
September-2023

2. Student’s Declaration
I hereby declare that the Summer Internship Project Report titled “Pankaj B Shah
& Co (Chartered Accountants)” is a result of my own work and my indebtedness to
other work publications, references, if any, have been duly acknowledged. If I am
found guilty of copying form any other report or published information and
showing as original work, or extending plagiarism limit, I understand that I shall be
liable and punishable by the university, which may include “ Fail” in examination
or any other punishment that University may decide.
Enrolment No. Name Signature
228040592066 Shah Raumil Hirenbhai

3. Part –I :- INTRODUCTION OF THE ORGANIZATION
Introduction of the organization
 Name of the firm Pankaj B. Shah & Co.
 Year of Establishment 1975
 Registration No. of firm With ICAI 107343W
 Constitution of the firm Proprietorship
 Registered office Medicine Market,Ahmedabad
 No. of Employees 5

4. Details of experiences with Banks:-
A) Concurrent Audits:-
Assignment Name of Bank Period Branch/Office
i) As Concurrent
Auditor
State Bank of
India
2008-2012 Vadgam
B) Statutory Audits:-
Assignment Name Year Branch/Office
i) As Statutory Auditor Torrent
Pharmaceut
icals Ltd
2018 –
Continued
Various
ii) As Statutory Auditor Torrent
Power Ltd
2017 –
Continued
Various
iii) As Statutory Auditor UNM
Foundation
2014 –
Continued
Various

5. iv) As Statutory Auditor Ashokkuma
rChinubhai
and Bros.
2013 –
Continued
Various
v) As Statutory Auditor Samvedna
Trust
2015 –
Continued
Ahmedabad
vi) As Statutory Auditor Pankaj Jain
Sangh
2012- Continued Ahmedabad
vii As Statutory Auditor Torrent
Sports
Venture
Pvt. Ltd.
2012- Continued Ahmedabad
I) Mission and Vision
Mission: Mission is to create synergies through the amalgamation of the various professional
value with a focus on delivering value based services that result in the optimization of client
worth, prospects and growth.
Vision: Firm continuously strives to be the Premier Accounting and Consultancy firm that
provides excellent service to their clients and excellent quality of life for their associates.
II) Historical Background of the group
This company was started in Ahmedabad.The company is providing financial services to its
customers since 1975 as it was started by CA Pankaj Shah in 1975. He help their client to
achieve their commercials and personal goals. This enables Pankaj B Shah & Co. to match
capabilities with those needed by our customers to meet the challenges of tomorrow’s
marketplace. It is a company which deals in taxation.

6. III) Names & Location of Group Companies
“Pankaj B. Shah &Co.” is located at Medicine Market, Paldi Cross Road, Ahmedabad. There are
no other branches of the company.
IV) Markets
Pankaj B. Shah & Co is dealing with domestic markets. It is a Chartered Accountants firm which
is serving client of Ahmedabad city as well as Mehsana.
V) Services
1. Statutory Audit.
2. Tax Audit.
3. Internal Management Audit.
4. Filing of Income Tax Return of Resident and Non Resident Individual, domestic companies
and other entities.
5. GST Compliance.
6. Personal Financial Planning.
7. Implementation and Review of Accounting Manuals.
VI) Functioning Departments
1. Account Department
2. Finance Department
3. Taxation Department

7. Industrial Environment of the Company
SWOT Analysis
STRENGTH
 Skilled workers
 Loyal Customers
 Strong Brand Equity
WEAKNESS
 Tough Competition of other
consulting firms
 Adverse Publicity due to Lawsuits
 Weak Training procedure for new
audit assistant.
Opportunity
 Complex tax laws enhancing the
opportunity
 Increase in companies looking for
expert business solutions
 GST
 There are enormous growth
prospectus in emerging markets
Threats
 Higher competition in market
 External Changes
 Lower Profitability
 Technology Problem

