Required Additional Comments by the Tax Auditor in Para 3 of Form 3CA and Para 5 of Form 3CB

Para 13.1 of 2022 GN provided that, for the purposes of performing audit procedures for verifying particulars in Form 3CD and reporting in Form 3CD, the tax auditor “would also be well advised” to refer to the other Standards on Auditing (SAs) as may be relevant, issued by ICAI, as well as the “Guidance Note on Audit Reports and Certificates for Special Purposes”. Latest GN replaces the words “would also be well advised” in Para 13.1 with the word “should”. In view of this change, tax auditor would have to comply with SAs and “Guidance Note on Audit Reports and Certificates for Special Purposes” for the purposes of performing audit procedures for verifying particulars in Form 3CD and reporting in Form 3CD.

1. Remarks to be added in Para 3 of Form 3CA as regards respective responsibilities of tax auditor and assessee-Company in respect of Form 3CD

Therefore, in order to comply with “Guidance Note on Audit Reports and Certificates for Special Purposes”, in Para 3 of Form 3CA, tax auditor should include assessee’s responsibility paragraph and tax auditor’s responsibility paragraph in respect of Form 3CD as under:

1. This Report is issued in accordance with the terms of our engagement letter/agreement dated …………………… [specify date].

2. The accompanying Statement of Particulars in Form 3CD contain particulars required to be furnished pursuant to the requirements of section 44AB of the Income-Tax Act, 1961 and Rule 6G of the Income-Tax Rules, 1962 and signed by us for the purposes of identification only.

1.1 Assessee’s Responsibility for the Statement of Particulars in Form 3CD

3. The preparation of the Statement of Particulars in Form 3CD is the responsibility of the Management of…………………………….. [Name of the Company] (hereinafter the “Company”) including the preparation and maintenance of all accounting and other relevant supporting records and documents. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the Statement and applying an appropriate basis of preparation; and making estimates that are reasonable in the circumstances.

4. The Management is also responsible for ensuring that the Company complies with the requirements of various provisions of the Income-Tax Act, 1961 and Income-Tax Rules, 1962 and other laws mentioned in various clauses of Form 3CD and for ensuring Compliance by the Company with sections 15 to 23 of the Micro, Small and Medium Enterprises Development Act, 2006

1.2 Tax Auditor’s Responsibility

5. Pursuant to the requirements of the Form 3CD, it is our responsibility to provide a reasonable assurance as to:

(i) whether particulars stated against various clauses of Form 3CD are true and correct in material particulars; and

(ii) whether amounts reported against various clauses of Form 3CD have been accurately extracted from the audited financial statements and audited books of account.

6. Pursuant to the requirement of Section 44AB of the Income-Tax Act, 1961, the Income-Tax Rules, 1962 and Para 3 of Form 3CA, it is our responsibility to examine the audited books and other records of the Company for the previous year…. and audited financial statements of the Company for the previous year…and report by providing reasonable assurance whether the Statement of Particulars in Form 3CD is true and correct in material respects.

7. The financial statements prepared from the books and records referred to in paragraph 6 above, have been audited by us on which we issued a modified/an unmodified audit opinion vide our report dated [date]. Our audit of these financial statements was conducted in accordance with the Standards on Auditing specified under section 143(10) of the Companies Act, 2013 and other applicable authoritative pronouncements issued by the Institute of Chartered Accountants of India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. Our audit was not planned and performed in connection with any transactions to identify matters that may be of potential interest to third parties

Or¹

7. The financial statements prepared from the books and records referred to in paragraph 6 above, have been audited by statutory auditors…… on which they have issued a modified/ an unmodified audit opinion vide their report dated [date]. We have relied on financial statements and books of account audited by the statutory auditors.

8. We conducted our examination of the Statement of Particulars in Form 3CD on a test check basis in accordance with the Standards on Auditing, the Guidance Note on Tax Audit under section 44AB of the Income-Tax Act, 1961(Revised 2023)and the Guidance Note on Reports or Certificates for Special Purposes(Revised 2016), issued by the Institute of Chartered Accountants of India. The said Standards and the Guidance Notes require that we comply with the ethical requirements of the Code of Ethics issued by the Institute of Chartered Accountants of India.

9. We have complied with the relevant applicable requirements of the Standard on Quality Control (SQC) 1, Quality Control for Firms that Perform Audits and Reviews of Historical Financial Information, and Other Assurance and Related Services Engagements.

1.3 Restriction on Use

10. This report in Form 3CA and the Statement of Particulars in Form 3CD is addressed to and provided to the Board of Directors of the Company solely for the purpose to enable comply with requirements of section 44AB of the Income-Tax Act, 1961 to be e-filed on the Income-tax Portal, and should not be used by any other person or for any other purpose. Accordingly, we do not accept or assume any liability or any duty of care for any other purpose or to any other person to whom this certificate is shown or into whose hands it may come without our prior consent in writing.

