This PPT tells you all baout the scetion 44AB in just 15 slides. The language used here is really simple and easy to understand

1. TAX AUDIT UNDER
SECTION 44AB OF
INCOME TAX ACT,1961
AISHWARYA P SARAF
M.COM PART II (SEM III)
ROLL.NO.9124

2. MEANING OF TAX AUDIT:
Tax audit means an official examination
and verification of financial accounts and
records. It is required to be performed
only by a Chartered Accountant u/s 44AB
of the Income Tax Act,1961.

3. TAX AUDIT- HISTORY
 1984-Tax Audit provisions introduced Memorandum explaining
the provisions of the Finance Bill,1984:
“the compulsory audit is intended to ensure proper maintenance
of books of accounts& other records, in order to reflect the true
income of the tax payer & to facilitate the administration of 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 verification”

4.  1984- Tax Audit provisions introduced
 1997- Tax Audit provisions applicable to 44AD
 1999- All forms and rule 6G revised. Form 3CC and 3CE
done away with
 2003- Tax Audit provisions applicable to 44BB and
44BBB
 2004- All forms revised
 2006- Form 3CD revised
 2008- Requirement to furnish report with return done
away with
 2011- Cases of fake membership numbers
 2013- E-filing of tax audit reports made mandatory

5. WHO IS REQUIRED TO GET TAX AUDIT
DONE ?
 An assessee is liable to get his tax audit done mandatorily, if
in the previous year,
 The person is carrying on the business & his total
sales/Turnover exceeds Rs.1crore(limit increased w.e.f 1st
April 2012) or
 The person is carrying on profession and his gross receipts
exceeds rs.25lkhs (limit increased w.e.f 1st April 2012),
 The person is carrying on business or profession and is
covered under the provisions of sec 44AD, 44AE,44AF,44BB
or 44BBB and claims that his income from the said business
is lower than the deemed profits and gains computed under
the relevant section.

6. DUE DATE
The due date of filing the Tax Audit Report
under sec 44AB is 30th sep of the
assessment year. However, for A.Y 2014-
15 the due date for filing Tax Audit Report
has been extended fro 30th
September,2014 to 30th November, 2014.

7. TAX AUDIT E-FILING
 As per notification no.34 dated 1st may 2013, e-filing of tax
audit report is now mandatory from the assessment year
2013.-14 onwards.
 As per rule 6G, tax audit report is to be furnished in Form
3CA & Form 3CB and the particulars required to be furnished
along with these tax reports should be in Form 3CD.

8.  Form 3CA & Form 3CD –
These forms are used in case where the accounts
of the business or profession of a person have already
been audited under any other law.
 Form 3CB & Form 3CD-these
forms are used in case where the accounts of
the business or profession have not been audited
earlier.

9. COMPUTATION OF TOTAL TURNOVER FOR THE
PURPOSE OF TAX AUDIT
 Where a person is carrying on 2 Business/2 Professions – the total turnover of
both the businesses shall be clubbed together and tax audit shall be liable to be
conducted if the Total Turnover exceeds Rs. 1 Crore/ Rs. 25 Lakhs as the case may
be.
 Where a person is carrying on business as well as profession and the Turnover of
the business is Rs. 1.2 Crore and the Gross Receipts of the profession is Rs 22
Lakhs. In such a case, ICAI has clarified through a Guidance Note that the Assessee
is liable to get the Tax Audit done of both the business as well as profession
because the Gross Receipts from the business exceed the limit of Rs. 1 Crore.
However, if his Total Turnover was Rs. 95 Lakhs and Gross Receipts from business
was Rs. 22 Lakhs, he would not be required to get his Tax Audit done.

10.  In case where a person has a total turnover of Rs. 98 Lakhs and has
sold a Car for Rs. 8 Lakhs. In such a case, the total amount on
adding up becomes Rs. 1.06 Lakhs i.e. above Rs. 1 Crore. Confusion
arose whether the person is liable to get an audit done in this case
and ICAI has clarified that the turnover will not include any amount
on the sale of the fixed asset as it was held by the person for
business use and not for the purpose of sale.

11.  ICAI has further clarified that the amount received
from the following items shall not be included while
computing the-
 Total Sales/Total Turnover/ Gross Receipts:-
 Sale Proceeds of Fixed Assets
 Sale Proceeds of Assets held as Investments
 Rental Income
 Income by way of Interest unless assessable as Business
Income
 Any expense which is reimbursable to the Agent by the Client

12. PENALTY FOR NON COMPLIANCE OF SECTION
44AB
 Non Compliance of the provisions of this act shall attract
Penalty under section 271B of the Income Tax Act. If any
person required to get his audit done under section
44AB fails to do so before the specified date shall be
liable for penalty of ½% of the turnover/gross receipts
subject to a maximum penalty of Rs. 1,50,000
 However, Section 273B states that no penalty shall be
levied under section 271B if there is a reasonable cause
for such failure.

13.  Some instances which have been accepted by the
Tribunals/Courts as “Reasonable Cause” are:-
 Resignation of the Tax Auditor and Consequent Delay
 Death or physical inability of the partner in charge of
the Accounts
 Labour Problems such as strikes, lock-outs for a long
period
 Loss of Accounts because of Fire/Theft etc. beyond
the control of the Assessee
 Natural Calamities

14. REVISION OF TAX AUDIT REPORT
 Tax Audit Report e-filed cannot be revised under normal
circumstances. However, in case the Accounts are revised in the
following circumstances, the Audit Report e-filed can also be
revised:-
 Revision of Accounts of a Company after its adoption in the
Annual General Meeting
 Change in Law with Retrospective effect
 Change in Interpretation of Law (E.g.: CBDT Circular, Notifications,
Judgments etc.)
In case the Tax Audit report e-filed is revised, the Auditor shall
state that it’s a Revised Report and shall also state the reasons for
the same.

15. LIMITATION ON CA’S FOR THE NUMBER
OF TAX AUDITS / CEILING LIMIT
 The Maximum no. of Tax Audit Assignments under Section 44AB
which can be taken by a CA has been increased from 45 to 60 by
the ICAI Council in its 331st meeting held from 10th to 12th Feb
2014.
 Thus if a firm has 4 partners, the maximum no. of Tax Audits that
can be taken by a firm in an assessment year would be 60*4=240.
If the Firm undertakes all the 240 Tax Audit Assignments, the
partners would not be in a position to undertake any tax audit
assignment in their personal capacity. Now that tax audit efiling is
mandatory, the chartered accountant conducting the tax audit
would also be required to prepare the tax audit report in electronic
format.

16. THANK YOU !!!