What is Section 44AB of the Income Tax Act?

Section 44AB of the Income Tax account is related to the Income Tax audit of accounts of individuals whose income exceeds a crore. Thus, if your annual income exceeds one crore, you fall under the ambit of this Act. So you must get a certified chartered accountant to audit your accounts.

The Government of India introduced this Act to help the assessing officers of the Income Tax department compute the total taxable income of professionals quickly.

1. If you are not submitting the Income Tax Audit Report under Section 44AB of the Income Tax Act, you are liable to pay the penalty of 0.5% of the total annual turnover. The maximum penalty you have to pay is Rs 1.5 Lakhs for non-compliance with the Income Tax Audit Report under Section 44 AB.

2. If the reason for non-compliance with the Income Tax Audit Report is valid, the IT Department of India cannot ask you to pay the penalty under section 271B. The following are the reasons for non-compliance are taken into consideration by the Income Tax Department of India:

   • If there is a delay in the income tax audit from the side of the authorised CA

   • If there is a delay in submitting the income tax audit report by you due to the unfortunate demise of the auditor or CA

   • Suppose there is a delay in submitting the income tax audit report because the auditor or CA does not have access to operate your account. The reason for the same may be riots, strikes, theft, etc.

   • If there is a delay in the income tax audit report due to unforeseen disasters or a natural calamity

• All individuals whose net income worth exceeds the taxable income limit, irrespective of the turnover in the preceding financial years, are liable to get their accounts audited as per Section 44AB of the Income Tax Act.

• All those individuals whose annual income is lower than the taxable limit set by the government of India are also liable to get their accounts audited from the certified chartered accountants.

• All those individuals whose income is not crossing the taxable limit, but the assessing officer wants to audit the accounts of an individual. The officer can do it by passing an order under Section 142(2A) of the Income Tax Act.

Here is the list of the forms you have to submit under Section 44AB of the Income Tax Act. These forms are submitted according to rule 6G of the Income Tax Act:

• Form Number 3CA: Audit form

• Form Number 3CD: This form reflects the statements showing various particulars

All those individuals whose accounts are not part of the taxable limit, but the assessing officer passes the order to get the accounts audited. They are required to fill the following forms:

• Form Number 3CB: Audit form

• Form Number 3CD: This form reflects the statements showing various particulars

Individuals who submit the tax audit report under Section 44AB of the Income Tax Act must do so by the 30th of September of each assessment year. Make sure you are e-filing the income tax audit reports.

Can individuals revise the already submitted income tax audit report even if it is carried out according to Section 44AB of the Income Tax Act?

No, there is no provision for revising the Income Tax Audit report after being submitted. One can only modify the income tax audit report if the IT Department issues any amendment. Moreover, in such cases, only the authorised auditor or CA can alter the report.

Suppose you submit the Income Tax Audit report under Section 44AB of the Income Tax Act and face the mismatch of the audit flag in XML and application. Then, you have to discard the old version showing the mismatch error.

Make sure that you are not disposing of the old version of the ITR excel utility. Download the latest version of the ITR excel utility to create XML from the e-filing portal to submit the Income Tax Audit report under Section 44AB of the Income Tax act.

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At Bajaj Markets, you can learn more about the applicability of Section 44AB of the Income Tax act.