Changes Made in New Form 3CD.

Form 3CA, 3CB AND 3CD have been amended vide Notification No. 33/2014 effective from 25.07.2014.
Changes:
Broadly speaking changes have been made with a view to have more information and analysis in standard forms. Many details will have to be furnished in comprehensive, tabular and analytical forms.

Earlier requirement of furnishing detailed information was not prescribed, now for many of relevant items more information are to be given in Tax Audit Report (TAR).
Some changes are to incorporate new provisions or more provisions which are in force but were not covered in TAR. The style and pattern of signature has also been changed and more information are required about the person signing the report.
Effective date:
The amended forms shall come into force on the date of their publication in the Official Gazette of the Notification which is dated 25.07.2014. So it may be applicable to Tax Audit Report for Assessment Year 2014-15 also if the report is tendered after such date.
Major changes:
Some of major Changes having impact of reporting requirements and more detailed working are:

1. Observations and qualifications, subject to which report is given, are to be mentioned in details in the report.
2. Information about indirect taxes applicable and relevant details.
3. Previous year from……………..to …………… will have to be mentioned.
4. More information and analysis in various tables will have to be furnished.
5. In some cases the auditor will have to give his definite answer about amount to be treated as income or amount to be disallowed, violations, and liability to pay interest in relation to TDS and TCS including details of payees will be given.
6. Particular of sale of land and or building and stamp authorities valuation.
7. Comparison of amount debited in P & L account or I/E A/c vis-a-vis amount admissible on account of various deductions will have to be given.
8. Detailed of information will have to be given on amount debited to PL, amount of capital expenses, personal expenses, advertisement.
9. Certain type of losses like speculation loss , deemed speculation loss etc. will have to be given in assertive manner.
10. Adverse reports, qualifications in cost audit report, Central excise audit report, service tax audit report etc. will have to be given by the auditor.
11. More elaborate information u/s 40, 40A, 40A (3) and 40A (3A) will have to be given.
12. Some of deemed income u/s 56 will have to be reported.
13. Detailed information about Dividend Distribution tax will have to be given.
14. Renumbering of clauses have been resorted to incorporate new additions in the reporting requirements.
15. Annexure 1 to Form 3CD has not been retained. Some of information furnished in the Annexure A were just repetition. Some of information were found in audited accounts and also in the form of IT Return filed by assessee. Therefore, the omission of Annexure 1 as an annexure makes no impact on reporting requirement or collection of information.
16. These forms have to be signed by a person eligible to sign the report as per the provisions of section 44AB of the Income Tax Act, 1961, so one must ascertain his eligibility as per S. 44AB.
17. Relevant clause of section 44AB under which the audit has been conducted will have to be indicated.
18. List of books of account maintained and the address at which the books of accounts are kept. In case books of account are maintained in a computer system, mention the books of account generated by such computer system. If the books of accounts are not kept at one location, please furnish the addresses of locations along with the details of books of accounts maintained at each location.

As per revised TAR forms, tax audit will require lot of additional time for checking various aspects, collection of information hided by clients people, elaborate checking, cross verifications will have to be adopted, more exacting responsibility has been cast upon tax auditors. Therefore, naturally tax audit fees will have to be increased. This must be made clear to clients beforehand instead of giving lee ways to client for their consideration about fees, which is unfortunately tendency of many of CA’s and most of clients.
For long time the author is out of practice of audits and tax audits (except as consultant on issues in audits) ; however, he has made an attempt to highlight changes. Readers who are extensively in tax audit functions are requested to contribute in this regard by way of articles, comments etc. for more clarity for benefit of professional friends.
Revised forms 3CA, 3CB and 3CD are reproduced below with highlights in red colour / underlining to point out major changes, new requirements etc.
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