A STUDY AWARENESS TAX AUDIT AMONG STUDENT

A Project Submitted to

University of Mumbai for partial completion of the degree of

Bachelor in Commerce (Accounting and Finance)

Under the Faculty of Commerce

By
SANDHYA SANTOSH GUPTA
ROLL NO. 15

Under the Guidance of

Prof. Kavita J. Juikar

D.T.S.S. COLLEGE OF COMMERCE

MALAD (EAST), MUMBAI

2020 - 2021

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 Declaration by learner
I undersigned Miss/ Mr. SANDHYA SANTOSH GUPTA hereby declare that the work
embodied in this project work Title” A Study Awareness Tax Audit Among Student”
Forms my own contribution to the research work carried out under the guidance of
Prof. Kavita J. Juikar is a result of my own research work and has not been previously submitted
to any other Degree/ Diploma to this or any other University.
Wherever reference has been made to previous works of others, it has been clearly indicated as
such and included in the bibliography.

I, here by further declare that all information of this document has been obtained and presented
in accordance with academic rules and ethical conduct.

Name and Signature of learner

Certified by (Sandhya Santosh Gupta)
Name and Signature of the guiding Teacher
(Prof. Kavita. J. Juikar)

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 Acknowledgment
To list who all have helped me is difficult because they are so numerous and the depth is so
enormous.

I would like to acknowledge the following as being idealistic channels and fresh dimensions in
the completion of this project.

I take this opportunity to thank the University of Mumbai for giving me chance to do this
project.

I would like to thank my principal, Dr. Sushmita Daxini for providing the necessary facilities
Required for completion of this project.

I take this opportunity to thank our Coordinator shraddha Chavan for her moral support
and guidance.

I would also like to express my sincere gratitude towards my project guide Prof. Kavita Juikar
whose guidance and care made the project successful.

I would like to thank my College Library, for having provided various reference books and
magazines related to my project.

Lastly, I would like to thank each and every person who directly or indirectly helped me in the
completion of the project especially my Parents and Peers who supported me throughout my
project.

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 Table of content
Serial no. Particular Page No.
1. Declaration 2
2. Certificate -
3. Acknowledgement 3
4. Table of content 4-6
5. Index 5-6
6. List of table 7
7. List of Graph/ Diagram/Chart 8
8. Chapter 1 Introduction 9-30
9. Chapter 2 Literature review 31-33
10. Chapter 3 Research methodology 34-37
11. Chapter 4 Data analysis & interpretation 38-56
12. Chapter 5 Finding, conclusion and suggestion 57-59
Bibliography 60
Annexure
Appendix Questionnaire 61-63

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 Index
Chapter Particular Page No.
No.
1 Introduction 9-30
1.1. Introduction of topic 9-10
1.2. origin and evolution 10-11
1.3. Feature of audit 11-12
1.4. Objective of tax audit 12
1.5. Feature of tax audit 13
1.6. Definition 13
1.7. Provision of tax audit 14-16
1.8. Types of tax audit 16-18
1.9. Process of tax audit 19-23
1.9.1. Income tax audit in India 19
1.9.2. Income tax auditor company whose tax audit is not conducted 19
section 44AB of the income tax act ,1961
1.9.3. Categories of taxpayer for whom tax audit is mandatory 20
1.9.4. Tax audit report filling process 20
1.9.5. Rules governing tax audit 21
1.9.6. The following point are to be noted with regarded to tax audit 21-22
1.9.7. Penalty for non-compliance tax audit 22-23
1.9.8. Due date by which taxpayer should get their account audited 23
1.10. From of tax audit 24-30
1.10.1. from no. 3CA 24-25
1.10.2. From no. 3CB 26-27
1.10.3. From no. 3CD 28-30
2. Literature Review 31-33
2.1. Introduction 31
2.2. Published/ Research paper/ Articles 31-33
3. Research methodology 34-37
3.1.Intoduction 34
3.2. Objective of study 34
3.3. Selection of the problem 34
3.4. Research methodology 34-35
3.4.1. Area of research 35
3.4.2. Research design 35
3.4.3. Sampling method 35

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 3.4.4. Sample size 35
3.4.5. Method of data collection 35
3.4.6. Techniques of data analysis 36
3.4.7. Research tool 36
3.4.8. Hypothesis of the study 36
3.5 Scope and signification of the study 36
3.6. Limitation of the study 37
4. Data Analysis, interpretation and Presentation 38-56
5. Finding, conclusion and suggestion 57-59
5.1. Finding & conclusion 57-59
5.2. Suggestion 59

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 LIST OF TABLE
Table Particular Page NO.
NO.
4.1. Age of respondents 38
4.2. Gender of respondents 39
4.3. Qualification of respondents 41
4.4. Respondents know about tax audit 42
4.5. Respondents which can filled to be tax audit 44
4.6. Respondents penalty for non-compliance tax audit 45
4.7. Respondents tax audit comes under which section 46
4.8. Respondents objective of tax audit 48
4.9. Respondents know about limit of tax audit 49
4.10. Respondents ever had on IRS tax audit before 51
4.11. Respondents filled tax return for current financial year 52
4.12. Respondents your ever received a notice of deficiency 53
4.13. Respondents received a notice for personal income 54
4.14. Respondents Format maintain recorded form tax audit assignment 55

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 List of Graphs/Diagrams/ Charts

Table Particular Page NO.

NO.
4.1. Age of respondents 39
4.2. Gender of respondents 40
4.3. Qualification of respondents 41
4.4. Respondents know about tax audit 43
4.5. Respondents which can filled to be tax audit 44
4.6. Respondents penalty for non-compliance tax audit 45
4.7. Respondents tax audit comes under which section 47
4.8. Respondents objective of tax audit 48
4.9. Respondents know about limit of tax audit 50
4.10. Respondents ever had on IRS tax audit before 51
4.11. Respondents filled tax return for current financial year 52
4.12. Respondents your ever received a notice of deficiency 53
4.13. Respondents received a notice for personal income 54
4.14. Respondents Format maintain recorded form tax audit assignment 56

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 CHAPTER-01

INTRODUCTION TO TAX AUDIT

1.1. INTRODUCTION:
A tax is a mandatory fee or financial charge levied by any government on an individual or an
organization to collect revenue for public works providing the best facilities and
infrastructure. The collected fund is then used to fund different public expenditure programs.
If one fails to pay the taxes or refuse to contribute towards it will invite serious implications
under the pre-defined law.

The due date of filing an Income tax return for AY 2020-21 is 31st December 2020 for
Individual taxpayers. For audit, transfer pricing cases and other taxpayers, the due date has been
extended to 31st January 2021.

The levying of taxes aims to raise revenue to fund governing or to alter prices in order to affect
demand. States and their functional equivalents throughout history have used the money
provided by taxation to carry out many functions. Some of these include expenditures on
economic infrastructure (roads, public transportation, sanitation, legal systems, public safety,
education, health-care systems military, scientific research, culture, and the arts, public works ,
distribution, data collection and dissemination, public insurance, and the operation of
government itself. A government's ability to raise taxes is called its fiscal capacity.

