CBDT allows tax audit report revision in case of disallowance recalculation, notifies rules


The Central Board of Direct Taxes has notified amendments to the income tax rules which allow tax audit reports to be revised if there’s a need for recalculation of disallowance basis deductible and non-deductible amounts specified in the income tax Act.

“The report of audit furnished under this rule may be revised by the person by getting revised report of audit from an accountant, duly signed and verified by such accountant, and furnish it before the end of the relevant assessment year for which the report pertains, if there is payment by such person after furnishing of report under sub-rule (1) and (2) which necessitates recalculation of disallowance under section 40 or section 43B,” the Board said in a notification issued Friday.

Section 40 refers to amounts that are not deductible while computing income chargeable under profits and gains of business or profession, while Section 43B refers to amounts that can be deducted on actual payments made by the assessee.

The Board has accordingly modified the Form 3CD – for filing the tax audit report – where a clause has been added to Part A to mention the taxation option chosen by the assessee under the concessional tax regime which the government had introduced in 2019 and brought into effect in the previous Union Budget.

India had reduced the corporate tax rate for existing companies to 22% and for new manufacturing units to 15% subject to the condition that companies do not avail any exemption or deductions.

Part B of the tax audit form will now include assessed value of any non-movable asset such as land, building or both, transferred during the previous year for consideration less than value adopted or assessed or assessable by any authority of a state government.

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The amendments to the Form 3CD also include mention of exclusion of depreciation on goodwill of a business or profession and adjustment to the written down value of intangible asset, besides details of brought forward loss or depreciation allowance.

In the Union Budget 2021, the government had amended the Finance Act, under which written down value of goodwill carried forward from earlier years will be excluded or reduced from the written down value of block of assets from assessment year 2021-22 onwards.



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