TAX AUDIT REPORT (TAR) - specified date need to be changed.

[DEV KUMAR KOTHARI]

^{TAX AUDIT REPORT (TAR) – SOME INFORMATION CANNOT BE GIVEN COMPLETELY  AS REQUIRED UNDER PROVISIONS DUE TO TIMING DIFFERENCE OF DUE DATES}

^{This will cause many problems in processing of Returns , mismatches and disallowances and un-necessary proceeding.}

^{REFERENCES AND LINKS:}

^{Sections 40, 43B, 44AB, 139, of Income tax Act,1961}

^{TAR form-  Form 3CD}

^{Tax audit report (TAR) is to be submitted before specified date as per  provisions of S.44AB. This is fixed as one month prior to due date to file Return of Income (ROI) in case of assessee.}

^{Some information in TAR are to be given in relation to period up to the due date to file Return of Income (ROI).}

^{These information which are required to be given till due date for ROI has direct impact on amounts of deductions allowable or to be disallowed in computation of income from business and profession. For example, Payment of certain sums covered by S.43B, will be allowable it paid before due date to file ROI and some sums will not be allowable  if not actually paid by the due date to file ROI.}

^{In some cases, if tax deducted at source (TDS)  has been paid before due date to file ROI, then  the related from which tax was deducted  will be allowable, however, if tax  is not deposited before due date to file ROI, then related sum from which tax was deducted will not be allowed.}

^{For example , for Assessment year 2022-23, TAR was to be submitted by 30th September, 2022 and this date was extended to 7th October,2022. Whereas due date to file ROI is 31st October 2022. The date may also be extended.}

^{Many TAR were filed by 30th September 2022 in which information could be furnished for payment till 30 th September only   that too if TAR was uploaded on  such last date. In case TAR was uploaded on 7.10.2022 information till that date could be furnished in TAR. Whereas more sums may be allowable based on payments to be made after information given in TAR but before due date to file ROI.}

^Mismatches:

^{Returns are examined with artificial intelligence tools applied for this purpose TAR and ROI contain major information, which are examined and reconciled. Other reports and information like AIS ,TIS, Form 26AS  information from other agencies can  also considered. This can be for processing of ROI as well as for selection of ROI for scrutiny and scope  scrutiny to be decided.}

^{Information in TAR is vital for applying provisions for making adjustments, additions , deductions and disallowances. Therefore, due to  timing differences for last date to upload TAR and last date for filing of ROI, different information and data will be found in TAR and ITR.}

^{This will lead to un-necessary adjustments, more proceeding requiring filing of revised or rectified TAR, explanations to CPC communications, additions , rectification and appeals etc.}

^{Therefore, there is need for harmonizing due dates in a manner that in TAR complete and up to relevant  information about sums allowable and   to be   disallowed can be provided.}

^{For this purpose changers in due dates can be made.  in sections  like S . 40,  43B,  44AB  and 139.}

^{Discussions of  provisions in above write-up is illustrative and in particular cases applicable  provisions of IT  Act,  IT Rules, and IT  forms  and IT Returns need to be examined and applied very carefully.}

^{From provisions relevant portions are reproduced with highlight’s  added by author:}    

¹[Audit of accounts of certain persons carrying on business or profession.

44AB. Every person,-

Xxx   get his accounts of such previous year   audited by an accountant before the specified date and furnish by that date the report of such audit in the prescribed form duly signed and verified by such accountant and setting forth such particulars as may be prescribed :

Explanation.-For the purposes of this section,-

(i) "accountant" shall have the same meaning as in the Explanation below sub-section (2) of section 288;

[(ii) "specified date", in relation to the accounts of the assessee of the previous year relevant to an assessment year, means date one month prior to the the due date for furnishing the return of income under sub-section (1) of section 139.

From section 43B:

[Provided that nothing contained in this section shall apply in relation to any sum ¹⁵[***] which is actually paid by the assessee on or before the due date applicable in his case for furnishing the return of income under sub-section (1) of section 139 in respect of the previous year in which the liability to pay such sum was incurred as aforesaid and the evidence of such payment is furnished by the assessee along with such return.

From Form 3CD:

26. In respect of any sum referred to in clause (a),(b), (c), (d), (e), ¹⁰[(f) or (g)] of section 43B, the liability for which:-

(A)

(B) was incurred in the previous year and was

(a) paid on or before the due date for furnishing the return of income of the previous year under section 139(1);

(b) not paid on or before the aforesaid date.

Under main clause 21

(b) Amounts inadmissible under section 40(a):-

(B) Details of payment on which tax has been deducted but has not been paid on or before the due date specified in sub- section (1) of section 139.

(I) date of payment

(II) amount of payment

(III) nature of payment

(IV) name and address of the payer

(V) amount of tax deducted

(VI) amount out of (V) deposited, if any

(iii) under sub-clause (ic) [Wherever applicable]

(iv) under sub-clause (iia)

(v) under sub-clause (iib)

(vi) under sub-clause (iii)

(A) date of payment

(B) amount of payment

(C) name and address of the payee

(vii) under sub-clause (iv)

(viiii) under sub-clause (v)