When expenditures exceed tax revenue, a government accumulates debt. A portion of taxes may
be used to service past debts. Governments also use taxes to fund welfare and public services.
These services can include education systems pensions for the elderly, unemployment benefits,
and public transportation Energy water and waste management systems are also common public
utilities

According to the proponents of the cartelist theory of money creation, taxes are not needed for
government revenue, as long as the government in question is able to issue fiat money.
According to this view, the purpose of taxation is to maintain the stability of the currency,

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express public policy regarding the distribution of wealth, subsidizing certain industries or
population groups or isolating the costs of certain benefits, such as highways or social security.1

Before understanding what is tax audit, let us understand the term ‘audit’. Dictionary meaning of
the term ‘Audit’ suggests that it is an official inspection of an organization’s accounts and
production of report, typically by an independent body. It is also referred to a systematic review
or assessment of something.

There are various kinds of audit being conducted under different laws such as company audit
statutory audit conducted under company law provisions, cost audit, stock audit etc.
Similarly, income tax law also mandates an audit called ‘Tax Audit’. As the name itself suggests,
tax audit is an examination or review of accounts of any business or profession carried out by
taxpayers from an income tax viewpoint. It makes the process of income computation for filing
of return of income easier.

A tax audit determines whether financial records and transactions are correctly recorded and
accounted for. This, in turn, ensures that the records reflect the actual income of the taxpayer and
that the claims for deductions made are accurate.

1.2. Origin and evolution

Tax audit was introduced in the year 1984. The main purpose was to ensure the accuracy of
books of accounts maintained, which forms the basis of computation of income of the assesses

The onerous responsibility was casted on chartered accountants.

Time and again changes were made in the reporting requirements of tax Audit report which not
only widened the scope of audit to an incredible scale but has also indicated the trust banked
upon the Chartered Accountancy Profession by the Government.

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The authorities also seek the suggestions of ICAI for changes to be made in the reporting
requirements, which are submitted to them from time to time. In fact it was the recommendation
of ICAI and persistent follow up thereof, due to which the system of e-filing of Tax audit reports
became a realty in the year 2013.

The tax audit report is required to be uploaded using digital signature of the tax auditor.

A question may arise whether a tax auditor appointed under section 44AB can be held
responsible if he does not complete the audit and if the taxes audit report is not uploaded before
the specified date. Answer to this question will depend on the facts and circumstances of the
case. Normally, it is the professional duty of the chartered accountant to ensure that the audit
accepted by him is completed before the due date.

If there is any unreasonable delay on his part, he is answerable to the Institute if a complaint is
made by the client. However, if the delay in the completion of audit is attributable to his client,
the tax auditor cannot be held responsible. It is, therefore, necessary that no chartered accountant
should accept audit assignments which he cannot complete within the above time frame.

1.3. FEATURES OF AUDIT:

(a) Systematic Process: Audit is a systematic and scientific examation of the books of
accounts of a business.

(B) Three-Party Relationship: The audit process involves three parties, that is, shareholders,
managers, and auditors.

(C) Subject Matter: Auditors give assurance on a specific subject matter. However, the
subject matter may differ con side ably, such as – data, systems or processes and behavior

(D) Evidence: The auditing process requires collecting the evidence, that is, financial and
non-financial data, and examining thereof.

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 (E) Established criteria: The evidence must be evaluated regarding established criteria,
which include International Accounting Standards, International Financial Reporting
Standards, “GERNELLAY ACCEPTED” Accounting Principle industry practices, etc.

(F) Opinion: The auditor has to express an opinion as to the reasonable assurance on the
financial statements of the entity.

1.4. OBJECTIVE OF TAX AUDIT:

Well, that was all about the objectives of tax audits. We hope that you found this article to be
helpful We all are aware that we will have to go through a tax audit if our turnover exceeds the
prescribed number as prescribed by statute i.e. Income Tax Act 1961.

However, have you ever wondered why there is a requirement for tax audits? Or, what are the
objectives of tax audits? In order to help you out, in this article, we will tell you all about the
objectives of tax audits.

(a) It is conducted to report the requirements of Forms - 3CA/3CB and 3CD, which the tax
auditor has to present in front of the tax authority.

(b) Proper maintenance of the book of accounts and other similar records is another such
objective of tax audits.

(c) It is also done to get a proper record about the income of the taxpayers as well as their tax
deductions.

(d) Tax audits are conducted to facilitate the administration of tax laws by presenting the
accounts properly in front of authorities.

(e) Another objective of tax audits is saving verification time. Tax Audits help save time that is
taken during routine verification, which is an even more tedious procedure than auditing.

If you need any help regarding tax audits in Bangalore, then you can get the touch with some of
the best Chartered Accountants in Bangalore.

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1.5. FEATURES OF TAX AUDIT:

(a) Legal provisions for levy and collection of service tax are indicated in one place.

(b) Principles of auditing of Service tax-payers based on modern methodology are enumerated.

(c) Guidelines are provided for selection of tax-payers for auditing based on risk assessment
technique.

(d) Detailed guidelines are provided for preparation of audit plan before the commencement of
the actual audit.

(e) Various techniques of auditing such as ‘walk through’, ABC Analysis, Revenue Risk
Analysis

(f) Specific guidelines are provided for conduct, preparation, reporting and follow up of audit.

(g) Formats for collection have been prescribed and Trend Analysis are explained.

(h) Check list for service tax auditing has been provided.

(i) Detailed profiles for three major services namely, telephone, non-life insurance and stock
brokers are made as part of the Manual for effective audit.

1.6. DEFINATION:
Tax: Tax is an amount of money that you have to pay to the government so that it can pay
for public services such as road and schools. When a person or company is taxed, they have to
pay a part of their income or profits to the government. When goods are tax, a percentage of their

price has to be paid to the government.

Tax audit: Tax audit is the official examination or audit of the tax department to the tax
return that declares by taxpayers as required by law. Different countries and different
jurisdictions may have different laws and requirements and due so the tax audits process.

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1.7. PROVISION OF TAX AUDIT:

The provisions of Section 44AB have been amended by the finance act 2020 giving rise to major
confusion in the minds of businessmen and professionals alike. A third threshold limit of Rs 5
cores has been added in order to reduce compliance burden on small retailers, traders,
shopkeepers who comprise the MSME sector. In this article I have tried to clarify the provisions
by simplifying the language and presenting the information in the form of a chart. I always
believe that any analysis should begin by reading the bare act. So, first of all, let us read what the
bare act has to say:

Audit of accounts of certain persons carrying on business or profession

44AB every person, —

(A) Carrying on business shall, if his total sales, turnover or gross receipts, as the case may be,
in business exceed or exceeds one core rupees in any previous year

(a) aggregate of all amounts received including amount received for sales, turnover or gross
receipts during the previous year, in cash, does not exceed five per cent of the said amount; and

(b) Aggregate of all payments made including amount incurred for expenditure, in cash, during
the previous year does not exceed five per cent of the said payment.

This clause shall have effect as if for the word one the word five core rupees had been substituted
core rupees.

(c) Carrying on profession shall, if his gross receipts in profession exceed fifty Lakh rupees in
any previous year; or

(d) carrying on the business shall, if the profit and loss are deemed to be the profits and gains of
such person under section 44AE or section 44BB or section 44BBB, as the case may be, and he
has claimed his income to be lower than the profits or gains so deemed to be the profits and gains
of his business, as the case may be, in any previous year; or

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(e) carrying on the profession shall, if the profits and gains from the profession are deemed to be
the profits and gains of such person under section 44ADA and he has claimed such income to be
lower than the profits and gains so deemed to be the profits and gains of his profession and his
income exceeds the maximum amount which is not chargeable to income-tax in any previous
year. Get his accounts of such previous year audited by an accountant before the specified date
and furnish by that date the report of such audit in the prescribed form duly signed and verified
by such accountant and setting forth such particulars as may be prescribed.

