Clause No.
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Points for Consideration
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1
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Name of the Assessee
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2
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Address
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3
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Permanent Account No.
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4
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Obtain the list and
verify the various indirect taxes payable by the assessee, (Excise, Service Tax,
VAT, and Customs etc.) and verify their registration number from the
registration certificates. Consider if any other indirect taxes that may be
applicable and whether they need to be reported under this clause.
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5
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Status
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6
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Previous Year Ended
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7
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Assessment Year
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8
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Relevant clause of Section 44AB under which audit is conducted. If there are
more than one clause applicable, then mention both the clauses.
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9
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-
Verify Deed of
Partnership for the names of the partners and their profit sharing ratios.
Disclose change/s in the ratio. Ratio for sharing losses, if different from the
profit sharing ratio, should be disclosed.
-
Cross verify the names
of the partners and their profit sharing ratios with that in the accounts of the
current year and that of the previous year to ascertain any change.
[Firms includes Limited
Liability Partnership (LLP) also]
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10
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-
Obtain list of
activities /principal lines of business from client and changes from previous
year (if any) (i.e. both new and discontinued businesses)
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Verify above with the
financial statements of the current year, board and general meeting minutes, and
previous years Return of Income.
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Identify and disclose
new activities in pre-operative stage, even if no revenues are generated from
the same. For this purpose scrutinize accounts such as capital w.i.p.,
pre-operative expenditure, interest costs, etc.
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Check if the client
carries out more than one business or profession during the previous year, even
if discontinued with in the year.
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Disclosure :
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Under broad heads viz.,
manufacturing, trading services and financial services
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Nature of product/
services under each broad head.
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11
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For persons carrying on
legal, medical, engineering or architectural professions or the profession of
accountancy or technical consultancy or interior decoration or authorized
representative or film artist or company secretary or the profession of
information technology the following books are prescribed u/s 44AA:
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cash book;
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journal, if the
accounts are maintained according to the mercantile system of accounting;
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Ledger;
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Carbon copies of bills;
and
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Original bills wherever
issued to the person and receipts in respect of expenditure incurred by the
person.
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Obtain list of books of
account maintained by the assessee. If books of account maintained on computer
then obtain certificate from software developer/vendor for books of account
generated by the computer.
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Compare list of books
maintained with previous year’s schedule.
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Disclose only those
books that are verified.
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Check whether the
address of place where books are kept is mentioned.
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12
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Profit and gains
assessable on presumptive basis would be of the following businesses:
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Civil Construction
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Plying, hiring or
leasing of goods carriages
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Retail business
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Shipping business in
case of non-residents
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Business of
exploration, etc. of mineral oils
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Operation of aircraft
in case of non-residents
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Foreign companies
engaged in the business of civil construction, etc., in certain turnkey
projects.
Also to be included in
the above list:
Profit and gains
assessable on presumptive basis would be of the following professions
Scrutinize the income
accounts for the nature of income to ascertain whether the same would fall in
any of the above categories and the conditions/requirements prescribed under the
Income Tax Act, 1961 are satisfied /complied.
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13
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-
Verify Notes to Account
for disclosure of significant accounting policies.
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Compare with previous
year’s tax audit report for basis adopted.
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Scrutinize Notes to
Accounts, Auditors’ report and CARO for change in method of accounting and the
quantification thereof.
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Disclose details of
deviation in the method of accounting employed (based generally on ICAI
Standards) in the PY from the standards prescribed under Section 145. Presently,
the following standards are prescribed:
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14
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-
Ensure disclosure is
consistent with Significant Accounting Policies under Notes to Accounts.
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Check that the
following is included in the valuation of stocks: tax, duty, cess or fee (by
whatever name called).
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If the items mentioned
in (ii) above are not included, then quantify the effect thereof on opening and
closing stock valuation.
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The effect on the
profit and loss account of deviation from method of valuation prescribed under
Section 145A should be given individually on the opening and closing stocks.
