M.A AUDITS & ACADEMI: TAX AUDIT & TAX AUDIT REPORT

Saturday, December 28, 2013

TAX AUDIT & TAX AUDIT REPORT

TAX AUDIT & TAX AUDIT REPORT

Requirement of Audit:

Section 44AB of the Income Tax Act, 1961

For a person carrying on business: if the total sales, turnover or gross receipt in the business for the previous year exceed Rs. 1 crore

For a person carrying on profession: if the gross receipt from profession for the previous year exceeds Rs. 25 lacs.

Section 44AD / AE:

In case of a eligible assessee engaged in an eligible business, a sum equal to eight per cent of his total turnover or gross receipt from business shall be deemed to be the profits and gains of such business chargeable under the head PGBP. If assessee claim lower income( below 8%) than he is required to maintained books of accounts as specified in section 44AA and also get such books of accounts audited from chartered accountants under section 44AB

Eligible business: any business other than following:

1. Business of playing, hiring of or leasing goods carriage reffered in section 44AE and

2. Whose total turnover or gross receipts in previous year does not exceed Rs. 1 crore.

Eligible assessee means:

An individual, hindu undivided family or partnership firm but not limited liability partnership firm

Provision of this section shall not apply to:

1. a person carrying on profession as referred in section 44AA

2. a person earning income in the nature of commission or brokerage

3. a person carrying on any agency business.

Section 44AE

An assessee, who owns not more than ten goods carriage, and who is engaged in the business of playing and hiring of such goods carriage than following shall be deemed to be a profits and gains from such business:

For heavy goods vehicles : Rs. 5000 per month per vehicle

For other than heavy vehicles : Rs. 4500 per month per vehicle

If assessee claim lower income(as above), than he is required to maintained books of accounts as specified in section 44AA and also get such books of accounts audited from chartered accountants under section 44AB

FORM NO. 3CB

[See 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/We have examined the balance sheet as at 31st March 2013, and the profit and loss account/income and expenditure account for the year ended on that date, attached herewith, of M/s Sagar Enterprise, at 50, Gumanshihji Shopping Center, Dhebar Road, Rajkot – 360001. (PAN: AAHFS9018B)

2. I/We certify that the balance sheet and the profit and loss account/income and expenditure account are in agreement with the books of account maintained at the head office at 50, Gumanshihji Shopping Center, Dhebar Road, Rajkot – 360001. (PAN: AAHFS9018B)

3. (a) I/We report the following observations/comments/discrepancies /inconsistencies; if any:

(b) Subject to above,-

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

(B) In my/our opinion, proper books of account have been kept by the head office and branches of the assessee so far as appears from my/our examination of the books.

(C) In my/our opinion and to the best of my/our information and according to the explanations given to me/us, 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 assessee as at 31st March, 2013 and

(ii) In the case of the profit and loss account/income and expenditure account of the profit/loss or surplus/deficit of the assessee for the year ended on that date.

4. The statement of particulars required to be furnished under section 44AB is annexed herewith in Form No. 3CD.

5. In my/our opinion and to the best of my/our information and according to explanations given to me/us, the particulars given in the said Form No. 3CD and the Annexure thereto are true and correct.

Place :ATTUR

Date : 04.08.2013

For, Kamani & Khanpara

Chartered Accountants

FORM NO. 3CD

[See rule 6G(2)]

Statement of particulars required to be furnished under section 44AB of the Income-tax Act, 1961

PART-A

1.	Name of the assessee	M/s Sagar Enterprise
2.	Address	50, Gumanshihji Shopping Center, Dhebar Road, Rajkot – 360001.
3.	Permanent Account Number	AAHFS9018B
4.	Status	Patrnership Firm
5.	Previous year ended	31st March, 2013
6.	Assessment Year	2013-13

PART-B

(a)

If firm or Association of Persons, indicate names of partners/members and their profit sharing ratios.

Name of Partners and their profit sharing ratio( from partnership deed or AOA deed)

(b)

If there is any change in the partners or members or in their profit sharing ratio since the last date of the preceding year, the particulars of such change.

(a)

Nature of business or profession (if more than one business or profession is carried on during the previous year, nature of every business or profession).

Dealer of pesticides and agriculture seeds & equipments.

(b)

If there is any change in the nature of business or profession, the particulars of such change.

No Change

(a)

Whether books of account are prescribed under section 44AA, if yes, list of books so prescribed.