Provided that this section shall not apply to the person, who declares profits and gains for the
previous year in accordance with the provisions of sub-section (1) of section 44AD and his total
sales, turnover or gross receipts, as the case may be, in business does not exceed two core rupees
in such previous year:

Provided further that this section shall not apply to the person, who derives income of the nature
referred to in section 44B or section 44BBA, on and from the 1st day of April, 1985 or, as the
case may be, the date on which the relevant section came into force, whichever is later :

Provided also that in a case where such person is required by or under any other law to get his
accounts audited, it shall be sufficient compliance with the provisions of this section if such
person gets the accounts of such business or profession audited under such law before the
specified date and furnishes by that date the report of the audit as required under such other law
and a further report by an accountant in the form prescribed under this section.

The two major amendments made by Finance Act, 2020 in respect of tax audit are as follows

1) Up to AY 2019-20, a person carrying on business was compulsorily required to get his

accounts audited by a chartered accountant, if his total sales, turnover or gross receipts (as the
case may be) in business for the year exceeds Rs. 1 core. This provision is not applicable to the
person, who opts for presumptive taxation scheme under section 44AD and his total sales or
turnover doesn’t exceed Rs. 2 cores.

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However, i.e. Assessment Year 2020-21, the threshold limit for tax audit u/s 44AB(a), for a
person carrying on business, is increased from Rs. 1 Core to Rs. 5 cores in cases where the
aggregate cash receipts and aggregate cash payments made during the year does not exceed 5%
of total receipt and total payment respectively. In other words, more than 95% of the business
transactions should be done through banking channels in order.

For resident professional (sec 44AB+ 44ADA)

Gross receipts form Profits and gains (as a % of Audit application

professional in the financial total gross receipts)
year

>50 Lakh NA Yes u/s 44AB((b)

<50 Lakh >50% no

<50% Yes u/s 44AB(d)

1. If total income exceeds basic exemption limit only then tax audit is applicable.

2. The assessed can opt for presumptive taxation u/s 44ADA.

1.8. TYPES OF TAX AUDIT:

Four Types of Tax Audits and Tax Compliance. Nothing is surer to elicit feelings of panic than
receipt of a letter from the IRS and for good reason. Tax issues and penalties can have harsh and
sometimes long-lasting impacts on an individual or business’s financial health. While some
letters or notices aren’t cause for much concern, an audit notice should not be taken lightly. All
audits are not created equal and some are more alarming than others. There are ultimately four
types of IRS audits that you could receive.

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1. CORRESSPONDANCE AUDIT: The first of the four types of tax audits are correspondence
audits are the most common type of IRS audits. In fact, they comprise roughly 75% of all IRS
audits. Correspondence audits are the simplest type of audit and involve the IRS sending a letter
in the mail (typically a 566 letter) requesting more information about particular part of a tax
return. For example, the IRS may have questions regarding auto expense and request you send in
receipts to substantiate your deduction. You should never ignore a letter requesting information
if you receive one, as doing so will only aggravate what should otherwise be a simple
correspondence. If you prepared your tax return correctly and you have the source
documentation (receipts, invoices, payments, etc.) to back up the items on your return, a taxpayer
can generally handle correspondence audits on their own and likely won’t have to meet with an
IRS agent in person. Simply providing the requested documentation should put the matter to rest.

2. OFFICE AUDIT: The second type of audit is an Office Audit. If the IRS has questions about
your return that are too complex or large for a correspondence audit, but too small for a field
audit, you will get a letter in the mail requesting that you come into an IRS office for the audit.
Generally speaking, an office audit is more detailed and may have more issues. Office audits
typically surround issues pertaining to itemized deductions (Schedule A), business profits/losses
(Schedule C) or rental income/expenses (Schedule E). Often one issue with a schedule can
trigger an audit, but audits can quickly expand if the auditor suspects there may be problems in
other areas of the return. The office interview will consist of questions related to the issue under
examination. There may also be more generalized questions about employment, financial
position, and lifestyle in an attempt to find other causes for concern like the possibility of
underreported income. An individual should give careful consideration to the answers and
documentation provided to the IRS. It’s very easy for a taxpayer to unintentionally give the
auditor a reason to expand the scope of the audit.

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3. FIELD AUDIT: A field audit is the most comprehensive of the four types of tax audits and
detailed IRS audit. It involves the IRS visiting the taxpayer at their home or place of business to
examine records. Field audits are performed by IRS revenue agents, who are generally more
skilled and knowledgeable than most other IRS representatives. IRS revenue agents will also
often specialize in a certain industry. When the IRS visits a home or place a business, they may
ask to see things outside of certain records. They do not want to limit themselves to a particular
item. A typical audit for a business includes a review of financial records, interviews with
employees, and a tour of the business facility. Interviews will be used to ascertain an overview of
management structure, accounting procedures, and internal controls. For an individual, the audit
will just consist of a review of financial records and an interview with the taxpayer. The audit
could last anywhere from one day to a week, depending on the complexity of the account.

4. Taxpayer Compliance Measurement Program (TCMP) Audit

The fourth type of audit is a Taxpayer Compliance Measurement Program (TCMP) Audit. The
primary purpose of this type audit is to update the data for the IRS’ DIF scores. DIF scores are
developed from analyzing a large group (involving up to 50,000 randomly selected returns) of
intensive audits, conducted every few years. In a TCMP audit, the IRS will analyze every item
on the tax return and every part of the return must be substantiated by documentation. A standard
audit is time consuming in that a taxpayer must find checks, invoices, contracts, bank statements,
etc. for the items selected for audit. In a TCMP audit, every line of the tax return is audited
therefore you have to provide documentation for all deductions not a selected few items.
Whichever audit you may be confronted with, it is always best to get organized and stay calm.
For instance, pull all your canceled checks, receipts, and other information related to the items to
be audited and get that information in sequential order.

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1.9. PROCESS OF TAX AUDIT:

1.9.1. INCOME TAX AUDIT IN INDIA

There are various laws in India that govern different kinds of audit like income tax audit, stock
audit, cost audit, company or statutory audit as per company law, to name a few. Section 44AB
of the Income Tax Act, 1961, lays down the provisions for income tax audit. Income Tax audit,
as evident from the name, is aimed at evaluating whether an individual or company has
accurately filed the income tax returns of an assessment year. An external agency is mandated to
assess returns filed from income, deductions and expenditures and other rules as mentioned by
the Income Tax Act, 1961. The tax audit process simplifies the computation of tax returns. The
Chartered Accountant of the concerned agency performing the tax audit has to submit Form 3CA
or Form 3CB, and Form 3CD, as an audit report comprising of the observations.

1.9.2. Income Tax Audit for companies whose tax audit is not conducted under Section
44AB of the Income Tax Act, 1961:

Taxpayer who has to get their account audited under any law other than 44AB of the Income Tax
Act 1961 does not have to get their account audited again for the purpose of income tax audit. In
such cases, account audited under other laws can be presented as a tax audit report for income
tax filling provide it is submitted before the stipulated due date.