Both the effects should be disclosed separately and not netted off. In case of
netting off, there should be proper disclosure.
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15
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-
Verify whether the
assessee has converted any capital asset into stock in trade by scrutinizing the
Assets accounts,
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Obtain the list of
assets converted into stock in trade,
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Verify the date of
acquisition and cost of acquisition with the supporting documents
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Obtain the amount at
which it is converted into stock in trade
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Disclosure:
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List of assets
converted in stock in trade including description,
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Date of acquisition of
each asset,
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Cost of acquisition for
each,
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Amount at which the
capital asset is converted into Stock in trade.
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16 a)
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Scrutinize liability
and capital reserve accounts to ascertain any amount in the nature of income.
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Scrutinize audit report
and notes to accounts for comments, if any, on deferment/non-accounting of
income.
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Identify whether the
business of the assessee enjoys the benefit of any import license, cash
assistance for exports, claims for duty drawback, Performa credits, refunds,
etc.
-
Verify whether income
when (i) to (iii) above is accrued, in accounts, if due. If not accounted,
quantify separately.
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Review the items of
financial statements that considering the propriety of transaction, would be
generating revenue but are provided free of cost or at subsidized rates.
Disclose such items separately and quantify the effect wherever possible.
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Discuss with the
management by making prima facie inquiry of any facilities or other benefits
provided to others out of gratis or otherwise.
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b)
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Discuss with the
management for any of the above claims admitted as due by the authorities
concerned at the year end.
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Verify whether the
above claims have been credited to the profit and loss account and, if not,
obtain reasons.
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Scrutinize subsequent
receipts of customs or excise refunds, drawbacks and refund of sales tax.
Ascertain when these claims were admitted as due by the authorities concerned.
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Verify recent sales tax
assessment orders to determine whether any refund is due.
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Cross check with notes
to accounts and qualifications in auditors report for such credits.
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c)
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Check the accounting
policy followed for accounting for escalation claims as also any adverse
comments in auditors’ report / notes for non-accounting of claims.
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d)
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Scrutinize the notes to
account and auditors’ report for any undisclosed / unaccounted revenue / income.
(Refer items listed in Section 2(24)).
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e)
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Review items
representing credits in the nature of capital receipt particularly those
credited to capital reserve.
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Check whether any of
these could be credited to revenue under tax laws. If yes, ensure appropriate
disclosure.
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17
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-
Check whether any land
or building or both has been transferred by the assessee during the previous
year by verifying from the statement of profit or loss / balance sheet.
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Verify the
consideration received / receivable by the assessee from his bank account /
agreement entered by him.
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Obtain the assessable
value of the property adopted by state government for stamp duty. The copy of
the registered document will give the evidence of the same.
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If the stamp duty value
as on the date of agreement is taken for valuation of consideration, check
whether the consideration has been received by A/c payee cheque or draft or by
electronic clearing system on or before the date of transfer and ensure that the
date of agreement and date of registration of transfer are not the same
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Reporting under this
clause is required to be made only if consideration for transfer is less than
value adopted or assessed by any authority of state government.
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18
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-
Obtain a schedule in
the form required under the clause. Description of asset / block of asset should
be under the following heads:
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Identify the opening
block of WDV from previous year’s return of income.
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Check/vouch adjustments
to the block of fixed assets during the year from statutory audit file or
relevant supports.
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Identify separately and
vouch for adjustments on account of the following:
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CENVAT, from RG 23A
Part II and RG 23C Part II registers
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Change in rate of
exchange of currency, from the financial statements/audit work papers
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Subsidy / grant /
reimbursement, etc., verify the scheme under which it is received and ensure
appropriate treatment in books.
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Confirm whether rates
and amount for claim of depreciation are as per Section 32 and Rule 5 of the
Income Tax Act and Rules respectively.
