Basavaraj (B.Com FCA) (193 Points)
13 September 2013Hi,
I have a Individual client wherein the turnover is less than 1 crore. They require the 3cd report to be signed by the chartered accountant. This is because the bankers in small town usually ask for 3cd report from the entities. Is it mandatory to have a 3cd report even if the turnover is less than 1 crore.
if yes. if I upload that form 3cd in the income tax website, will it be counted in my limit of 45 tax audit assign ments. please clarify urgently
Basavaraj
CA Himanshu Bansal
(Risk Manager)
(2345 Points)
Replied 13 September 2013
Dear Sir,
First of all, it shall not be counted in your limit of 45 Audits(since it will fall under section 44AD & there is specific exclusion for audits under section 44AD for limit calculations).
Bank generally ask for 3CD report because they get other data in the form 3CD like payments made to related parties, quantities traded, etc.
This has become a general trend these days, for any paper they say " Iss pe CA ka thappa lagwa lao" Anyhow, bank cannot insist for form 3CB-CD as per law, because this report is specifically meant for income tax department. What other thing you could do is sign balancesheet and profit and loss and issue general audit report not under any statute.
Dear Sir,
due to less time i copy*pasted a reply i posted to another thread.. just for an info..
No, You need not Sign an Audit report/Upload 3CB.CD if he's not coming under 44AB, you may file his ITR u/s 44AD and just give an attested copy of Balancesheet & P&L.. Banks shouldnot ask for 3CB.CDs even when the assessees are liable to be audited.. just give them Signed P&L & BS along with the ITR..
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Since the assessee is having 79 lakhs turnover and net profit of 3.53 lakhs (which is only 4.5% of the turnover) he comes under the purview of Sec.44AB
In that case Audit has to be conducted and Audit report in Form.3CA (If the assessee is a domestic company) / 3CB (in case of Individual/ Firms) along with Form 3CD has to be prepared.
Further more, quantitative details of Raw materials/Finished goods: Opening Stock/Purchase/Sales/Closing Stock/Manufactured qty etc has to be mentioned in 3CD or you may leave it unfilled commenting that "It was not possible to quantify the stocks and the stock values are taken as certified by the Prop/Partner/Director"
Or the assessee may declare a minimum profit of 8% of turnover and leave the hazzle of 44AB Audit.
In this case Assuming the turnover is 80,00,000 : 80,00,000* 8% = Declare 6.40lakh Net profit and pay taxes for the same, No Audit report then
Whoever running business below the tax audit limit has to calculate their income U/S. 44AD @ 8% of turnover and if such calculated net profit is above the taxable slab of the assessee he has to file return declaring that proft and if he has/wish to declare a lower income as in the case above, MUST get the accounts audited U/s.44AB
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