8. PESTEL Analysis
Political Factors: The continuous or repeated political issues in a country limit the growth of the
financial services industry. The turbulent external environment makes the industry a high risk
segment. The dysfunctional government poses the threat of business closure clearing lower
investment and financial transactions. This leads to decline in the output and revenue of financial
institutions. The policies of the government pertaining to financial institutions and overall
economic dynamics of the country shape the business environment for this industry.
Economic Factors: The economic condition of country determines the pace of growth of
financial services providers. Decision made by the government influence the economic
performance of the country which further effects the way financial services sector performs.
Furthermore, organizations are at the risk of bankruptcy, which adds further pressure to financial
services sector as there is risk of defaulter and credit loss.
Social Factors: The increasing population and lifestyle changes are two of the main social
factors which influence the progress of financial services industry. Customers demand better
services which pushes the financial services company t shape their services according to their
needs. The digital medium has offered an alternative means of handling the financial transactions
and customers prefer due to ease of use of online option.

9. Technological Factors: The digital payment solutions and financial management via online
medium is dependent on technology. Banks and other financial institutions are integrated the
technology based process as a part of their system. Block chain technology and AI and big data
are few of the terms that denote the way technology has contributed in the development of
financial services sector.
Environmental Factors: Organization in the financial service industry are focusing in their
environmental , social and governance initiatives to indicate their positive roll in climate
protection. Another way financial service industry is implementing environment friendly
practices .
Legal Factors: The regulation for maintaining security of consumer data indicates that the firms
need to integrate strong cyber security system specifically for digital medium. Moreover,
employment laws and labor laws have to be implemented across the organizations to avoid
litigations.

10. PART-II INTRODUCTION TO PROJECT
RESEARCH METHODOLOGY
Purpose of the Study:-
The purpose of the study about the taxation and auditing services provided by the CA firms.
While assisting the CA / Auditor doing the tax audit for the various clients companies, I also,
Examined the effectiveness and benefits of the services provided by the CA Firms to their
respective clients and observing the level of satisfaction of the clients.
Research Objectives of the Study:-
To examine the necessity of conducting the audits for the clients Why it is requisite for the firms
to get the Audits done for their financial account and timely filling of the taxes levied on them.
For examining whether the services provided by the CA firms are satisfactory and the activities
are conducted while maintain the authenticity and confidentiality for the client companies or not.
To Learn about what is taxation and auditing, How they are made mandatory and why it is
necessary for companies, individuals to pay taxes.

11. Research Methodology Adopted:-
The study is based on analytical method. The primary data is collected by personal collection of
the book of accounts of the mentioned clients and thereby conducting the tax audit, along with
interviewing the staff for knowing the views, comments and confidence regarding the
performance of audit, taxation and consultancy services given by the CA firms.
The primary data is collected by interviewing the internal staff of the client companies. The
secondary data is collected from the books and websites.
Sampling Plan:-
The Sample that was taken was the number of the clients for whom I had personally assisted the
CA while conducting the tax audit function.
Sample Size:-
The sample that was taken was the number of the clients for whom I had personally assisted the
CA while conducting the tax audit function. Hence, the study was performed on the 3 major
clients.

12. DATA ANALYSIS

13. COMPANY 1: M/s S.A.RUBBER (INDIA)
TRADING AND PROFIT & LOSS ACCOUNT
FOR THE YEAR ENDED 31.03.2018
PARTICULARS AMOUNT PARTICULARS AMOUNT
To Opening Sock 3647222.00 By Sales 8192388.06
To Purchases 5078269.49 By Closing Stock(B0) 3708000.00
To Bonus Exp 82630.00
To Electricity Exp 273288.00
To E.S.I Exp 76625.00
To Wages 677465.00
To Carriage Inward 4249.00
To Gross Profit 2060639.57
11900388.06 11900388.06
To Accounting
Charges
48000.00 By Gross Profit 2060639.57
To Courier & Postage 344.00 By Interest 1492.00
To Electricity Exp. 1387.00 By Sales of empty
drums
340000.00
To Freight &
Forwarding Charges
1050.00 By Sale of scraps 9423.50
To House Tax 11848.00 By Dividend 1500.00
To Insurance Exp 2046.00
To Bank Interest 34987.00
To Interest on TDS 639.00
To ISO Exp 7866.00
To Legal Exp 3000.00
To Licence Fees 5900.00