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19
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Discuss whether any of
the sections referred are applicable to the assessee. The business
activities/expenditures covered are:
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Manufacturing or
Production Company (32AC)
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Growing and
manufacturing of tea (33AB)
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Prospecting/extraction/production of petroleum and/or natural gas (33ABA)
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Scientific research
(35)
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Telecommunication
services (35ABB)
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Eligible projects or
schemes for promotion of social and economic welfare (35AC and rules 11F to
11-O)
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Cold Chain facility,
Warehouse for agricultural produce, laying a cross-country pipelinefor
distribution of natural gas, crude oil or petroleum, Building a 2 Star or above
hotel or a hospital with at least 100 beds, etc (35AD)
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Rural development
programmes (35CCA)
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Conservation of natural
resources (35CCB)
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Expenditure for
agricultural extension project (35CCC)
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Expenditure on any
skill development project other than of the nature of cost of land or building,
incurred by company (35CCD)
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Preliminary expenses
(35D)
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Amortization of
expenditure in case of amalgamation/demerger (35DD)
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Amortization of
expenditure incurred under voluntary retirement scheme(35DDA)
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Prospecting/extraction/production of any minerals (35E)
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Scrutinise general
ledger for items of allowable expenses, particularly those in the nature of
capital expenditure, which under tax laws are allowed as deduction (e.g. licence
fees, preliminary expenses as defined under 35D)
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Check depreciation
schedule for any capitalized asset is claimed as an allowance under tax laws and
ensure separate disclosure.
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Ensure appropriateness
of deductions (particularly weighted deductions) claimed under the relevant
sections
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Additionally, the
auditor is now asked to check the compliance with conditions of relevant
sections, circulars, notification, guidelines issued for each of the aforesaid
sections for which the deduction is claimed.
For items in (i) above,
verify and classify items which have been charged to current statement of profit
and loss, and those that are not.
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20 a)
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-
Obtain a schedule of
bonus, exgratia and commission paid/payable to employees stating the name of the
employee, designation, amount of bonus/exgratia/ commission paid/payable, etc.
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The particulars should
be disclosed only if the above are payable in lieu of dividends or profits.
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20 b)
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Check payroll records
for any deductions on account of provident fund, superannuation fund, ESIC or
contribution towards any other fund for the welfare of employees.
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Obtain and verify chart
for employees contribution towards the above funds with their respective due
dates and actual dates of payment.
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21 a)
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Scrutinize audited
accounts and schedules for expenditures for any expenditure of capital or
personal nature:
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Repair & Maintenance
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Travelling expenses
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Salaries & Wages
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Stores & spare parts
consumption
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Depreciation
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Legal, Professional &
Consultancy charges
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Filing Fees
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Capital losses written
off
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Miscellaneous
Expenditure written off (Balance Sheet item)
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Miscellaneous/general
expenses, for capital expenditure written off.
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Computer software
expenses to ensure that it does not include any system software.
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Penalty
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Scrutinize
schedules/vouchers for expenses like – Staff Welfare, Entertainment, Rent,
General Expenses, Sales Promotion, Travelling, Hotel & Club bills, Guest house
expenses, Drivers Salary, Telephone expenses, Electricity expenses and Motor Car
expenses.
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Make prima facie
inquiry about the applicable laws to the organization with the management and
also identify specific statutes based on review of clients business
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Verify from audit work
papers for expenditure in the nature of penalty, fine, illegal payments.
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Verify Income Tax,
Sales Tax, excise, P.F. and other orders for penalty and other payments.
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21 b)
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Obtain statement of
payments made outside India, (with corresponding TDS amount) on account of
interest, royalty, fees for technical services or other sum paid outside India
or in India to a non-resident (other than a company /foreign company) chargeable
under the Act.
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Cross check with
expenditure in foreign currency disclosed in the notes to account.
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Verify whether adequate
tax has been deducted and paid on the above payments. If not, then give details
of non/short deductions.
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For the items of
payments stated in (i) above where tax was not deducted or deducted but not paid
before the prescribed time limit in section 139(1) such payments will be
disallowed and such sum shall be allowed as a deduction in computing the income
of the previous year of payment of tax. Report the list of such inadmissible
amounts.
