A Tax Audit refers to the examination and review of the accounts of a business or professional entity carried out as per Section 44AB of the Income Tax Act. It is conducted by a Chartered Accountant to ensure the correctness of income tax filings and to verify that various provisions of the Act have been properly complied with.

It is mandatory for certain taxpayers to get their accounts audited, based on turnover thresholds, nature of business or profession, and the presumptive income schemes availed.

Objectives of a Tax Audit

• Ensure proper maintenance of books of account and other records

• Certify the accuracy of income declared and expenses claimed

• Report discrepancies or non-compliances observed during the audit

• Facilitate proper calculation of taxable income under the law

• Simplify the filing of income tax returns

• Enable tax authorities to efficiently assess tax liabilities and reduce evasion

Applicability of Tax Audit

A tax audit is mandatory under the following circumstances:

For Business:

• If total sales, turnover, or gross receipts exceed ₹1 crore in a financial year

• The limit is increased to ₹10 crores if:

  • Aggregate cash receipts and payments do not exceed 5% of the total receipts and payments respectively

For Profession:

• If gross receipts exceed ₹50 lakhs in a financial year

For Presumptive Taxation Cases:

• If a taxpayer declares income lower than the prescribed percentage under Sections 44AD, 44ADA, or 44AE, and such income exceeds the basic exemption limit

Important Note:

If a person is engaged in both business and profession, the thresholds are to be considered separately for each. Crossing either limit independently would trigger the requirement for a tax audit.

Forms Required for Tax Audit

Depending on the nature of accounts and compliance, the following forms are prescribed:

• Form 3CA & Form 3CD – If accounts are already audited under any other law (like Company Law)

• Form 3CB & Form 3CD – If the taxpayer is not required to get books audited under any other law

These forms contain extensive reporting on:

• Particulars of the business or profession

• Statutory dues

• Tax deduction and collection compliance

• Loans, advances, depreciation, and more

Tax Audit Process at Saket Mahajan & Co.

1. Initial Assessment:
   We conduct a comprehensive review of your books of account and transaction records.

2. Audit Planning:
   A structured audit plan is developed, identifying high-risk areas and legal compliance requirements.

3. Execution:
   Our team conducts the audit using a sample-based testing approach, guided by ICAI standards.

4. Drafting Reports:
   Based on the findings, we prepare the required audit forms and reports (3CA/3CB & 3CD).

5. Online Filing & Coordination:
   We handle end-to-end filing of audit reports through the Income Tax portal, and liaise with your team for approvals and acknowledgments.

Due Dates for Filing Tax Audit Report

• 30th September – For most taxpayers (non-international transactions)

• 30th November – For entities involved in international or specified domestic transactions (Transfer Pricing cases)

Timely filing is essential to avoid penalties and ensure a smooth income tax return process.

Penalties for Non-Compliance

Failure to comply with tax audit provisions may result in a penalty under Section 271B, which is the lower of:

• ₹1,50,000

• 0.5% of total sales, turnover, or gross receipts

Exemptions & Penalty Waiver

A penalty may be waived under Section 273B if the taxpayer can demonstrate reasonable cause for failure, such as:

• Auditor resignation or delay in appointment

• Illness or death of responsible personnel

• Loss of data due to fire, theft, or system failure

• Natural calamities or unforeseen disruptions

• Labor strikes or legal disputes

Why Choose Saket Mahajan & Co. for Tax Audit?

• Deep expertise in Income Tax Act and regulatory compliance
• Efficient handling of large and complex businesses
• High accuracy in reporting and disclosures
• Seamless coordination with client teams for timely filings
• Proactive identification of red flags and advisory support
• 100% data confidentiality and professional integrity