The following are the other section under income tax act 1961, which also lay down regulation
related to income tax audit in India. These are presumptive taxation scheme, wherein a pre-
determine percentage of income is assumed to be the gain or profit meant for taxation.

Section44AB: for non-resident Indians involves in the business specialization in the mineral oils
industry, like exploration.

Section44BB: international company involve in the business of civil conduction etc. in certain
power project.

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Section 44AD: any business expect those business mentioned under section 44AE

Section 44ADA: this section focuses on the regulation regarding income tax audit for eligible
professional.

Section44AE: business speculation in leasing hiring and plying of good carryings.

1.9.3. Categories of Taxpayer For Whom Tax Audit Is Mandatory:

Tax audit is compulsory for the following categories of taxpayer:

(a) A business owner, who has not opted for presumptive scheme, with gross receipt or total
sales exceeding Rs. 1corer.

(b|) A business owner, who has opted for presumptive taxation scheme under section 44AD
of the Income Tax Act,1961, with gross receipt or turnover or total sale exceeding Rs.2coror.

(c) An employee of an organization whose gross receipt is more than Rs. 50 Lakh.

(d) An employee of an organization that is eligible for presumptive taxation under section
44AD and claim profit that are lesser than the prescribed limit under presumptive taxation
scheme and income is more than maximum amount not chargeable to tax.

1.9.4. Tax Audit Report Filing Process

(A) The following is the procedure for filing tax audit report:

(b) The Chartered Accountant assigned for conducting tax audit of an individual or an
organization has to present the tax audit report online, using his/her official login credentials.

(c) The taxpayer also has to mention the relevant information about their Chartered
Accountant in their login platform.

(d) Once the tax audit report is uploaded by the auditor, it has to be either accepted or
rejected by the taxpayer on their login portal. If the taxpayer rejects the tax audit report, the
entire process has to be repeated until the tax audit report is accepted by him/her.

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 (e) Tax audit report has to be filed on or before the pre-determined due date of filing income
return, i.e., 30th November of the subsequent assessment year for taxpayers who have
engaged in an international transaction and 30th September of the subsequent assessment
year for other taxpayers.

1.9.5. Rules Governing Tax Audit:

The Following Is The Producer For Filling Tax Audit Report:

(a) The chartered accountant assigned for conducting tax audit of an individual or an
organization has to present the tax audit repot online, using his official login
credentials.

(b) The taxpayer also has to mention the relevant information about their charted
accountant in their login platform.

(c) Once the tax audit report is uploaded by the auditor, it has to be either rejected by
the taxpayer on their login portal. If the taxpayer reject the tax audit report, the entire
process has to repeated until the audit report is accepted by h

1.9.6. The Following Point Are To Be Noted With Regarded To Tax Audit:

(a) If you are involved in more than 1 business, you will be liable to audit your
total turnover of all your business is more than Rs. 1 corer.

(b) If you operate more than 1 profession, you have to audit your account books in case the gross
receipt of all the professions cumulatively corer Rs. 50lakhs.

(c) If you run a business well as as a profession then tax audit is not based on total turnover form
both. If you business turnover is more than 1 corer then an audit is required to the business
account and if the gross receipt from your profession is more than Rs. 50 Lakh than an audit of
the professional account is needed. But if your business turnover is Rs. 90 Lakh and profession
receipt are Rs. 40 Lakh than no audit is required for either account.

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(a) Assets held as investment (E.g. Share, stock, securities.)

(b) Rental income.

(c) Any expenses reimbursed by the client.

I. Once the tax audit receipt is filed online, it cannot be revised. But if the
account have been revised- for example, a company account revision after
acceptance at the annual general meeting, change in law or change in
interaction of law- than the audit report has been field can also be changed.
The reason for change in audit report have to explicitly report have to be
mentioned while filling the revised report.

1.9.7. Penalty for Non-compliance of Tax Audit

Non-compliance of tax audit regulations by taxpayers attracts a penalty of whichever is
lower from the following:

(a) 0.5% of total sales or

(b) Turnover or Rs. 1, 50, 000

(c) Gross receipts

A penalty is waived only when a taxpayer is able to show a reasonable cause for non-
compliance. If the account books of a business or profession are not audited as per Section
44AB, then the assessed has to pay penalty as per Section 271B of the Income Tax Act. In case
of a delay in completing audit and submitting the report on time (before or on September 30),
then 0.5% of the turnover, a maximum of Rs. 1.5 Lakh, has to be paid as penalty. If there is a
genuine reason for delay or non-filing of audit report, then as per Section 273B, no penalty will
be applicable. Among the permitted reasons are:

A penalty is waived only when a taxpayer is able to show a reasonable cause for non-
compliance. If the account books

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 (a) Delay caused by resignation of the tax auditor

(b) Delay caused by death or physical inability of the partner responsible for accounts

(c) Delay caused by labour issues such as strikes or lock-outs

(d) Delay caused by loss of accounts due to theft or fire, or incidents that are not under the
assesses control.

(e) Natural calamities.

1.9.8. Due Date By Which Taxpayer Should Get Their Accounts Audited:
I. The due date of filing the tax audit report under section 44AB is 30th September of the
assessment year i.e. for financial year 2014-15; tax audit report should be submitted by
30th September 2015.
II. In case of taxpayer who is required to furnish report in form no 3CEB under section 92 in
respect of international transaction or specified domestic transaction, the due date of
filing the return of income is 30th November of the relevant assessment year.
III. The tax audit report is to be electronically filled by the chartered accountant to income
tax Department. After filing of report, the tax payer has to approve the report from his e-
filing account with income tax department.

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1.10. FORM OF TAX AUDIT:

1.10.1. FORM NO.3CA.

FORM NO.3CA

[Sec rule 6G (1) (a)]

Audit report under section 44AB of the Income Tax Act, 1961,

In case where the account of the business or profession of a person

Have been audited under any other law

I report that the statutory audit of ………………(Name and address of the assesses with
permanent account number) was conducted by M/S………………… in pursuance of the
provision of the…………………Act, I annex here to a copy of my audit report
dated… ............................ along with a copy of each of :

(a) The audited profit and loss and loss account/ income and expenditure account for the period
beginning form……………………………………to ending on ……………………….

(b) The audited balance sheet as at ................................ ; and

(c) Document declared by the said act to be part of, or annexes to, the profit and loss account/
income and expenditure account and balance sheet.

2. The statement of particulars required to be furnished under section 44AB is annexed here with
in form no. 3CD

24
3. In my opinion and to the best of my information and according to examination of books of
account including other relevant document and explanations gives to me the particulars given in
the said form no. 3 CD are true and correct subject to the following observations/ qualifications,
if any:

A ……………………………………………………………………

B . . . ……………………………………………………………………

C.. ……………………………………………………………………

…………………………………..

(Signatures and stamp / seal of the signatory)

Name of the signatory……………………..

Full address………………………………..

Place: ………….

Date: ………….

Note:

1. Delete whichever is not applicable.

2. This report has to be signed by a person eligible to sing the report as per the provision of
section 44AB of the income tax act, 1961.