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In case of payments to
residents of interest, commission or brokerage, fees for professional or
technical services, contractor/sub-contractor on which tax was not deducted or
deducted but not paid before the prescribed time limit such payments will be
disallowed to the extent prescribed in section 40(a)(ia).
Report the list of such
inadmissible amounts.
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STT are inadmissible
for computing income. Verify the amounts based on available information and
report them separately under this clause.
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Disclose the amount of
income tax and wealth tax charged to the statement of profit and loss.
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Obtain an employee wise
statement of salaries paid outside India with corresponding tax withheld and
verify the accuracy of the deduction.
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40(a)(iv) Provident
fund – TDS – Salaries.
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Write appropriate
disclaimer where it was not possible to verify or ascertain certain inadmissible
amounts pertaining to any of the above categories.
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21 c)
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Verify the details of
payments to partners/members for interest, salary, bonus, commission or
remuneration with reference to the deed of partnership/other documents (in case
of AOP or Body of Individuals) and books of account.
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Work out payments in
excess of limits prescribed under Section 40(b)/40(ba) and report the same in
the Statement of Particulars.
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21 d)
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Obtain the list from
client where payments were made otherwise than by a/c payee cheque/draft of
amounts more than ₹ 20,000/- in cash or by cheques /drafts which are not
crossed.
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Cross verify the list
given by the assessee with the bank statements.
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Scrutinize cash book to
ensure completeness and accuracy of list provided by the assessee.
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Independently look for
such payments in cash that may not be included in the list provided by the
assessee.
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Check whether any
expenditure which were allowed in any previous year on accrual basis and were in
excess of ₹ 20,000/-, were paid in subsequent year by a/c payee cheque/draft
only.
(in case of
transport business as defined in this section the limit should be taken as ₹.
35,000)
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21 e)
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-
Obtain schedule for
provision for payment of gratuity.
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Cross tally schedule
with the amount as per audited accounts.
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Check the provision for
gratuity which has become payable to employees who have left the services.
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Check the actual date
of payment in case of funds set up by the Company and the due date as per the
trust deed.
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Indicate the following
separately
a. Provision towards
approved gratuity fund contribution
b. Provision for
gratuity that is due and payable during the year.
c. Other provisions.
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21 f)
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-
Obtain list of payments
made by an employer towards the setting up or formation or contribution to any
fund, trust, company, etc., other than:
-
Recognized provident
fund.
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Recognized gratuity
fund.
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Recognized
superannuation fund.
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As required by or under
any other law.
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Indicate in the
Statement of Particulars the payments made by the employer other than those
mentioned in (i) above
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21 g)
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Scrutinize liability
accounts to identify any liability of contingent nature debited to the profit
and loss account.
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21 h)
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Does the assessee have
any exempt income,
-
If ‘yes’ then verify
whether the assessee has incurred any expenditure to earn exempt income,
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Consider the account
head that are likely to contain expenditure relating to such income and
scrutinize them,
-
If there is any
expenditure relating to such exempt income then such expenditure incurred should
be disclosed under this point and added back to the taxable income.
In case of composite
business the expenditure relating to the exempt income should be determined as
per method to be specified by CBDT.
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21 i)
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Has the assessee
accrued/paid any interest on loan borrowed,
-
Ascertain the purpose of
such loan,
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Where the amount is
borrowed for capital asset which is still not put to use ensure that such
amounts are not treated as expenses,
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This inadmissible amount
should be shown in this point
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In case the asset for
which any amount is borrowed and it is put to use during the year under report
then apportion the amount of interest on time basis.
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22
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Do the audited annual
accounts of the assessee disclose the interest paid or payable under the Micro
Small and Medium Enterprises Development Act, 2006 (MSMED Act)?
