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Advanced Auditing

Notes 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 derives income of the nature
referred to in section 44B or section 4BBA on and from the lst day of April, 1985 or, as the case
may be, the date on which the relevant section came into force, whichever is later:
Provided further 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.
Explanation: For the purposes of this section–

(i) “Accountant” shall have the same meaning as in the explanation below sub-section (2) of
Section 288;
(ii) “Specified Date”, in relation to the accounts of the assessee of the previous year relevant to
an assessment year, means the 31 day of October of the assessment year.
st

Notes The ICAI has issued a Guidance note on the audit of Fringe Benefits (With
Supplementary Guidance Note on tax audit under section 44AB of the Income-tax Act,
1961). The said Guidance Note has to be read along with the “Guidance Note on Tax Audit
under section 44AB of the Income-tax Act, 1961”. The Guidance given in both the Guidance
Note has been integrated in the following text.
The above section stipulates that every person carrying on business is required to get his accounts
audited before the “specified date” by a chartered accountant, if the total sales turnover or gross
receipts in the business in any previous year exceed 40 lakhs. A person carrying on a profession
will also have to get his accounts audited before the “specified date” by a chartered accountant
if his gross receipts in profession in any previous year exceed 10 lakhs.

Did u know? Clause (c) of Section 44AB, inserted by the Finance Act, 1997 w.e.f. assessment
year 1998-99, provides that in the case of an assessee carrying on a business of the nature
specified in section 44AD, 44AE, 44AF, 44BB or 44BBB, tax audit will be required if he
claims his income to be lower than the presumptive income deemed under those sections.
Therefore, such assessees will be required to have a tax audit even if their sales, turnover or
gross receipts do not exceed 40 lakhs.

Under the provisions of sections 44AD and 44AF, an assessee can opt to be assessed on presumptive
basis, so long as the gross receipts/total turnover from any of the business(es) do not exceed 40
lakhs. Once the total turnover/gross receipts from any such business(es) exceed 40 lakhs, a tax
audit will be required under clause (a) of Section 44AB. The provisions of sections 44AA and
44AB shall not apply in so far as they relate to the business of civil construction, etc. as referred
to in Section 44AD(1), the business of plying, hiring or leasing goods carriages as referred to in
section 44AE(1), retail business as referred to in section 44AF(1), the business of exploration, etc.
of mineral oil as referred to in section 44BB(1) and the business of civil construction, etc. in
certain turnkey power projects as referred to in section 44BBB(1). In computing the monetary
limits under sections 44AA and 44AB, the turnover/gross receipts or as the case may be the
income from the said business shall be excluded.

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