See Note 9(a)

(b)

Books of account maintained.

(In case books of account are maintained in a computer system, mention the books of account generated by such computer system.)

Cash Book, Bank Book, Journal, Payment Voucher, Receipt Voucher, Sales Register, Purchase Register

(c)

List of books of account examined.

Cash Book, Bank Book, Journal, Payment Voucher, Receipt Voucher, Sales Register, Purchase Register

Whether the profit and loss account includes any profits and gains assessable on presumptive basis, if yes, indicate the amount and the relevant sections (44AD, 44AE,44AF, 44B, 44BB, 44BBA, 44BBB or any other relevant section).

If any income chargeable to tax under presumptive basis and such profit is credited to P & L shall be mentioned here.

(a)

Method of accounting employed in the previous year.

Mercantile Method or cash basis

(b)

Whether there has been any change in the method of accounting employed vis-a-vis the method employed in the immediately preceding previous year.

Changed from mercantile to cash basis or vice a versa.

(c)

If answer to (b) above is in the affirmative, give details of such change, and the effect thereof on the profit or loss.

Effect on profit due to change in method of accounting.

(d)

Details of deviation, if any, in the method of accounting employed in the previous year from accounting standards prescribed under section 145 and the effect thereof on the profit or loss.

AS-1 Disclosure of Accounting policies and AS-2 Disclosure of prior period and extraordinary items.

(a)

Method of valuation of closing stock employed in the previous year.

As per AS-2 At cost or market price whichever is lower

(b)

Details of deviation, if any, from the method of valuation prescribed under section 145A, and the effect thereof on the profit or loss.

Give the following particulars of the capital asset converted into stock-in-trade: -

Capital Assets converted into stock in trade

(a)

Description of capital asset;

(b)

Date of acquisition;

(c)

Cost of acquisition;

(d)

Amount at which the asset is converted into stock-intrade;

Amounts not credited to the profit and loss account, being,-

@Not credited to p & l like any income directly credited to capital account, or credited to any other account

(a)

the items falling within the scope of section 28;

Nil

(b)

the proforma credits, drawbacks, refund of duty of customs or excise or service tax, or refund of sales tax or value added tax, where such credits, drawbacks or refunds are admitted as due by the authorities concerned;

Nil

(c)

escalation claims accepted during the previous year;

Nil

(d)

any other item of income;

Nil

(e)

capital receipt, if any.

Nil

Particulars of depreciation allowable as per the Income-tax Act,1961 in respect of each asset or block of assets, as the case may be, in the following form :-

Depreciation as per section 32

(a)

Description of asset/block of assets.

(b)

Rate of depreciation.

(c)

Actual cost or written down value, as the case may be.

(d)

Additions/deductions during the year with dates; in the case of any addition of an asset, date put to use; including adjustments on account of—

(i) Modified Value Added Tax credit claimed and allowed under the Central Excise Rules, 1944, in respect of assets acquired on or after 1st March, 1994.

(ii) change in rate of exchange of currency.

(iii) subsidy or grant or reimbursement, by whatever name called.

(e)

Depreciation allowable.

(f)

Written down value at the end of the year.

Amounts admissible under sections- (a)33AB, (b)33ABA, (c)33AC (wherever applicable), (d)35, (e)35ABB, (f)35AC, (g)35CCA, (h)35CCB, (i)35D, (j)35DD, (k)35DDA, (l)35E

33AB Tea-Coffee-rubber Development account, 33ABA-Site Restoration Fund, 33AC- Reserve for Shipping Business. 35- Expenditure on Scientific Research. etc

(a)

debited to the profit and loss account (showing the amount debited and deduction allowable under each section separately);

Above amount if debited to p & L and allowable deduction on each section

(b)

not debited to the profit and loss account.

Or Not debited to P & L.

16.

(a)

Any sum paid to an employee as bonus or commission for services rendered, where such sum was otherwise payable to him as profits or dividend. [Section 36(1)(ii)].

(b)

Any sum received from employees towards contributions to any provident fund or superannuation fund or any other fund mentioned in section 2(24)(x); and due date for payment and the actual date of payment to the concerned authorities under section 36(1)(va).

#PF deduction from salary and due date for payment of the same and actual date of payment.

