Jamshedpur, Aug 22: With the Income Tax department putting more and more reliance on technology and with the launch of faceless assessment the Tax audit report preparation and filling is a very big source for the department for selection of cases under scrutiny under CASS selection process.
Every year there are changes in the Act and similarly from time to time the Tax audit form which started with only 13 points covered for information to be filled in form 3CD now has over 44 points and if we take the sub points there are more than twice. The Income tax department has over the years shifted the entire onus of determination of correct income on the CA�s through the Tax Audit report.
With Income Tax returns getting more information based and very cumbersome and lengthy as against earlier years and through various information gathered by the department from other departments etc. it has become still more difficult to complete a tax audit of a client, whatever the size may be.
Now with faceless assessment coming in it would be imperative for CA�s to ensure that they reconcile all the GST returns, TDS returns, all other information given by the clients by way of specified financial transactions etc.
The tax audit for the current year would be more challenging due to Covid -19 as due to lockdown the verification of physical stocks, cash in hand etc. of clients could not have been carried out on 31.3.2020. Further due to terms of moratorium of bank loans, the disallowances of expense u/s 43B will have to be seen on a case to case basis that whether the same is restructuring of loans as there has not been any corresponding amendment u/s 43B. Several businesses, which continued in 2019-20 would have to be wound up or may have become unviable during the year 2020-21 so the same may have to be seen as a going concern. Several perishable items lying in stocks as on 31.3.2020 would have become bad and so the valuation of stocks at net realisable value would also require diligence.
Thus in these hard time, with increasing compliance burden given by the department, corresponding guidance issues by ICAI and the faceless assessment procedures coming in the current year (more so because of Covid-19) and years to come will require much more efforts and much more diligence on part of each tax auditor, so proper care, accuracy is required and with the lockout still not completely over time will be a big constraint unless audits are done online.