14. To ManufacturingExp 13692.00
To Misc Exp 5334.00
To Car hiring charges 120000.00
To Salary 658950.00
To Telephone Exp 1200.00
To Bank Charges 17954.00
To Depreciation Exp 220478.40
To Interest on Loan 378845.10
To Licence
Fees(I.S.I.)
35057.00
To Petrol & Diesel 10500.00
To Printing &
Stationery
8385.00
To Rent 65510.00
To Short & Excess 1063.23
To Cess to Rubber
Board fee
4681.00
To Net Profit 435855.02
210755.07 210755.07

15. BALANCE SHEET ON 31.03.2022
LIABILITIES AMOUNT ASSETS AMOUNT
CAPITAL
ACCOUNT
FIXED
ASSETS
Opening
Balance
2863157.58 Branch Office 2938421.70
Add Addition 1050000.00 Head Office 657213.00 3595634.70
Add profit &
loss
435855.02
4349012.60 CURRENT
ASSETS
Less Home
Loan
250440.00 Closing Stock 3708000.00
Less Drawing 470000.00 3628572.60 UP Vat (C/F) 5578.39
Prepaid
Insurance
22510.00
LOAN AND
ADVANCES
4580843.30
As per
schedule
attached
Sundary
Debtors
As per
Schedule
attached
395639.59
BANK
OVERDRAFT
Advance to
suppliers
770686.00 1166325.59
Canara Bank
A/C
683188.25
Security
Deposit

16. Sundry
Creditors(as
per schedule
attached)
387628.00 Sh.A.K.Jain 35927.00
Electricity
Security
23992.00
Provisions Telephone
Security
2010.00 61929.00
ESI 7295.00
TDS 37885.00 CASH AND
BANK
Salary Payable 42261.00 Cash in Hand 909083.97
Wages
Payable
67852.00 Canara Bank
SB A/C
3518.64
CST 65154.14 The Vaish
Coop,
Bank(H.0)
33099.00 945701.61
Rent 5000.00 225447.14
9505679.29 9505679.29
STATEMENT
OF
ASSESSABLE
INCOME
AMOUNT
(Rs)
INCOME
FROM
BUSINESS
OR
PROFESSION

17. As per profit &
loss A/c
435855.02
INCOME
FROM House
Property
Interest paid
on self
occupied
house property
(3480-
1160-
696-
119954)
-118330,00
INCOME
FROM
CAPITAL
GAIN
Sale
Consideration
14980000
Less Transfer
cost
749000
Net
Consideration
14231000
Inexed cost of
purchase and
improvements
1983-84 82819 731092
1984-85 80912 662831
1985-86 106750 821895
1986-87 50000 365714
1987-88 35000 238933
11410535

18. Less invested
in capital gain
scheme
7945200 3465334.68
Income From
The Sources
Bank Interest 66452
FDR Interest 209070 275522.00
Gross Income 4058381.70
Less: Under
Chapter VI-A
U/s 80C PPF 30000.00
U/s 80C
Principal
amount of
House Loan
130486.00 But
restricted
150000
U/s 8-TTA
Bank Int
10000 160000.00
Total Income 3898381.70
Rounded Off 3898380.00

19. TAX COMPUTATION:
Tax on
above
Special rate 3465330 @0.20 693066
Normal
rate
433050 @0.10 13305 706371(*1)
Add:
Education
Cess@3%
21191
Total Tax
Due
727562
Add:
Interest
10416
Total Tax
and Interest
737978(*2)
Tax Paid TDS 177739
Advance
Tax
401000
Self
Assessment
Tax
159239 737978
(*1)-(NORMAL RATE -300000) X 0.1
(*2)-(NORMAL TAX DUE+INTEREST)