Amounts debited to the profit and loss account, being :-

(a)

expenditure of capital nature;

#Capital Expenditure

(b)

expenditure of personal nature;

#Personal in nature

(c)

expenditure on advertisement in any souvenir, brochure, tract, pamphlet or the like, published by a political party;

#Any payment given to political party for advertisement in such magazine or papers.

(d)

expenditure incurred at clubs,-

If any,

(i) as entrance fees and subscriptions;

(ii) as cost for club services and facilities used;

(e)

(i) expenditure by way of penalty or fine for violation of any law for the time being in force;

#Like Traffic Police Memo,

(ii) any other penalty or fine;

(iii) expenditure incurred for any purpose which is an offence or which is prohibited by law;

(f)

amounts inadmissible under section 40(a);

(g)

interest, salary, bonus, commission or remuneration inadmissible under section 40(b)/40(ba) and computation thereof;

(h)

(A) whether a certificate has been obtained from the assessee regarding payments relating to any expenditure covered under section 40A(3) that the payments were made by account payee cheques drawn on a bank or account payee bank draft, as the case may be, [Yes/No]

See note 17(h)(A)

(B) amount inadmissible under section 40A(3), read with rule 6DD [with break-up of inadmissible amounts]

As per explanation given by assessee there is no payment exceeding Rs.20,000/- otherwise than by A/c payee cheque or DD However it was not possible for us to verify the same.

(i)

provision for payment of gratuity not allowable under section 40A(7);

@Allowable: payment to approved gratuity fund or provision for gratuity for certain liability

(j)

any sum paid by the assessee as an employer not allowable under section 40A(9);

@What is allowable is any sum paid by employer toward recognized provident fund or superannuation fund or approved gratuity fund to the extent if it is required by any law.

(k)

Particulars of any liability of a contingent nature.

If provision for contingent liabilities made in the books of account.

(l)

amount of deduction inadmissible in terms of section 14A in respect of the expenditure incurred in relation to income which does not form part of the total income;

#If incomes are exempt from tax, than expenditure on such incomes shall not be allowed.

(m)

amount inadmissible under the proviso to section 36(1)(iii)

@Interest on Borrowed Capital: following condition must be satisfied : 1. Assessee must have borrowed capital 2. Money so borrowed must have been used for the purpose of business and 3. Interest is paid or payable on such borrowing. Otherwise such interest in not allowable.

Amount of interest inadmissible under section 23 of the Micro, Small and Medium Enterprises Development Act, 2006

Particulars of payments made to persons specified under section 40A(2)(b).

See note 18

Amounts deemed to be profits and gains under section 33AB or 33ABA or 33AC.

Tea coffe development account, site restoration fund amount not utilized or closure of business or other condition not fulfilled than such amount shall be shown at here

Any amount of profit chargeable to tax under section 41 and computation thereof.

@Expenditure allowed as deduction in earlier previous now recovers or not fulfilling the specified condition. Bad Debts allowed earlier now recover, depreciation, transfer from special reserve for financials institutes etc

(i) In respect of any sum referred to in clauses (a), (b), (c), (d), (e) or (f) of section 43B, the liability for which :-

@Some expenses are deductible payment basis. A. tax payable, PF and superannuation payable, bonus and commission to employees, interest payable on borrowing from public financial institutions

(A) pre-existed on the first day of the previous year but was not allowed in the assessment of any preceding previous year and was

(a) paid during the previous year;

above payment of preceding previous year paid during current previous year

(b) not paid during the previous year.

Or not paid during the current previous year

(B) was incurred in the previous year and was

Above sum payable for previous year paid within the due date of filling of return or until the filling of return.

(a) paid on or before the due date for furnishing the return of income of the previous year under section 139(1);

(b) not paid on or before the aforesaid date.

If not paid until the date of signing of audit report than mention here

(ii) [***]

*State whether sales tax, customs duty, excise duty or any other indirect tax, levy, cess, impost, etc., is passed through the profit and loss account.

(a)

Amount of Modified Value Added Tax credits availed of or utilized during the previous year and its treatment in the profit and loss account and treatment of outstanding Modified Value Added Tax credits in the accounts.

@Effect of VAT and Excise credit taken on purchase and sale on profit and loss

(b)

Particulars of income or expenditure of prior period credited or debited to the profit and loss account.

#Expenses or income of preceding previous years credit or debited to P & L account.

Details of any amount borrowed on hundi or any amount due thereon (including interest on the amount borrowed) repaid, otherwise than through an account payee cheque [Section 69D].