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If the assessee is not
audited under any other law, then while preparing the annual accounts the
assessee would have to compile the details of amount of interest paid/payable
under the MSMED Act and disclose the same in the accounts in accordance with the
said Act. Ensure that a separate classification of such suppliers of
goods/services is maintained by the assessee. A separate ledger account for such
interest would be desirable. The auditor should verify the manner in which the
amount is determined so that it is complete and correct and in alignment with
the MSMED Act.
-
The amount so determined,
should be reported under this clause for disallowance.
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23
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-
Obtain duly certified
list of persons specified under Section 40A(2)(b) and cross tally with previous
year’s list. Also check whether the entities/parties listed in the register
maintained under Section 189 of the Companies Act, 2013 or referred to in any
Board Minutes fall in category of specified persons.
-
Obtain list of
expenditures in respect of which payment has been made or is to be made for
goods, services and facilities (including remuneration and interest to partners)
to the above mentioned category of persons and check with:
-
Agreements/authorization.
-
Vouchers/entries in the
general ledger
-
Personal accounts of the
parties
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24
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-
Confirm the workings of
profits and gains as per the requirement of these sections.
-
In respect of section
33ABA verify from the accountants’ report required under sub section (2) of this
section
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25
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-
Obtain a statement of
written back during the year. Inquire whether allowance in tax returns was
claimed in earlier years.
-
Scrutinize other income
and reserves account and report receipts, upon succession of business.
-
For Power
Companies only - In case of sale of fixed assets, check whether the
sale value exceeds the WDV of that particular asset. If yes, report difference
under this clause. However, this should be restricted to the difference between
cost and WDV of that particular asset.
-
In case of sale of assets
used for scientific research, the excess of sale proceeds (together with
deduction under 35(2)(i), 35(2)(ia), 35(2B)(c)) over capital expenditure; or the
amount of deduction above, whichever is lower should be reported.
-
Obtain a statement of
recovery of debts earlier written off. Report to the extent amount allowed as
deduction in the past assessments.
-
In case assessments are
not complete for the years in respect of which bad debts are recovered, ensure
appropriate disclosure by way of note.
-
Obtain list of amounts
withdrawn from special reserve created under section 36(1)(viii) with
corresponding deduction allowed in earlier assessments. Report with note as
discussed under verification point (vi) above.
In case business (in
respect of which all the above income is received) is discontinued, any
unclaimed loss (other than speculation loss) of the year in
which the business is discontinued for that particular discontinued business can
be set off against these incomes. Consider the effect of the same in the
computation under this clause.
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26
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-
Scrutinize previous
year’s tax audit report, current liabilities & secured/ unsecured loans (for
interest accrued and due) to identify any of the following amounts pertaining to
earlier years:
-
Tax, duty, cess or fee
(by whatever name called) levied under any law (e.g. excise duty provision,
customs duty, service tax, electricity duty, R&D cess, textile cess, municipal
taxes, profession tax, octroi duty, etc);
-
Any sum payable by
employer by way of contribution to provident fund or super-annuation fund or any
fund for the welfare of employees
-
Bonus or commission
payable to employees;
-
Interest payable on any
loans or borrowings from public financial institution, state financial
corporation or industrial investment corporation, and
-
Interest payable on term
loans availed from a scheduled bank.
-
Leave encashment
-
Any sum payable by an
employer in lieu of leave at the credit of employee
-
Any amount paid to the
Indian Railways for the use of its assets
-
Verify payments relating
to above (not allowed as a deduction in the earlier assessment years) with
relevant supports viz. challans, receipts, bank advise, etc. Also disclose
amounts unpaid out of above.
-
For expenditures
mentioned in (i) above debited to profit and loss account (including those not
routed through the profit and loss account) of the current year, determine the
amount remaining unpaid (i.e. shown as liabilities) as at 31st March.
Also verify amounts paid subsequently on or before the filing of return of
income, and balance outstanding.
-
In respect of any tax,
duty, cess or fee reported in clause 21(i) it is necessary to state whether it
is routed through the profit and loss account. For this refer to the accounting
policy on sales to confirm if sales include excise duty, sales tax, service tax,
etc.
