What is tax audit?
The provisions for an Income Tax audit are covered under section 44AB of the Income Tax Act of 1961. The Income Tax audit is an examination of an individual’s or organisation’s tax returns by any outside agency to verify that all the income, expenditure and deduction information are filed correctly. Tax audits have been made mandatory by the Income Tax Act that states that all taxpayers are required to get the accounts of their business or organisation audited according to the provision of the act.
Under section 44AB, the audit aims to ascertain the factual veracity of returns filed and the accomplishment of other requirements as per applicable rules. The Chartered Accountant performing the tax audit has to submit all his/her findings and observations in the form of an audit report. The audit report is given as per format available in the form numbers 3CA/3CB and 3CD.
Section 44AB gives the provisions concerned to the class of taxpayers who are required to get their accounts audited from a chartered accountant.