Tax audit is a process to verify whether the books of accounts prepared by the taxpayer comply with the generally accepted accounting principles and provisions of the Income Tax Act. Its purpose is to ensure that the books of account and other records are maintained properly and correctly calculate the actual income of the taxpayer. Tax audit does not give immunity to the assessee from assessment of investigation or disallowance of expenses[1]. A tax audit can only be done in practice by a Chartered Accountant.

Under area 44AB, an obligatory expense review is required to be finished by a Chartered Accountant if a business has add up to deals turnover or over Rs.1 crore. If there should be an occurrence of a calling, if the calling has add up to net receipts of more than Rs.50 lakhs, at that point charge review by a Chartered Accountant is compulsory.

Notwithstanding as far as possible in light of the business turnover, organizations secured under area 44AD, 44AE, 44BB or 44BBB and guaranteeing pay to be lower than the regarded benefits as indicated under separate areas is additionally required to get charge review compulsorily.

Income Tax Act commands experts and organizations to get an expense review from a Chartered Accountant and keep up accounts if the turnover or benefit surpasses a specific sum. In this article, we take a gander at the duty review farthest point and records support restrict for organizations under the Income Tax Act.

Sales Turnover: Sales turnover shall mean the sum total of the amount for which sales are effected by an enterprise.

Gross Receipts: This term is not defined under the Income Tax Act. Gross receipts include all receipts from the profession.

Normally the audit report under section 44AB should not be modified, but at times a member may modify such report on the following grounds:

• Amendments to the accounts of the company after their adoption at the AGM;
• Change of law;
• Change in interpretation.

Hence on the above grounds, the audit report once filed can be modified.

One of the objectives of tax audit is to ascertain/receive/report the requirements of Form No. 3CA/3CB and 3CD. In addition to the reporting requirements of Form No. 3CA/3CB and 3CD, a proper audit for tax purposes shall ensure that the books of account and other records are properly maintained, that they faithfully reflect the income of the taxpayer and are subject to deduction. The claims are correctly made by him. Such audit will also help to check fraudulent practices. It can also facilitate the administration of tax laws by proper presentation of accounts before the tax authorities and substantially save the time of the Assessing Officers in carrying out regular verifications, such as checking and verifying the correctness of the totals. Whether the purchase and sale are properly certified. The time saved by the Assessing Officers can be used to focus on the more important and investigative aspects of a case.