20. FINANCIAL RATIOS:
GROSS PROFIT RATIO= Gross Profit x 100
Sales
= (2060640/ 8192388) x 100= 25.15%
NET PROFIT RATIO: Net Profit x 100
Sales
= 435855 X 100
8192388
= 5.3%
STOCK IN TRADE
TURNOVER RATIO: =Closing Stock x 100
Sales
= 3708000 x100
8192388
= 45.26%

21. Analysis: The financial ratios pie chart shows that STR is at 60% while the GPR and NPR are
at 33% & 7% respectively stating that while the firm is making profit is maintain at higher stock
in trade turnover ratio which suggests that the businesses need to hold stock for a longer period.
Analysis: The tax computation chart shows the total taxes payable for the firm after successful
deductions from the gross total income, It shows that since, the total income to be taxable was aa
Rs. 38,98,380, hence, after the deduction of tax slabs it falls under and calculating by special and
normal rates, the tax payable amount is derived at which is higher in this case at Rs. 737978.

22. Company 2: M/s BANSHAL STATIONERS
TRADING AND PROFIT & LOSS ACCOUNT
FOR THE YEAR ENDED 31.03.2022
PARTICULARS AMOUNT PARTICULARS AMOUNT
To Opening Sock 7211500.00 By Sales 9791716.00
To Purchases 3683378.00 By Discount on
purchase
826657.00
By Closing Stock
(BO)
691500.00
To Gross Profit 414995.00
11309873.00 11309873.00
To Audit & DSC Fee 7500.00 By Gross Profit 414995.00
To Bank Charges 810.00 By Interest on
security
45000.00
To Car Running &
maint.
2845.00. By rebate & discount 3.00
To car insurance 5252.00
To conveyance Exp. 14215.00
To depreciation 25259.00
To Miscellaneous
Exp.
921.00
To sales promotion 16045.00
Net Profit 361546
459998.00 459998.00

23. BALANCE SHEET
FOR THE YEAR ENDING 31.03.2022
LIABILTIES AMOUNT ASSETS AMOUNT
CAPITAL
ACCOUNT
FIXED
ASSETS
143132.00
Opening Balance 1892117
Add Addition 230252.00
Add Profit 361546.00
2483915.00 CURRENT
ASSETS
Sundary
Debtors
920762.00
Less Drawing 111550.00 2372365.00
Advance to
Suppliers
1689406.00
UNSECURED
LOANS
571000.00 DVAT 9321.00
Closing Stock 691500.00
CURRENT
LIABILITIES
Sundry Creditors 687285.00 CASH AND
BANK
Cash in Hand 13473.00
PAYABLES
AND
PROVISIONS
Canara Bank A/c 165246.00

24. DVAT 2190.00
3632840.00 3632840.00
STATEMENT OF ASSESSABLE INCOME
Source Of Income Amount(Rs)
Income from Business 361546.00
Net profit from
business
Income from other
sources
Bank Interest 4000.00
Gross Total Income 365546.00
Less: Deduction under
Chapter VIA
Deduction under
section 80 – LIC
premium
31305.00
Deduction under
section 80TTA- Bank
Intt
4000.00 35305.00
Total Income 330241.00
Rounded off 330240.00

25. TAX COMPUTATION
Tax on Above 8024
Less: Rebate u/s 87A 2000
6024
Add: Education Cess
@ 3%
181
Total Tax Payable 6205
Tax Paid 6205
ANALYSIS: The financial ratios pie chart shows that STR is at 47% while the GPR and
NPR are at 28% & 25% respectively stating that while the firm is making profit is
maintain at higher stock in trade turnover ratio which suggests that the businesses
need to hold stock for a longer period.
ANALYSIS: The tax chart shows the total taxes payable for the firm after successful deductions
from the gross total income. It shows that the total income to be taxable was at Rs.365546 &
after the deduction of tax under the tax slabs, the tax payable amount is derived at Rs.6205 and it
is less in this case.

