Submitting the Tax Audit Report is the final step which requires to be performed in an orderly manner. After the audit is thoroughly done, the auditor submits a detailed audit report with opinions and inferences of the financial statements in a format prescribed by the Institute of Chartered Accountants of India. The report must not contain any misstatements, ambiguous or misleading statements.
The audit report first mentions the legal name of organization/individual and the details of the financial statements being audited. Every tax audit report along with other headings as per format, must have these three heads: ‘Management’s Responsibility for the Standalone Financial Statements’, ‘Auditor’s Responsibility’ and ‘Report on Other Legal and Regulatory Requirements’. The auditor, in case of any negligence brought forward, may be held accountable. Thus, the auditor must be coherent in his opinions and must act independent of any factors.
Objectives of Tax Audit
Tax audit is being conducted to achieve the following:
- A proper system ensures maintenance of its record of income, revenue, expense etc in a correct and verified manner.
- Tax audits minimize the risk of frauds and other illegal practices
- In case of discrepancies, there is an ease of methodical examination of the well-maintained record.
- It also facilitates the implementation of tax laws during routine verification since proper presentation of accounts saves time of the assessing officer
- Also, be noted that failure to comply with the Income Tax rules attracts penalty, thus tax audits for compliance are a wise choice
Penalty for Non-Compliance
According to section 271B of the Act, if any person who is required to comply with section 44AB, does not do so, as per the prescribed manner, a penalty may be imposed by the Assessing Officer which may be:
(a) 0.5% of the total turnover, sales or gross receipts, in business, or of the gross receipts in profession of an individual, in such year or years as under scrutiny, OR
(b) Rs. 1,50,000.
Whichever is lower
Though, there may not be penalty imposed a reasonable and bonafide cause for such failure is brought forward.
Source url – https://penzu.com/public/fce08de3