2. Remarks to be added in Para 5 of Form 3CB as regards respective responsibilities of tax auditor and assessee in respect of Form 3CD

In order to comply with “Guidance Note on Audit Reports and Certificates for Special Purposes”, in Para 5 of Form 3CB, tax auditor should include assessee’s responsibility paragraph and tax auditor’s responsibility paragraph in respect of Form 3CD as under:

1. This Report is issued in accordance with the terms of our engagement letter/agreement dated …………………… [specify date].

2. The accompanying Statement of Particulars in Form 3CD contain particulars required to be furnished pursuant to the requirements of section 44AB of the Income-Tax Act, 1961 and Rule 6G of the Income-Tax Rules, 1962 and signed by us under UDIN…………………for the purposes of identification only.

2.1 Assessee’s Responsibility for the Statement of Particulars in Form 3CD

3. The preparation of the Statement of Particulars in Form 3CD is the responsibility of the Management of…………………………….. [Name of the assessee] (hereinafter the “Assessee”) including the preparation and maintenance of all accounting and other relevant supporting records and documents. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the Statement and applying an appropriate basis of preparation; and making estimates that are reasonable in the circumstances.

4. The Management is also responsible for ensuring that the assessee complies with the requirements of various provisions of the Income-Tax Act, 1961 and Income-Tax Rules, 1962 and other laws mentioned in various clauses of Form 3CD and for ensuring Compliance by the assessee with sections 15 to 23 of the Micro, Small and Medium Enterprises Development Act, 2006.

2.2 Tax Auditor’s Responsibility

5. Pursuant to the requirements of the Form 3CD, it is our responsibility to provide a reasonable assurance as to:

(i) whether particulars stated against various clauses of Form 3CD are true and correct in material particulars; and

(ii) whether amounts reported against various clauses of Form 3CD have been accurately extracted from the audited financial statements and audited books of account.

6. Pursuant to the requirement of Section 44AB of the Income-Tax Act, 1961, the Income-Tax Rules, 1962 and Para 3 of Form 3CA, it is our responsibility to examine the audited books and other records of the assessee for the previous year…. and audited financial statements of the assessee for the previous year…and report by providing reasonable assurance whether the Statement of Particulars in Form 3CD is true and correct in material respects.

7. The financial statements prepared from the books and records referred to in paragraph 6 above, have been audited by us on which we issued a modified/an unmodified audit opinion vide this report in Form 3CB dated [date]. Our audit of these financial statements was conducted in accordance with the Standards on Auditing and other applicable authoritative pronouncements issued by the Institute of Chartered Accountants of India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. Our audit was not planned and performed in connection with any transactions to identify matters that may be of potential interest to third parties.

8. We conducted our examination of the Statement of Particulars in Form 3CD on a test check basis in accordance with the Standards on Auditing, the Guidance Note on Tax Audit under section 44AB of the Income-Tax Act, 1961 (Revised 2023)and the Guidance Note on Reports or Certificates for Special Purposes(Revised 2016), issued by the Institute of Chartered Accountants of India. The said Standards and the Guidance Notes require that we comply with the ethical requirements of the Code of Ethics issued by the Institute of Chartered Accountants of India.

9. We have complied with the relevant applicable requirements of the Standard on Quality Control (SQC) 1, Quality Control for Firms that Perform Audits and Reviews of Historical Financial Information, and Other Assurance and Related Services Engagements.

2.3 Restriction on Use

10. Our work in connection with Statement of Particulars in attached Form 3CD was performed solely to assist you in meeting your responsibilities in relation to your compliance with section 44AB of the Income-Tax Act, 1961. Our obligations in respect of attached Form 3CD of even date are entirely separate from, and our responsibility and liability is in no way changed by any other role we may have (or may have had) as auditors of the Company or otherwise. Nothing in this certificate nor anything said or done in the course of or in connection with the services that are the subject of this certificate in Form 3CD, will extend any duty of care we may have in our capacity as auditors of the assessee.

11. This report in Form 3CB and the Statement of Particulars in Form 3CDis addressed to and provided to the assessee solely for the purpose to enable comply with requirements of section 44AB of the Income-Tax Act, 1961 to be e-filed on the Income-tax Portal, and should not be used by any other person or for any other purpose. Accordingly, we do not accept or assume any liability or any duty of care for any other purpose or to any other person to whom this certificate is shown or into whose hands it may come without our prior consent in writing.

It may be clarified that above remarks in Para 5 of Form 3CB are in addition to remarks required under SA 700 in respect of the respective responsibilities of assessee and tax auditor in respect of the financial statements.

1. Of the two alternative Para 7s, delete the inapplicable alternative Para 7