-
Verify report under CARO
for any statutory dues remaining unpaid.
|
27 a)
|
Purchase of goods and
materials
-
Document the system of
accounting excise at the time of purchase of goods and materials, point of
availment or utilization of CENVAT credit and entries passed at the time of
availment/utilization of cenvat credit.
-
Quantify and verify from
excise records the amount of cenvat credit available for the year, amount
utilized and the balance outstanding.
-
Provide a summary of
above account with description and ensure disclosure of the same.
|
27 b)
|
-
Check the items under the
head prior period adjustments, or check the notes on accounts to ensure whether
any expenditure or income of prior year is debited or credited to profit and
loss account.
-
Reference to be made to
the method of accounting followed by the organization and stated at clause 11 of
form 3CD.
In case of cash
system of accounting, there will not be any item appearing under this clause
|
28
|
-
Enquire with client and
check whether during the previous year, assessee has received any property,
being share of a company not being a company in which the public are
substantially interested, (this clause is applicable only to firm or company in
which public are not interested)
-
Check the ledger accounts
for investment and stock in trade. Check for the movements in these accounts to
ascertain as to whether any shares covered under this clause are received.
-
Check whether the same is
received without consideration where the aggregate FMV of which exceeds ₹ 50,000
-
or for inadequate
consideration i.e at a value which is less than FMV of the property by amount
exceeding ₹ 50,000
-
Scrutinize the bank
payments for any payments, which are in connection with purchase of any shares.
|
29
|
-
This clause will be
applicable only in case the assessee is a closely held company, which during the
previous year received the consideration for issue of shares.
-
Check whether any shares
were issued during the year.
-
Obtain the value at which
shares are issued.
-
Obtain the Fair Market
value of the shares issued.
-
Check whether the issue
price / consideration received of the shares is more than Fair Market value.
-
In case the issue price /
consideration for issue of shares exceeds the FMV the difference shall be shown
as chargeable to tax under section 56(2)(viib)
|
30
|
-
Obtain a statement of
hundis borrowed and repaid during the year with the mode and amount of each
individual payment.
-
Also, check the mode of
payment of interest due on hundi during the year.
-
Obtain loan
confirmations.
-
Disclose all payments
made for above otherwise than by account payee cheque. The amount so borrowed or
repaid shall be deemed to be the income of the person borrowing or repaying.
-
Ensure disclosure of
standard note of the firm for our inability to verify whether the payments are
done through account payee cheque or not.
|
31 a)
|
-
Obtain statement in the
required format and check with relevant accounts in general ledger.
-
Scrutinize loan accounts,
current account and deposit accounts for similar items.
-
Scrutinize advances
account to find out whether such advances are in the nature of
loans/deposits/specified sum*.
-
Obtain loan
confirmations.
-
Disclose particulars of
loans/deposits/specified sum* taken in excess of ₹ 20,000 during the year.
*“Specified sum”
means any sum of money receivable, whether as advance or otherwise, in relation
to transfer of an immovable property, whether or not the transfer takes place.
This amendment is with effect from 1st
June, 2015.
|
31 b)
|
-
Obtain statement in the
required format and check with relevant accounts in general ledger.
-
Scrutinize loan accounts,
current account and deposit accounts for similar items.
-
Ensure that all the
items, which are covered under 31 (a) above and in respect of which repayment
(including specified advance*) is made during the year, disclosure is made under
this clause.
*“Specified advance”
means any sum of money in the nature of advance by whatever name called, in
relation to transfer of an immovable property, whether or not the transfer takes
place. This amendment is with effect from 1st
June, 2015.
|
31 c)
|
-
Obtain a certificate from the
assessee that all the loans or deposits or repayments of loans have been made
through an account payee cheque or an account payee bank draft or by use of
electronic clearing system through a bank account (i.e. by way of internet
banking facilities or by us of payment gateways). – Inserted by Finance
Bill 2014
-
No certificate is required if
repayment of any loan or deposit taken or accepted from Government, Government
company, banking company or a corporation established by a Central, State or
Provincial Act
|
32 (a)
|
-
Verify the last return of income
filed, and make a list of all the carry forward losses.
