Tax Audit Due Date should be extended? Penalty for Non-Filing TAR

The Due Date for filing Tax Audit Reports (TAR) as per the Income Tax Act for Financial Year 2022-23 (Assessment Year 2023-24) is 30th September 2023.

21 Basic Income Tax Audit Checklist Points

Some reasons why the due date should be extended:

Many other Due Dates

Well, 30th September is not only the due date for TAR but other compliances as well. The other compliances to be done by 30th September are:

• The due date for conducting the Annual General Meeting (AGM) is on or before the 30th of September, 23 following the end of the financial year.
• The due date for furnishing of challan-cum-statement in respect of tax deducted under section 194-IA, 194-IB, 194M, 194S in the month of August 2023
• Extended due date for filing Quarterly statement of TDS deposited for the quarter ending June 30, 2023. The due date of furnishing TDS statement was extended from July 31, 2023, to September 30, 2023, vide Circular no. 9/2023, dated 28-06-2023.
• Extended due date for filing Quarterly statement of TCS deposited for the quarter ending June 30, 2023. The due date of furnishing TDS statement was extended from July 15, 2023, to September 30, 2023, vide Circular no. 9/2023, dated 28-06-2023.
• Every individual who holds DIN as on 31st March 2023 and who has not filed DIR 3 KYC form previously or there is any change wrt KYC details along with email id and mobile number. Every DIN holder who has previously filed form DIR-3 KYC and there is no change wrt KYC details and email id and mobile number.

Common Mistakes Found in Tax Audit Report

Festive Season:

September and October are full of many important festivals. So a 15-day extension would not hurt.

Draft Observations for Tax Audit Report

Extensive Reporting:

The Tax Audit Form requires more extensive reporting, for example in the case of clause 44 and the Tax Professional needs more time to prepare it.

Draft Management Representation Letter for Tax Audit of Non-Corporate Entity

Penalty of non-filing or delay in filing tax audit report

If any taxpayer is required to get the tax audit done but fails to do so, the least of the following may be levied as a penalty: 0.5% of the total sales, turnover, or gross receipts. Rs 1,50,000.

Penalty is not Automatic, but subject to Adjudication.

Draft Management Representation Letter for Tax Audit

Penalty will not be levied if the taxpayer is able to give reasonable cause for not filing the TAR. Some of the instances where Tribunals/Courts have accepted as “reasonable cause” are as follows:

(a) Resignation of the tax auditor and consequent delay;
(b) Bona fide interpretation of the term `turnover’ based on expert advice;
(c) Death or physical inability of the partner in charge of the accounts;
(d) Labour problems such as strike, lockout for a long period, etc.;
(e) Loss of accounts because of fire, theft, etc. beyond the control of the assessee;
(f) Non-availability of accounts on account of seizure;
(g) Natural calamities, commotion, etc.
(i) Resignation of the accountant and his consequent non-cooperation.
(j) Official E e-filing portal (of the Income-tax department) failure

Draft Disclosures of ICDS in Tax Audit Report as compiled by CA Nitin Kanwar