INTRODUCTIONSince the provision for audit u/s 44AB of the Income-tax Act was introduced in 1984, it has occupied centre stage of activity for many CAs in practice. Popularly, it is referred to as Tax Audit. After nearly four decades, while the original provisions and forms may look simple, the task of conducting a tax audit has always been complex. While in earlier years, the complexities revolved around getting the client to prepare proper financial statements from manually maintained accounting records, today, the challenge is getting the client to compile the voluminous details before auditing and reporting these in the complex online utilities.
Before we get into some of the issues one has to tackle while forming a view and reporting on the same; it is important to understand the objective behind the introduction of Tax Audit. The scope and effect of section 44AB were explained by the CBDT in Circular No. 387, dated 6th July, 1984 [(1985) 152 ITR St. 11] in para 17, as under:
“17.2 A proper audit for tax purposes would ensure that the books of accounts and other records are properly maintained, that they faithfully reflect the income of the taxpayer and claims of deduction are correctly made by him. Such audit would also help in checking fraudulent practices. It can also facilitate the administration of tax laws by a proper presentation of the accounts before the tax authorities and considerably saving the time of a