-
Verify the recent assessment orders
and ensure that the effect of such assessment, so far as applicable to the carry
forward losses and depreciation, has been properly dealt in the annexure
prepared.
-
Ensure disclosure of amount of
carry forward loss being subject to change on account of open assessments.
Include status under appeal under Remarks column.
-
Get the annexure so prepared
verified by the audit Group.
|
32 (b)
|
-
Is there any brought forward loss?
If no b/f loss is there then skip this point,
-
Is the assessee other than company
in which the public is substantially interested?
-
If ‘yes’, then is there any change
in the share holding pattern carrying voting rights compared to the year whose
loss is sought to be set off?
-
Is the above change 51% or more on
the last day of the year under report?
-
If yes then report the
same under this clause.
-
Such b/f loss will not be
admissible for setoff. It should be noted in the Return of Income and suitably
disclosed.
|
32 (c)
|
-
Verify if there is any speculation
business conducted by the assessee.
-
Report any speculation loss
incurred and falling within the ambit of section 73
|
32 (d)
|
-
Check the various business
activities carried out by the assessee, by scrutinizing the various incomes and
expenses of the assessee.
-
Check whether the assessee is
engaged in any business, which is specified U/s 35AD of the Income Tax Act.
-
If the assessee has incurred any
loss from such business, the same is required to be reported under this clause.
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32 (e)
|
-
Check the various business
activities carried out by the assessee, by scrutinizing the various incomes and
expenses of the assessee.
-
Check whether the assessee is
engaged in any business, which involves the purchase and sale of shares of
companies.
-
If the assessee has incurred any
loss from such business, the same is required to be reported in this clause.
-
There are however two exceptions to
this deeming fiction — one is for a company whose gross total income consists
mainly of income which is chargeable under the heads ‘Interest on Securities’,
‘Income from House Property’, ‘Capital Gains’ and ‘Income from Other Sources’
and the second is for a company the principal business of which is the business
of banking or the granting of loans and advances.
|
33
|
-
Verify the return of income of
earlier years to ensure that all the deductions claimed in the previous year,
and if applicable in the current year, have been disclosed.
-
Scrutinize the current year
financial statements and audit work papers for identifying any claims available
under the chapter.
-
In respect of sections under which
independent certificates are required, ensure that a copy of the same is put on
the file.
-
Ensure full particulars of
deductions with quantification thereof are verified and signed off by audit
staff.
|
34 (a)
|
-
Obtain a statement of TDS deducted
showing the particulars of the head under which tax is deducted.
-
Identify various heads of expenses
where there is a likelihood of TDS liability and scrutinize those accounts to
ensure that wherever TDS was liable to be deducted, is deducted and deducted
correctly, (Ensure you have the correct heads and rate chart including
changes if any during the year)
-
Check the relevant vouchers,
challans of payments.
-
Scrutinize relevant accounts for
expense heads such as salaries, interest, royalties,
contractors/sub-contractors, professional technical fees etc.
-
Specify the section under which TDS
is required to be deducted, nature of payments, and total payment of such
nature.
-
Out of the above payments, check
the total amount on which TDS is required to be deducted, amounts on which TDS
is actually deducted and deposited.
-
Scrutinize the ledger to obtain
instances where tax is deductible but it is not deducted or there is short
deduction.
|
34 (b)
|
-
Obtain the receipts /
acknowledgements of the various TDS return filed by the assessee during the
year.
-
Check whether the returns are filed
within the due dates specified under the act.
-
Cross verify the TDS and gross
amount on which TDS is required to be deducted as specified in the
acknowledgement with the books of accounts, to ensure that all transactions on
which TDS was required to be deducted are shown in the quarterly returns.