26. Company 3: M/s PUNEET & COMPANY
TRADING & PROFIT & LOSS ACCOUNT
(For The Year Ending 31st
March, 2022)
Particular Amount Particular Amount
To Opening Stock 532400.00 By Sales 13788116.00
To Purchases 11506985.00 By Closing Stock 528700.00
To Cartages 15903.00
To Wages 432000.00
To Gross Profit 1829528.00
14316816.00 14316816.00
To Account Charges 40000.00 By Gross Profit 1829528.00
To Advertisement
Exp.
138465.00 By Excess & Short 208.00
To Audit Fee 20000.00
To Bank Charges 10255.10
To Car Insurance 15272.00
To Car Maintenance 12500.00
To Commission 65000.00
To Conveyance Exp. 37750.00
To Depreciation 126364.00
To Intt.Paid on Other
Loans
31857.27
To Intt. Paid on other
Loans
17974.78
To Job Labour
Charges
312240.00
To Legal Expenses 26000.00
To Postage Exp. 17000.00

27. To Printing &
Stationery
1302.00
To Rent 168000.00
To Salary 186000.00
To Sales Promotion 24400.00
To Staff Welfare 19600.00
To Telephone 840.00
To Net Profit 558915.85
1829736.00 1829736.00

28. BALANCE SHEET
LIABILITIES AMOUNT ASSETS AMOUNT
CAPITAL A/C FIXED ASSETS
Opening Balance 1320691.70 716064.00
Add: Profit 558915.85
1879607.55 Current Assets
Less: Drawing 258789.0 1620818.55 Sundry Debtors
3269833.00
Secured Loans Advance to
Suppliers
HDFC Bank 296480.94 158492.00
HDB Bank 27625.02 324105.96
Closing Stock 528700.00
Current
Liabilities
DVAT Refund 473144.00
Sundry Creditors VAT Input 73436.00
2946470.00
Advance from
customers
CASH & BANK
944000.00 Cash In Hand 465788.00
Yes Bank 430.30
Payables &
Provisions
ICICI Bank 177064.71
Account Charges
Payable
10000.00 The Kangra Co-
Op Bank Ltd.
2442.50
Audit Fee 20000.00 30000.00
5865394.51 5865394.51

29. STATEMENT OF ASSESSABLE INCOME
Income from
Business or
Profession
As per Profit
& Loss A/C
558915.85
Income From
Other Sources
Bank Interest 7500.00
Gross Total
Income
566415.85
Less: Under
chapter V1-A
u/s 80C LIC 66751.00
u/s 80D
Mediclaim
22704 Maximum to 15000.00
u/s 80TTA 7500.00 89251.00
Total Income 477164.85
Rounded Off 477160.00

30. TAX COMPUTATION
Tax on above 22716
Less: Rebate
u/s 87A
2000
20716
Add:
Education
Cess @ 3%
621
Add: Interest
u/s 234B &
234C
2067
Total tax
payable
23404
Tax Paid 23404
ANALYSIS: The financial ratios pie chart shows that STR is at 18% while the GPR and
NPR are at 63% & 19% respectively stating that while the firm is making higher
gross profit, it is also maintaining its stock in trade turnover ratio which suggests
that there is fast movement of stock and hence, the business do not need to hold
their inventory for longer time.
ANALYSIS: The tax computation chart shows the total taxes payable for the firm after
successful deductions from the total income, It shows that since, the total income to be taxable
was at Rs. 477164.85, hence, after the deduction of tax slabs it falls under, the tax payable
amount is derived at Rs. 23404 and which is less in this case.