Nil

(a)

Particulars of each loan or deposit in an amount exceeding the limit specified in section 269SS taken or accepted during the previous year :-

@ See Note 24(a) & (b)

(i) name, address and permanent account number (if available with the assessee) of the lender or depositor;

Name, address and PAN

(ii) amount of loan or deposit taken or accepted;

Amount taken

(iii) whether the loan or deposit was squared up during the previous year;

Means set off during the year. Against creditors

(iv) maximum amount outstanding in the account at any time during the previous year;

Maximum amount during the year

(v) whether the loan or deposit was taken or accepted otherwise than by an account payee cheque or an account payee bank draft.

Yes or No

*(These particulars need not be given in the case of a Government company, a banking company or a corporation established by a Central, State or Provincial Act.)

(b)

Particulars of each repayment of loan or deposit in an amount exceeding the limit specified in section 269T made during the previous year :-

@ See Note 24(a) & (b)

(i) name, address and permanent account number (if available with the assessee) of the payee;

Name, address and PAN

(ii) amount of the repayment;

Amount repaid(interest also if in excess of Rs. 20000)

(iii) maximum amount outstanding in the account at any time during the previous year;

Maximum amount

(iv) whether the repayment was made otherwise than by account payee cheque or account payee bank draft.

Yes or No

(c)

Whether a certificate has been obtained from the assessee regarding taking or accepting loan or deposit, or repayment of the same through an account payee cheque or an account payee bank draft. [Yes/No]

Certificate regarding the same shall be obtained from assessee

The particulars (i) to (iv) at (b) and the Certificate at (c) above need not be given in the case of a repayment of any loan or deposit taken or accepted from Government, Government company, banking company or a corporation established by a Central, State or Provincial Act.

(a)

Details of brought forward loss or depreciation allowance, in the following manner, to the extent available :

From previous year income tax return.

Sr. No

Assessment Year

Nature of loss/ allowance

(In Rupees)

Amount as returned

(In Rupees)

Amt. as Assessed( give ref. no to relevant order)

Remark

NIL

(b)

whether a change in shareholding of the company has taken place in the previous year due to which the losses incurred prior to the previous year cannot be allowed to be carried forward in terms of section 79

In case of a pvt ltd company,

(from shareholder’s register)

Section-wise details of deductions, if any, admissible under Chapter VIA.

Deduction if any will be claimed at the time filling of return.

(a)

Whether the assessee has complied with the provisions of Chapter XVII-B regarding deduction of tax at source and regarding the payment thereof to the credit of the Central Government.[Yes/No]

#Provision off tax deducted at sources.

(b)

If the provisions of Chapter XVII-B have not been complied with,

please give the following details*, namely:-

Amount

(i)

Tax deductible and not deducted at all

(ii)

shortfall on account of lesser deduction than required to be deducted

(iii)

tax deducted late

(iv)

tax deducted but not paid to the credit of the Central Government

*Please give the details of cases covered in (i) to (iv) above.

(a)

In the case of a trading concern, give quantitative details of principal items of goods traded:

For each any every items but to the extent possible

(i) opening stock;

(ii) purchases during the previous year;

(iii) sales during the previous year;

(iv) closing stock;

(v) shortage/excess, if any.

(b)

In the case of a manufacturing concern, give quantitative details of the principal items of raw materials, finished products and by-products :

For each any every items but to the extent possible

A. Raw materials :

(i) opening stock;

(ii) purchases during the previous year;

(iii) consumption during the previous year;

(iv) sales during the previous year;

(v) closing stock;

(vi) * yield of finished products;

(vii) * percentage of yield;

(viii) * shortage/excess, if any.

B. Finished products/By-products :

(i) opening stock;

(ii) purchases during the previous year;

(iii) quantity manufactured during the previous year;

(iv) sales during the previous year;

(v) closing stock;

(vi) shortage/excess, if any.

*Information may be given to the extent available.

In the case of a domestic company, details of tax on distributed profits under section 115-O in the following form :-

Dividend Distribution tax

(a) total amount of distributed profits;

(b) total tax paid thereon;

Whether any cost audit was carried out, if yes, enclose a copy of the report of such audit [See section 139(9)].

Not Applicable

Whether any audit was conducted under the Central Excise Act, 1944, if yes, enclose a copy of the report of such audit.

Not Applicable

Whether any audit was conducted under the Central Excise Act, 1944, if yes, enclose a copy of the report of such audit.