-
In this regards Scrutinize the
accounts as specified in clause 34(a) above.
-
The details in this clause are
required to be given only if the assessee has not filed the TDS returns on time.
|
34 (c)
|
-
Obtain the payment challans to
Verify whether the TDS / TCS deducted / collected has been deposited within the
time limit specified in the Act.
-
Verify in case of delay, the
calculations of interest payable for default and whether such interest is paid
by the assessee.
|
35 (a)
|
-
Verify whether the quantitative
information is given as per stock records maintained by the assessee or compiled
from financial statements.
-
Verify that at least the items,
which constitute more than 10% of the value of purchases or consumption or
turnover as the case may be are disclosed as a separate item.
-
The information about percentage of
yield, shortage of raw materials as well as shortage and percentage of finished
products to be given to the extent data is available from the assessee’s
records. Non-receipt of particulars, if any, should be stated.
|
35 (b)
|
Verify quantitative details of
finished goods from the notes to account.
|
36
|
-
Ensure that total amount of profits
distributed and the tax paid thereon is as per the audited profit and loss
account.
-
Verify and obtain copy of challan
for payment of tax and date of payment.
-
Report the dates of payment in
respect of tax on dividend.
|
37
|
-
Verify the Annexure to Auditors
Report under CARO to see the comments in relation to cost records / accounts
were made / maintained as under Section 148 of the Companies Act, 2013. Review
the comments of the auditor under this clause.
-
In case a cost audit was required
and also carried out, a copy of the same should be attached to the Tax Audit
Report.
-
In case of any disqualification or
disagreement on any matter / item / value / quantity as may be
reported/identified by the cost auditor needs to be specified in this clause.
(The issue is vexed as to whether there exists a disqualification and same will
depend upon individual skill of the tax auditor).
|
38
|
-
Inquire with the client, whether
any audit conducted under the Central Excise Act, 1944. Include whether audit
under Central Excise Act, 1944 has been conducted or not in the letter of
representation.
-
If above audit has been conducted
then attach copy of the same to the Tax Audit Report.
-
In case of any disqualification or
disagreement on any matter/item/value/quantity as may be reported/identified by
the auditor needs to be specified in this clause.
|
39
|
-
Inquire with the client, whether
any audit conducted under the section 72A of the Finance Act 1994, in relation
to value of taxable service. This audit is generally sought by the commissioner
on valuation matters and therefore it appears that this clause is restricted to
such matters.
-
If yes obtain the copy of the
report.
-
In case of any disqualification or
disagreement on any matter/item/value/quantity as may be reported/identified by
the auditor needs to be specified in this clause.
|
40
|
-
Verify figures required for the
purpose of ratios from the audited accounts and ensure that they are
consistently followed.
-
Give particulars of the components
of the amounts considered in the ratios.
-
The manner of arriving at gross
profit and net profit should be disclosed and followed consistently.
-
Finished goods produced would be
derived by the following formula :
-
Turnover
|
xxx
|
Less: Gross Profit
|
xxx
|
Add: Closing Stock Finished of
goods
|
xxx
|
|
xxx
|
|
xxx
|
Less: Opening stock of Finished
goods
|
xxx
|
Finished goods produced
|
xxx
|
The stock figures should be taken
as per books of account and not the adjusted number as per section 145A.
This clause requires comparative figures for the preceding previous year. In a
situation where the assessee was not liable for tax audit in the preceding
previous year appropriate note may be incorporated.
|
41
|
-
Inquire for all demand or
notices received during the year under income tax / wealth tax or under any
other tax laws raising the demand on the assessee.
-
Check the bank statements
of the assessee to ascertain any refund has been received under any tax laws.
-
Obtain representation
from the management as regards the proceedings under various tax laws and also
obtain the list of consultants who are representing the assessee in such matter.
-
If required also obtain
from each such consultants confirmation about the proceedings under various tax
laws.
-
The details of demand or
refund have to be provided even if the assessee has appealed against such
proceedings.
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