3. Where any of the requirements in this form is answered in the negative or with qualification,
give reasons therefore.

25
1.10.2 FORM NO. 3CB:

Form No. 3CB

[Sec Rule 6G (1)(B)]

Audit report under section 44AB of the income tax act 1961,

In the case of a person referred to in clause (b) of sub- rule (1) of rule 6G

1. I have examined the balance sheet as on, .................................. and the profit and loss account /
income and expenditure account for the period beginning form ................................ To ending on
……………………………. Attached here with, of ................................... (Name),
…………………………………………………………………………….. (Address),
…………………………………………….. (Permanent Account Number).

2. I certify that the balance sheet and the profit and loss / income and expenditure account are in
agreement with the books of account maintained at the head office at ...............................and
…………………… branches.

3. (A) I report the following observation/ discrepancies / comments/ inconsistencies; if any;

(B) subject to above,

(A) I have obtained all the information and explanations which, to the best of my knowledge and
belief, were necessary for the purpose of the audit.

(B) In my opinion, proper books of account have been kept by the head office and branches of
the assesses so far as appears so far as uppers form my examination of the books.

26
(C) In my opinion and to the best of my information and according to the explanation given to
me the said accounts, read with notes thereon, if any give a true and fair view:

I. In the case of the balance sheet, of the state of the affairs of the assesses as at 31st march;
and
II. In the case of the profit and loss account / income and expenditure account of the profit
and loss or surplus/ deficit of the assesses for the year ended on that date.

4. The statement of particular required to be furnished under section 44AB is annexed

herewith in form no. 3CD.

5. In my opinion and to the best of my information and according to explanations given to me

the particulars gives in the said form no.3CD are true and correct subject to following
observation/ qualification, if ant:

a. ………………………………………………………………………………..

b. ………………………………………………………………………………..

c. ……………………………………………………………………………….

27
1.10.3. FORM NO. 3CD:

Form No. 3CD

[Sec rule 6G (2)]

Part A

Statement of particular required to be furnished under section 44AB of the income tax
act, 1961.

1. Name of the assesses -

2. Address -

3. Permanent account number -

4. States -

5. Previous year ended -

6. Assessment year -

28
 Part B

7. (a) If firm or association or person , As per Annexure

indicates names of partners/ Members
and their profit sharing ratio

b) If there is any change I the partner/ As per annexure

member or in the profit Sharing ratio sine
the last date of the preceding year the
Particular of such change

8. (a) Nature of business or profession (if FMCG

more than one business Or profession is
carried on during the previous year
nature of every business or profession.)

(b) If there is any change in the nature of There is no change

business or profession. The particular of
such change

9. (a) whether book of account are Not application

prescribed under section 44AA if Yes,
list of books so prepared

(b) Books of account maintained (in Cash book- bank book- ledger- journal
case books of account are Maintained in registration- purchase registration sale
a computer system mention the books of registration in coumtuersied system
account Generated by such so prescribe

(c) List of books of account examined Same a above

10. Whether the profit and loss account

includes any profit and gain Assessable on

29
presumptive basis if indicate the amount -

11. (a)method of accounting employed in the Mercantile system

previous year

(b) whether there has been any change in the No change

method of accounting employed visa-a visa
the method employed in the immediately
preceding previous year

(c) If answer to (b) above is I the alternative N.A

give details and such change and the effect
there of the profit and loss.

(d) Details of deviation if any in the method

of accounting employed in the previous year
No deviation
form accounting standard prescribed under
section 145 and the effect thereof on the
profit and loss.

12. (a) Method of valuation of closing stock -

employed in the previous year

(b) Detail of devotion and any form the Nil

method of valuation prescribed under
section 145A and the effect there on the
profit and loss.

30
 CHAPTER 02

REVIEW OF LITERATURE

2.1. INTRODUCTION:

A literature review is the synthesis of the available literature regarding your research topic.
This synthesis merges the conclusions of many different sources to explain the overall
understanding of the topic, thus laying a foundation for both the research question and primary
research. Although a literature review will cite sources and should discuss the credibility of the
sources included, it is more than an annotated bibliography. Your literature review needs to
review all the significant sources on a topic, regardless of whether or not they support the claims
you will eventually be working toward.

A literature review should not simply list the relevant sources; that is the purpose of an
annotated bibliography. Coherent structure is important. The general information needs to work
toward some overall framework. Outlining the sources that you will present can help to provide a
structure that will direct your audience toward the research topic.

In other words, when reviewing the literature, “not only do you need to engage with a body of
literature, you also need to be able to compare, contrast, synthesize, and make arguments with
that literature in ways that indicate a readiness to contribute to the literature itself.

2.3. Books And Research Paper/ Articles Publish In Various Research

Journals:

1. Dr. Kavitha Jayakumar (2019) In their research paper the researcher has explained An
audit is an independent examination of books of accounts of an organization by an external body
and review the accuracy and authenticity of the accounts to ensure transparency and fair dealings
in the affairs of the firm. Tax is a compulsory levy charged by the government on the income,
consumption and capital of its subjects in order to earn revenue for its functions. In compliance
with various laws governing a company, there are several audits which are being conducted
keeping various objectives in mind such as statutory audit, cost audit, inventory audit etc. A tax

31
audit is carried out by the taxpayer from the requirement of income tax purpose. Section 44AB
of Income tax Act 1962 gives the provisions of tax audit of an entity.

2. Pankaj Kumar Bag (2019) He explained in his research paper that, Audit literature is one
of the richest contributed fields among accounting and auditing. The concentration of the
literature shows a drastic shift from time to time. Till 2000’s the area mostly concentrates on the
fundamentals such as vouching, verification, internal control, audit materiality, auditor’s
independence, sources of audit evidence and audit risk. Our paper tries to explore the
fundamental contributions in the field. After 2000’s the literature shows some advanced shifts
from these basic concepts, such as structure if internal control, related auditing standards,
protection of auditor’s independence, financial reporting standards, etc.

3. Rini Hasttuti (2014) In their research paper he explained Self assessment system requires
tax payers to have full understanding of tax rules. Students of high education are perceived as
potential tax payers since in the future they will earn revenues that are subjected to taxes. Based
on previous research, having full understanding of tax is proved to drive tax evasion; hence tax
education becomes a key. This research is mainly aimed to investigate contextual and ethical tax
awareness between business and non business students; it is also investigate student’s perception
if tax is important therefore they need to learn since it is unavoidable onus. It employed 341
students of Soegijapranata Catholic University (SCU); they then were divided into two groups
that were 54.3% business and 45.7% non business students.

4. Kalgutkar & Anjuman, (2018) Studied in his articles that Found and concluded that there is
a relationship between tax awareness and wealth creation and in order to save tax, an individual
assesses invests their hard-earned money on law prescribed investment avenues which helps an
individual to create wealth in future.

5. Dey & Varma (2016) Explained in his research paper Concluded that taxes constitute
major source of revenue for any government it is important for government to make people
aware about the tax schemes. In the study it was observed that only 23% people have good
knowledge about tax awareness and 34% have poor knowledge.

6. Saravanan & MuthuLakshmi, (2017) He studied in his articles Researched and found that
there is variety of tax saving investment options available in the market but a most adopted tax

32
saving instrument is Provident Fund, which got the first rank in this study and the second most
adopted tax saving instrument is Life Insurance policy. (Mathew, 2016) carried out a study to
explain the tax planning awareness among working women in our society and analyzing whether
they are aware about different investment opportunities and finding out various alternatives in
which investment is made to minimize tax liability and most attractive investment scheme.