31. FINDINGS & SUGGESTIONS
Findings:
The findings drawn are as follows:
 Cash payments are not more than 20,000/- and there is timely payment to the creditors.
 Depreciation on the Assets are ascertained on the basis of their date of purchase 100%
depreciation for 1-6 months old used assets. More than 6 months- 50% of rate of
depreciation is charged. Mostly, the rate of depreciation used is at 18%.
 Unsecured Loans for more than 20,000/- are paid in cash rather than they are paid
through cheques and there is no bouncing of those cheques observed.
 The proprietor has issued TDS certificates to their contractors, to the salaried workers and
professional heads for the job rendered by them to the company and also, they have been
issued the TDS certificates from the financial institution.
 There has been timely deposit and filing of the TDS returns with Income Tax department.
 Also, the Income Tax returns are timely sent to IT department.
 The challans of the payment of VAT, purchase bills provided by the clients are matching
and hence, entered in tally erp software.
 Yearly analysis of the GPR, NPR, Stock-in-trade turnover ratios and the business ensured
that there are no abnormal losses incurred by the company.
 Also where there is higher stock in turnover ration the firms have been advised to hold
the stocks and for the smaller ratios, it suggested that businesses are having good and the
faster flow of the stock movement.
 The bills of expenditures, rent, purchases are checked and tallied.
 The sales figures are in accordance with sales tax returns and purchases figures from
DVAT.
 Also, there has been no undue shortage or misappropriation of funds observed along with
the all the payments and incomes statements in accordance with the figures mentioned in
financial statement.

32.  Many Clients business was observed that they set off their liabilities early and there was
little delay in the payments to the creditors and there has been less delay.
 The relevant tax authority employed tax audit towards achieving target revenue.
 Tax audit aimed at ensuring the submission of accurate and current returns for proper
computation.
 Awareness of tax rules and regulation increase compliance and reduce non-compliance
tax payers.
 Tax audit improves the level of tax compliance by tax payers.
 The personnel conducting the tax audit are skilful in the area of tax audit.
SUGGESTIONS:
After the completion of the study, according to my opinion, there still exists a possibility
that biased approach can be adopted by many CA’s performing the tax audits for the
companies. Though, ICAI has laid many stringent and strict rules and regulations for
maintaining the ethics always and there has been heavy emphasis by them on the
authorized audit performance to give their judgments based on the facts which are there
in front of them and to their best knowledge without having any undue influence of the
particular clients for whom they are performing the audits.
Also, the data provided to the CA’s are given by the companies is not ensured that there
is no falsification of the facts mentioned hence, they need to perform internal audits and
the various kinds of audits which are not statutory in nature along with those which are
such as company audits. So that, when the financial statements reach the CA is ensured to
be true in all sense.
 The Relevant tax authority at all levels should improve the standard of tax audit
employed for effectiveness and efficiency.
 Tax audits should aim at reducing more problems of tax evasion, tax avoidance and other
tax irregularities for standardization.

33.  The scope of tax audit should be wider in such a way that will ensure proper submission
of accurate and current returns for proper computation.
 RTA should also provide a policy that would allow the tax payers to co-operate during
the period of tax audits and at the same time the tax payers should do their best towards
cooperating with tax audit personnel during the period of the exercise.
 RTA should also improve the standard of tax audits personnel so that they can highly
improve the level of tax compliance by the tax payers.
CONCLUSIONS: -
The primary goal of this project report was to identify the need and the requirement for a
company to conduct tax audits. It showed that unless and until the companies conducts of
their accounts how will the assessor be able to ensure that the figures and the data mentioned
in the financial statements by the companies are actual.
Audit of accounts in the corporate sector was always mandatory by virtue of the provision of
The Companies Act, 1956, Realizing the importance of audit this requirement has been
extended to non-corporate assesses. Since by virtue of sec 44AB all assesses irrespective of
their nature, if they fulfil the criteria as laid out in the section have to get their accounts
audited.
The intention of bringing in this piece of legislation as observed by the Finance Minister
while presenting the Union Budget for 1984-85 is the compulsory audit is intended to ensure
proper maintenance of books of accounts and other records, in order to tax laws by a proper
presentation of the accounts before the tax authorities. This would also save the time of the
Assessing Officers considerably in carrying out the verifications.
The projects study conducts helped in examining the areas which are of upmost importance
to be considered while preparation of the audit report. The in-depth analysis of the particular
client’s financial statements helped in analysing their growth, performance and any abnormal
looses occurrence.

34. ANNEXURES: -
1. www.icai.org
2. www.incometaxindia.gov.in
3. www.taxguru.in