Tax Audit for partnership means to Examine the books of accounts maintained by partnership firm & verify the accurateness of the income earned & deduction claimed by the firm in the Income tax returns .Tax audit for FY 2019-20(i.e AY 20-21) shall be governed by the provisions ( Section 44AB ) & Rules laid down in the Income Tax Act 1961 . Partnership firm who’s turnover crosses specified limit for those firm Tax audit is applicable. The Chartered Accountants conducting audit needs to record all his observations & findings and submit in the form of an audit report. In below article we discussing about tax audit applicability , due date of filing , tax audit report format & penalty for tax audit.
Tax audit applicability for partnership firm is given under Section 44AB of Income Tax Act 1961. Tax Audit for partnership firm is applicable if the turnover/ gross receipt exceeds Rupees One Crore in case of business and Rupees Fifty laces in case of profession. As per nature of business of firm turnover criteria changes.
Meaning of Business : – Sec. 2(3) has defined the term as “ any trade, commerce, manufacturing activity or any adventure or concern in the nature of trade, commerce and manufacture”
Meaning of Profession : – “Every person carrying on legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decoration or any other profession as is notified by the Board in the Official Gazette.
|S.No||Example||Nature of Activity||Turnover||Tax Audit Applicability|
|1||M/s Shree Sales ( Partnership firm ) is business of supply of building material. The firm turnover for FY 2019-20 is 2.5 Cr||Business||Turnover > Rs. 1 Cr||Tax Audit Applicable|
|2||M/s Shree Consulting ( Partnership firm ) is business of engineering service provider . The firm turnover for FY 2019-20 is 52 Lac||Profession||Turnover > Rs. 50 Lac||Tax Audit Applicable|
|3||M/s Shree Marbles ( Partnership firm ) is business of supply of Marble products . The firm turnover for FY 2019-20 is 52 Lac||Business||Turnover < Rs. 1 Cr||Tax Audit Not Applicable|
Due date for tax audit for partnership firm for FY 2019-20 ( AY 2020-21 ) is 30 September 2020. If the partnership firm is liable for audit u/s 44AB then firm should file tax audit in due date. Also income tax reuturn filing due of firm shall be 30 September 2020.
Any partnership firm where tax audit is applicable & fails in tax audit filing in due date invites penalty under section 271B of Income Tax Act 1961. Penalty for non filing of tax audit shall be as below , penalty may be levied i.e lower of
However, Section 273B tax audit can be filed audit due. There is no penalty shall be levied under section 271B if firm proves there is a reasonable cause of such no filing, which causes are accept by Tribunals/Courts as reasonable Cause are:
Income Tax Act 1961 given Tax audit report format for partnership firm. Below are Tax Audit report formats.
Where assesse isn’t required to get his accounts audited under any other law except Income tax.
Statement of Particulars including details of the assesse and compliances which are required to be furnished .
Digital Signature for Chartered Accountant and authoried partner is mandatory for audit filing. While uploading the Audit Form CA needs to attach DSC , which shall be approved by partner.