7. Bhide (2013) He explained in the research paper observed that majority of salaried
employees do not seek professional advice. Professional advice is sought by business entities and
business men especially when they are subjected to tax audit. Individual assesses who do not
take professional guidance results in tax planning done in a hap hazard manner.

8. Natarajan, (2008) In his research paper he sated studied the options for investments for tax
savings in Erode district, Tamil Nadu. In order to reduce tax liability, an assesses has to plan well
as to where to invest and how much to invest. In choosing a specific investment, an assesses
needs definite knowledge regarding a number of features of investments such as tax benefit,
safety of principal, liquidity, stability of income etc.

9. (Gupta, 2012) In his research paper he stated that Concludes in the study about the reforms
needed in the personal income tax structure so that people could feel encouraged for investments
which is the vital tool not only for their personal affluence but also for economic development of
the nation. Study further highlights how high-income tax rates reduce the incentive to invest.

10. Vasanthi, (2015) In their research paper he explained in his that Observed that direct tax
imposed on salaried employee is very high. It was also concluded that the salaried employees are
reducing the tax liability. (Singh & Sharma, 2007) observed that most of the tax consultants were
satisfied with tax rates but majority showed dissatisfaction with regard to price level adjustment.
It was also observed that most of the taxpayers consulted tax experts because they found it
cheap. Factor Analysis of data showed that seven factors which are reduction in tax evasion,
extension of relief to taxpayers, incentives for dependents and honest taxpayers, broadening the
tax base, e- filing of returns, adequacy of deductions and impact of exempt-exempt tax system
played an important role in determining the effectiveness of Indian tax system.

33
 CHAPTER 03

RESEARCHER MYTHOLOGY

3.1. INTRODUCTION

The study of existing literature is done in order to comprehend the relevance of tax audit. A
descriptive approach has been adopted in understanding the same.

Research is not only concerned to the revision of the facts and building up to date knowledge but
discover new facts involved through the process of dynamic change in the society mythology is
the systematic, theoretical analysis of the method applied to field of study. It comprises the
theoretical analysis of the body of method and principle associated with a branch of knowledge.
Typically, it encompasses concepts such as paradigm, theoretical model, phases and quantitative
or qualitative techniques.

3.2. Objective of the study

1. To find out tax audit concept.

2. To study tax audit concept

3. To observed tax audit effectiveness.

4. To investigate tax audit compliance.

3.3. Selection of the problem

The research was select to know about the tax audit. Form this research I was able to know about
tax audit manager. To know more about the models and types of tax audit.

3.4. RESEARCH METHODOLOGY

The researchers adopted convenient sampling techniques for the selection of study area. A
sample of 50 respondents was taken well structured questionnaire was used for collecting
primary data by survey method. The study is designed together descriptive information for
conducting study in more practical manner therefore the study makes use of quantitative research

34
approach. There are two basic research method qualitative and quantitative researches.
Qualitative research provide insight and understanding of the problem setting in this study
qualitative research was used with a goal of getting insight into the effect of eliminating and
reducing the wastage of material.

The qualitative research method involving the collection of variety of empirical paper, literature
and knowing personal experience of the users.

Quantitative research seeks to quantify the data and typically, applies some form of statistical
analysis. In this research, more emphasis is laid on quantitative data.

3.4.1. AREA OF RESEARCH

The research data was collected from the area of Mumbai city.

3.4.2. RESEARCH DESIGN

A Research design is a logical and systematic plan for directing a research study. The research
gives a blueprint for research work. For this study simple random sampling research desing
method have been used. Primary data were used.

3.4.3. SAMPLING METHOD

The researcher adopted convenient sampling method. In this sampling questionnaire was
distributed to individual by making form. To understand the problem a selected research was
done by the researcher based on the knowledge and personal judgment.

3.4.4. SAMPLE SIZE

The sample in the study was restricted to 50 respondents keeping in the mind the objective and
constraints.

3.4.5. METHODS OF DATA COLLECTION

The present research study is based on primary data. Well structure questionnaire was prepared
and used for the collection of primary data from the responded of Mumbai. For this purpose
face-to-face interview were conducted. With the help of this method primary data collected in

35
proper manner. Through the personal interview researcher come to know about financial literacy
awareness among investors.

3.4.6. TECHNIQUES OF DATA ANALYSIS

Data analysis is an activity by which raw data collected with the help of a questionnaire,
converted into meaning information for making decision on objective of the study. For found out
finding and collusion researcher was used excel and graph. Different and table was used for
analysis of data.

3.4.7. RESEARCH TOOL

A questionnaire was prepared with the help of a detail study of literature available in the field of
investment. The final data was collected with a questionnaire that incorporated certain change in
the question.

3.4.8. HYPOTHESIS OF THE STUDY

H0: Their is no awareness of tax audit among student.

H1: Their is awareness of tax audit among student.

3.5. SCOPE AND SIGNIFICATION OF THE STUDY

Tax audit shall comparison of verification of all recorders, documents, books of account
including electronic records. It includes physical verification of stock in trade, collection of
sample of goods and exanimation of such other records and documents.

During tax audit, the figures of turnovers are compared and reconciled with Indirect tax returns
filed by assesses such as Excise returns, Vat returns, service tax returns. If there is variation in
turnover (more specifically turnover is less in final accounts as compared to indirect tax returns)
the tax auditor raises the query to management. But what about the wrong claim of ITC by
assesses in his indirect tax returns. Whether these wrong claims are covered by the scope of tax
audit and if yes, how to report the same. In Form 3CA and 3CB, there is mention of true and fair
view and if assesses has claimed ITC wrongly under any indirect tax law, the accounts does not
show true and fair view. So in my opinion such wrong claim must be reported in tax audit.

36
3.6. LIMITATION OF THE STUDY

The limitation of the study is as follow:

1. Time:

Limited time for data collection. It is not possible to collect the data form respondent for this
research.

2. Respondent Bias:

There are 100 respondents for this research. Some respondent were not given their accurate
response of the question for collecting the data. This becomes a major. Limitation of the study.

3. Area of Research:

The area of research was restricted to only Mumbai city, because the limitation of time.

37
 CHPTER 4

DATA ANALYSIS AND INTERPRETATION

PERSONAL DATA

Q.1. Age

1) 18-25
2) 26-30
3) 31-35
4) 36-40

Particular Percentage
(%)

18-25 90.6

26-30 9.4

31-35 0

Total 100

Table 4.1. Age of Respondent

38
 0%

10%

18-25
26-30
31-35

90%

Chart 4.1. Ages of Respondents

From the above table 4.1. and chart 4.1 it is observe that out of 100 respondents 90% students are
in 18-25 age group 10% student are in 26-30 age group and 0% student are in 31-35 age group.

Q2. Gender

1) Female
2) Male

Particular Percentage (%)

Female 45

Male 55

Total 100

Table 4.2. Gender of Respondents

39
 45%
Female
Male
55%

Chart 4.2. Gender of Respondents

There are 100 respondents for the above table 4.2. and chart 4.2 it indeed that out of 100
respondents 45% student are female and 55% students are male.