Not Applicable

Accounting ratios with calculations as follows :-

Gross profit/Turnover;

Gross profit / turnover X 100 =

Net profit/Turnover;

Net Profit / turnover X 100 =

Stock-in-Trade/Turnover;

Stock in Trade X 100 =

Material consumed/Finished goods produced

If possible

	For, Kamani & Khanpara.

Date : 04.08.2013 Place : ATTUR

ANNEXURE-I

PART-A

1.	Name of the assessee	M/S Sagar Agor Input
2.	Address	50, Gumanshihji Shopping Center, Dhebar Road, Rajkot-360001
3.	Permanent Account Number	AAHFS9018B
4.	Status	Patrnership Firm
5.	Previous year ended	31st March, 2013
6.	Assessment Year	2013-13

PART B

Nature of business or profession in respect of every business or profession carried during the previous year

CODE

Sl. No.	Parameters	Current Year	Preceding Year**
1.	Paid-up share capital/capital of partner/proprietor	3214006	2831815.97
2.	Share Application Money/Current Account of Partner/Proprietor, if any	0	0
3.	Reserves and Surplus/Profit and Loss Account	0	0
4.	Secured Loans	0	0
5.	Unsecured Loans	7126190	6261600.00
6.	Current Liabilities and Provisions	2122041	2621303.43
7.	Total Balance Sheet	12462237	11722981.40
8.	Gross Turnover/Gross Receipts	30865905	33961220.00
9.	Gross Profit	1823211	0
10.	Commission Received	0	0
11.	Commission Paid	0	0
12.	Interest Received	800	0
13.	Interest Paid	647664	304105.00
14.	Depreciation as per Books of Account	69570	81437.00
15.	Net Profit (or Loss) before Tax as per Profit and Loss Account	41497	48738.00
16.	Taxes on income paid/provided for in the books	15000	0

** As per last Audit Report.

	For, Kamani & Khanpara.

Date : 04.08.2013 Place : ATTUR

Note 9(a) (Section

44AA)

Specified Profession:

legal, medical, engineering, architectural, technical consultancy or interior decoration or any other notified professions are specified profession.

If any assessee carrying above specified profession, than he has to maintained specified books of accounts.

Specified Books of Accounts:

Cash Book, journal Books, Ledger, Carbon copy of bills, original bills for all expenditure exceeding Rs. 50.

Apart from above, medical profession is required to maintained a daily case register (Form No.3C) and Daily Stock Register.

Other person has to maintained such books of accounts so as to enable assessing officer to compute their taxable income under the income tax act.

Note 17(h)(A) (Section 40(A)(3)

Where assessee incurs any expenditure in respect of which a payment or aggregate of payment made to a person in a day, otherwise than by an account payee cheque, exceeds twenty thousand ruppes, than no deduction shall be allowed in respect of such expenditure.

Ex.: If aggregate payment in a day to the same person in respect of an expenditure, exceeds Rs. 20000, it will be disallowed under section 40A3

If assessee makes payment of two different bills and none of them exceed Rs. 20000 at the same time in cash or by bearer or crossed cheque, section 40A3 is not applicable even if the aggregate payment exceed Rs. 20000.

Note 18 9Section 40A(2)b

Any expenditure incurred and payment of such expenditure is paid to person specified in section 40A(2)b( Relative Person) and such payments are excessive or unreasonable having regard to the fair market value, than such excessive or unreasonable amount shall be disallowed. We have to mention only amount of such transaction.

Ex: Purchase from relative parties, Payment of salary etc. any amount debite to P & L and payment of such expenditure made to relative parties should be mention in this clause.

Note 24(a) & (b) (Section 269SS & 269 T)

Section 269SS:

No person shall, take or accept from any person any loan or deposits otherwise than account payee cheque or bank draft in excess of Rs. 20000 except

a. Government,

b. any banking company or post office saving bank or co-operative bank

c. any government company

d. any corporation established by a central, state or provincial act

e. such other institutions notified by the government.

Section 269T

No person shall repay any deposits or loan to any person otherwise than account payee cheque or bank draft in excess of Rs. 20000 except above a to e.

Means one shall not take or accept any loan or deposit in cash in excess of Rs. 20000 during the year or repay the same

All the transaction of deposits or loan taken or repaid in excess of Rs. 2000 must be reported in this column.

Thank You

M.A AUDITS & ACADEMI

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