The Central Board of Direct Taxes (CBDT) has enabled the Tax Audit Utility for filing of Tax Audit Report (TAR) for Assessment Year 21-22.

Income Tax rules necessitate few taxpayers to get their accounts audited under Section 44AB. The threshold limit of Rs 1 crore for a tax audit is increased to Rs 5 crores from AY 2021-22 and further to Rs.10 crore with effect from AY 2022-23 (FY 2021-22) if the taxpayer’s cash receipts are limited to 5% of the gross receipts or turnover, and if the taxpayer’s cash payments are limited to 5% of the aggregate payments.

The auditor has to furnish the audit report in the specified audit form along with the detailed particulars.

The person conducting a tax audit has to provide the findings in a report using specified ‘Audit Forms’ prescribed by the income tax department.   Section 44AB prescribes Forms 3CA and 3CB. Along with these two forms, the auditor has to furnish a form 3CD. Let us discuss these forms in detail.

A taxpayer has to obtain the audit report on or before 30th September of the relevant assessment year unless otherwise extended. However, due to the pandemic situation, the audit report for AY 2021-22, the due date for submitting the audit report was extended to 15th Jan 2022.

The Assessing Officer may impose a penalty u/s 271B if the taxpayer doesn’t get his accounts audited or file the audit report. A minimum penalty can be 0.5% of the total sales, turnover or gross receipts, which can go up to Rs. 1,50,000. However, if the taxpayer gives reasonable cause for non-compliance, no penalty will be imposed.