40
Q.3. Qualification

1) Under graduation
2) Graduation
3) Post graduation

Particular Percentage (%)

Under Graduation 62.5

Graduation 26.6

Post Graduation 10.9

total 100

Table 4.3. Qualification of Respondents

11%

Under Graduation
27% Graduation
Post Graduation
62%

Chart 4.3. Qualification of Respondents

From the above table 4.3 and chart 4.3 it is observes that out of 100 respondents 62.5% students
are under graduation 26.6% students are graduation and 10.9% students are post graduation.

41
Q.4. Respondents know about tax audit

1) Yes

2) No

Particular Percentage (%)

YES 89.1

No 10.9

Total 100

Table 4.4. Respondents know about tax audit

42
 11%

Yes
No

89%

Chart 4.4. Respondents know about tax audit

There are 100 respondents from the above table 4.4 and chart 4.4 it is observed that out of 100
respondents 89.1% of students know about tax audit and reaming 10.9% of the respondents don’t
know about tax audit.

Q .5. Respondents which can fill to be tax audit.

1) 3CA
2) 3CB
3) 3CD
4) All the above

43
 Particular Percentage (%)
3CA 9.4
3CB 8.5
3CD 4
All the above 78.1
Total 100

Table 4.5. Respondents which can filled can to be tax audit

4%
9%

9%
3CD
3CA
3CB
All the above

78%

Chart 4.5. Respondents which can from can to be tax audit

From the above table 4.5. and chart 4.5 it is indeed that out of 100 respondents 4% students
are know about 3CD from will be filled 9% students are know about 3CA from will be filled
9% students are know about 3CB from will be filled and 78% students know about all the
from cab be filled to be tax audit.

44
Q.6. Respondents penalty for non- compliance tax audit?

1) 1 Lakh
2) 1.5 lakh
3) 50 Lakh
4) All the above

Particular Percentage (%)

1 Lakh 6.3
1.5 Lakh 82.8
50 Lakh 7.8

All the above 3.1

Total 100

Table 4.6. Respondents penalty for non- compliance tax audit

1%

8% 7%

1 Lakh
1.5 Lakh
50 Lakh
All the above

84%

Chart 4.6 Respondent t penalty for non- compliance tax audit

45
From the above table 4.6 and chart 4.6 it is indeed that out of 100 respondents 6.3%
students know about 1Lakh rupees 82.8% students are know about 1.5 Lakh 7.8 %
students are know about 50 Lakh rupees 3.1% students are know about all the above.

Q.7. Respondents tax audit comes under which section

1) 44AD
2) 44AA
3) 44AB
4) 44AE

Particular Percentage (%)

44AD 9.4
44AA 4.7

44AB 85.9

44AE 0

Total 100

Table 4.7. Respondents tax audit comes under which section

46
 1%

9%
5%

44AD
44AA
44AB
44AE

85%

Chart 4.7. Respondents tax audit comes under which section

From the above table 4.7 and chart 4.7 it is indeed that out of 100 respondents
9.4% students are know about 44AD section 4.7% students are know about 44AA
section 85.9% students are know about 44AB section and 0% students are know
about 44AE section.

Q. 8. Respondents objective of tax audit

1) Proper book maintain

2) Correctness
3) Information
4) All the above

47
 Particular Percentage (%)

Proper books maintenance 7.8

Correctness 1.6

Information 7.8

All the above 82.8

Total 100

Table 4.8 Respondents objective of tax audit

7%

42% Proper book maintain

Correctness
Infromation
42%
All the above

9%

Chart 4.8 Respondents objective of tax audit

From the above table 4.8 and chart 4.8 it is indeed that out of 100 respondents
7.8% students are know about proper books maintain 1.6% students are know
about correctness 7.8% students are know about information and 828% students
are know about all the above.

48
Q.9. Respondents know about limit of tax audit

1) Threshold limit of Rs. 1 crore

2) Threshold limit of RS. 10 Lakh
3) Threshold limit of Rs 50 Lakh
4) All the above

Particular Percentage (%)

Threshold limit of Rs. 1 crore 7.8

Threshold limit of Rs.10 Lakh 4.7

Threshold limit of Rs. 50 Lakh 73.4

All the above 14.1

Total 100

Table 4.9 Respondent know about limit of tax audit

49
 1%

9%

6%

Threshold limit of Rs. 1 crore

Threshold limit of Rs. 10 lakh
Threshold limit of Rs. 50 lakh
All the above

84%

Chart 4.9. Respondents Know About Limit of Tax Audit

From the above table 4.9 and chart 4.9 it is indeed that out of 100 respondents 7.8% students are
know about threshold limit of RS. 1 crore 4.7% students are know about threshold limit of Rs. 10
lakh 73.4% students are know about threshold limit of RS. 50 lakh and 14.1% students are know
about all the above.

Q.10. Respondents ever had on IRS tax audit before

1) Yes
2) No

50
 Particular Percentage (%)
Yes 73.4
No 26.66
Total 100
Table 4.10. Respondents ever had on IRS tax audit before

27%

Yes
No

73%

Chart 4.10 Respondents ever had on IRS tax audit before

There are 100 respondents from the above table 4.10 and chart 4.10 it is indeed that only 73.4%
of students are aware about tax audit and remaining 26.66% students don’t know about IRS tax
audit before.

Q.11. Respondents filled tax return for current financial year

1) Yes
2) No

51
 Particular Percentage (%)
Yes 17..2

No 82.8

Total 100

Table 4.11. Respondents filled tax return for current year

17%

Yes
No

83%

Chart 4.11. Respondents filled tax return for current year

There are 100 respondents from the above table 4.11 and chart 4.11 indeed that only 82.8% of
students are aware about tax return and remaining 17.2% students’ donts filled tax return for
current financial year.

Q12.Respondents you ever received a notice of deficiency

1) Yes
2) No

52
 Particular Percentage (%)
Yes 12
No 88
Total 100
Table 4.12 Respondents you ever received a notice of deficiency

12%

Yes
No

88%

Chart 4.12. Respondents you ever received a notice of deficiency

There are 100 respondents from the above table 4.12 and chart 4.12 it is indeed that only 87.5%
students are aware about received a notice of deficiency and remaining 12.5% are don’t aware
about received a notice of deficiency.

53
Q.15. Respondents received a notice of proposal income tax

1) Yes

2) No

Particular Percentage (%)

Yes 64

No 36

Total 100

Table 4.13. Respondents received a notice of proposal income

36%

Yes
No

64%

Chart 4.13. Respondents received a notice of personal income

There are 100 respondents from the above table 4.13 and chart 4.13 it is indeed that only 64%
students are aware about received a notice of proposal income tax examination change from a tax

54
auditor and remaining 35.9% students are don’t aware about received a notice of proposal
income tax examination change from a tax auditor.

Q.16. respondents format maintain records of tax audit assignment

1) Name of the member

2) Membership No.

3) Financial year of audit acceptance

4) All the above

Particular Percentage (%)

Name of the member 4.7

Membership No. 7.8

Financial year of audit acceptance 6.3

All the above 81.3

Total 100

Table 4.14.Respondemts format maintain records of tax audit assignment

55
 6%

23%
Name of the member

32% Membership No.

Financail year of audit

acceptance
All the above

39%

Chart 4.14.Respondents format maintain record of tax audit assignment

There are 100 respondents from the above table 4.14 and chart 4.14 it is indeed that 4.7%
student are know about name of the member 7.8% students are know about Membership
No. 6.3% students are know about Financial year of audit acceptance and81.3% students
are know about all the above.

