Clause No. 44 of the Tax Audit Report: The Short Overview

1. Reporting under clause 44 is mandatory in all cases for Income Tax Audit reporting done for 31st March 2022.

2. Reporting needs to be done for both GST registered and unregistered assesses, Irrespective of whether registered as composition dealer or as a regular dealer.

3. This clause shall also be applicable in case assesses get their accounts audited under presumptive scheme of taxation.

4. This clause shall apply to all kind of expenses whether revenue or capital

5. Even if certain expenses are exempt from GST still the same has to be reported under column 3 if such transactions have been entered into with a GST registered person.

6. We need to report payment made to a GST registered person irrespective of whether the payment relates to current year expenses or expenses relating to previous FY, including payment made for expenses in advance.

7. There exist no column to mention the nature of expenses or the name thereof, like purchases, Commission, electricity expenses or capital expenses. One may consolidate all the expenses and make a single entry in serial number 1.

8. In case books of accounts are not geared up to provide the above information, we can give the following disclaimer:

Details as required by Clause 44 are not maintained by the assessee and hence we are unable to comment.

9. The clause 44 requires tax auditor to give the details of entire expenditure in the following format:

 

 

10.Break-up of total expenditure of entities registered or not registered under the GST:

Sl No	Total amount of Expenditure incurred during the year	Expenditure in respect of entities registered under GST				Expenditure relating to entities not registered under GST
		Relating to goods or services exempt from GST	Relating to entities falling under composition scheme	Relating to other registered entities	Total payment to registered entities
(1)	(2)	(3)	(4)	(5)	(6)	(7)

10. It may be noted that the details in clause 44 need not be given on individual expenses wise basis and it can be given on a consolidated basis.

11. There may be numerous cases where auditor may find it difficult to give the details: . Ideally, in all such cases, giving the details at this last hour may not be possible by the assessee. The tax auditor in such case, can give the following disclosure & disclaimer in Form No. 3CA or 3CB as may be applicable:
12. Assessee has not maintained the details in proper format as required in Clause 44. In absence of this, we are unable to give the details as required in Clause 44 of Form No. 3CD.
13. Considering the nature of business and volume of transactions, it is not possible for us to verify and give the details as required in Clause 44 of TAR in 3CD.

iii.  Assessee has not maintained the details as required in Clause 44 of TAR in 3CD. In view of this, we express our inability to report the same.

1. Details as required in the required format in Clause No. 44 is not maintained by the Assessee. It is told that the assessee is not having the proper system and manpower to compile and report the same.

 

Whether disclaimer tantamount to Penal consequences of ICAI or Income Tax Department:

1. The date required is voluminous and bulky. Wihout the same being maintained and streamlined, giving the details may not be possible. In view of this, the disclaimer may not involve the penal consequences.
2. Wrong reporting or erroneous reporting would be more penal in nature as compared to the disclaimer / disclosure of reason for non reporting.