05 December 2009
whether notes given by tax auditor in 3CD relieve him from any irregularity noticed in Income Tax assessment? Whether 3CD is required to be signed by assessee? As per provision of income tax act, who is responsible for prepare form 3CD?
05 December 2009
Professional misconduct: It may be noted that when any question relating to professional misconduct in connection with tax audit arises, the tax auditor would be liable under the Chartered Accountants Act and the ICAI's disciplinary jurisdiction will prevail in this regard.
Audit report Section 44AB requires the tax auditor to submit the audit report in the prescribed form and setting forth the prescribed particulars. Sub-rule 1 of rule 6G provides that the report of audit of accounts of a person required to be furnished under section 44AB shall - (a) in the case of a person who carries on business or profession and who is required by or under any other law to get his accounts audited, be in Form No. 3CA; (b) in the case of a person who carries on business or profession, but not being a person referred to in clause (a), in Form No.3CB.
Sub-rule (2) of Rule 6G further provides that the particulars which are required to be furnished under section 44AB shall be in Form No. 3CD.
The revised Form No. 3CA is applicable to a person whose accounts of the business or profession have been audited under any other law carrying on either business or profession
While Form No. 3CB is applicable to a person who carries on business or profession but who is not required by or under any other law to get his accounts audited.
It may thus be noted that the audit report is in two parts. The first part requires the tax auditor to give his opinion as to whether or not the accounts audited by him give a true and fair view: i. in the case of the balance sheet, of the state of affairs as at the last date of the accounting year. ii. in the case of the profit and loss account, of the profit or loss of the assessee for the relevant accounting year.
The second part of the report states that the statement of particulars required to be furnished under section 44AB is annexed to the audit report in Form No. 3CD. The tax auditor is required to give his opinion whether the prescribed particulars furnished by the assessee are true and correct.
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05 December 2009
Not possible to give an unconditional answer to the issue. Why because, if the ITO comes to the conclusion that,from the irregularities noticed by him,the tax auditor was grossly negligent in the performance of his duties, he can refer the matter to the ICAI so that appropriate action can be taken against the tax auditor under the Chartered Accountants Act,1949. Form 3CD has to be signed by the assessee. ICAI in their Guaidence note on the captioned subject says, quote' the tax auditor should obtain from the assessee the statement of particulars in form 3CD duly authenticated by him' quote ends.
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