56
 CHAPTER 5

FINDING, CONCLUSION AND SUGGESTION

5.1. FINDING AND CONCLUSION

5.1. Finding

Analysis 1: From the above table 4.1. and chart 4.1 it is observe that out of 100 respondents 90%
students are in 18-25 age group 10% student are in 26-30 age group and 0% student are in 31-35
age group.

Analysis 2: There are 100 respondents for the above table 4.2. And chart 4.2 it indeed that out of
100 respondents 45% student are female and 55% students are male.

Analysis 3: From the above table 4.3 and chart 4.3 it is observes that out of 100 respondents
62.5% students are under graduation 26.6% students are graduation and 10.9% students are post
graduation.

Analysis 4: There are 100 respondents from the above table 4.4 and chart 4.4 it is observed that
out of 100 respondents 89.1% of students know about tax audit and reaming 10.9% of the
respondents don’t know about tax audit.

Analysis 5: From the above table 4.5. and chart 4.5 it is indeed that out of 100 respondents 4%
students are know about 3CD from will be filled 9% students are know about 3CA from will be
filled 9% students are know about 3CB from will be filled and 78% students know about all the
from cab be filled to be tax audit.

Analysis 6: From the above table 4.6 and chart 4.6 it is indeed that out of 100 respondents 6.3%
students know about 1Lakh rupees 82.8% students are know about 1.5 Lakh 7.8 % students are
know about 50 Lakh rupees 3.1% students are know about all the above.

Analysis 7: From the above table 4.7 and chart 4.7 it is indeed that out of 100 respondents
9.4% students are know about 44AD section 4.7% students are know about 44AA section 85.9%
students are know about 44AB section and 0% students are know about 44AE section

57
Analysis 8: From the above table 4.8 and chart 4.8 it is indeed that out of 100 respondents 7.8%
students are know about proper books maintain 1.6% students are know about correctness 7.8%
students are know about information and 828% students are know about all the above.

Analysis 9: From the above table 4.9 and chart 4.9 it is indeed that out of 100 respondents 7.8%
students are know about threshold limit of RS. 1 crore 4.7% students are know about threshold
limit of Rs. 10 lakh 73.4% students are know about threshold limit of RS. 50 lakh and 14.1%
students are know about all the above.

Analysis 10: There are 100 respondents from the above table 4.10 and chart 4.10 it is indeed that
only 73.4% of students are aware about tax audit and remaining 26.66% students don’t know
about IRS tax audit before.

Analysis 11: There are 100 respondents from the above table 4.11 and chart 4.11 indeed that
only 82.8% of students are aware about tax return and remaining 17.2% students’ donts filled tax
return for current financial year.

Analysis 12: There are 100 respondents from the above table 4.12 and chart 4.12 it is indeed that
only 87.5% students are aware about received a notice of deficiency and remaining 12.5% are
don’t aware about received a notice of deficiency.

Analysis 13: There are 100 respondents from the above table 4.13 and chart 4.13 it is indeed that
only 64% students are aware about received a notice of proposal income tax examination change
from a tax auditor and remaining 35.9% students are don’t aware about received a notice of
proposal income tax examination change from a tax auditor.

Analysis 14: There are 100 respondents from the above table 4.13 and chart 4.13it is indeed that
4.7% student are know about name of the member 7.8% students are know about Membership
No. 6.3% students are know about Financial year of audit acceptance and81.3% students are
know about all the above.

5.1.2. Conclusion:

A tax audit is nothing but an examination of books of accounts of a taxpayer. Under the Income
Tax Audit Section 44AB of the Income Tax Act, 1961 contains provisions related to the tax

58
audit. The main aim of the examination is to make sure that the taxpayer is properly maintaining
the books of accounts and other records. the audit of tax is done to curb the fraudulent tax
practices. The person who is responsible for the auditing of the tax should verify that the
assessee has complied with the requirements like, income tax filing, accurate deductions in
income tax, etc. The auditing of tax must be done by the practicing Chartered Accountant.

The IRS can audit a tax return and its documentation and conclude that there is no change. On
the other hand, IRS can propose a new amount. The taxpayer can either agree or disagree with
this amount. By agreeing, the taxpayer must sign an agreement and may have to pay the
additional amount. If a taxpayer disagrees, they may request a meeting with an IRS manager file
an appeal or participate in an Appeals Mediation, where an appeal officer will help resolve the
case.

5.2. SUGGESTION:

Various Techniques were used like questionnaire tool, and pie chart to complete this project
report. From this project work it is suggested to the students that so many students are not aware
about tax audit and tax audit process. This problem can be solve with the help of advertisement
to aware the students about tax audit.

59
 BIBLIOGRAPHY

Website:

https://www.businesswsdaily.com14300-what-is-a-tax-audit.html

https://taxguru.in/income tax/section-44ab-analysis-tax-audit-provision-finance-act-
2020.html

https://www.cadaaudit.com/bog/importance-of-tax-audit-and-its-effects-on-business

https://taxguru.in/income-tax/51-suggestions-efilling-tax-audit-report-tar-income-tax-return.html

https://taxguru.in/income-tax/tax-audit-season-is-on-rush-to-your-ca.html

https://tax2win.in/guide/section-44ab-income-tax-audit

https://irssolution.com/estate-planning-probate-and-trust-administration/

https://www.coverfox.com/personal-finance/tax/tax-
audit/#:~:text=The%20following%20is%20the%20procedure%20for%20filing%20tax%2
0audit%20report%3A&text=The%20taxpayer%20also%20has%20to,taxpayer%20on%2
0their%20login%20portal.

https://www.taxdebthelp.com/tax-problems/tax-audit/audit-process

60
 Questionnaire

PERSONAL DATA

Q.1. Name:

Q.2. Age

1) 18-25
2) 26-30
3) 31-35
4) 36-40

Q.3. Gender

1) Female
2) Male

Q.4. College:

Q.5. Qualification:

1) Under Graduation
2) Graduation
3) Post graduation

TAX AUDIT SURVEY DATA

Q.6. Do you know about tax audit.

1) Yes
2) No

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Q.7. which from can be filled to be tax audit?

1) 3CD
2) 3CA
3) 3C
4) All the above

Q.8. What is the penalty for a non-compliance tax audit?

1) 1 Lakh
2) 1.5 Lakh
3) 50 Lakh
4) All the above

Q.9. Tax audit comes under which section?

A. 44AD
B. 44AA
C. 44AB
D. 44AE

Q.10. what is objective of tax audit?

A. Proper book maintains

B. Correctness
C. Information
D. All the above

Q.11. what is limit for tax audit for assessment year 2020-2021?

A. Threshold limit of RS. 1 crore

B. Threshold limit of RS. 50 lakh
C. Threshold limit of RS. 10 lakh
D. All the above

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Q.12. Have you ever had on IRS tax audit before?

A. Yes
B. No

Q.13. Have you filled your tax returns for the current financial year?

A. Yes
B. No

Q.14. Have you ever received a notice of deficiency?

A. Yes
B. No

Q.15. Have you ever received a notice of proposed income tax examination change from a tax
auditor?

A. Yes
B. No

Q.16. What is the format for maintaining records of tax audit assignments?

A. Name of the member

B. Membership no
C. Financial year of audit acceptance.
D. All the above

Q.17. Suggestion

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