The Central Board of Direct Taxes (CBDT) has recently announced significant modifications to Form No. 3CD, a crucial document for tax audit reporting. These amendments, highlighted in Notification No. 27/2024 dated 05.03.2024 and effective immediately, are aimed at refining and updating tax audit procedures to align with the ever-changing legislative and regulatory landscape.
Key Changes in Form No. 3CD
Clause 8A: The amendment includes a reference to section 115BAE for assessing whether an assessee has opted for special provisions under various sections.
In PART A, in clause 8a, the figures and letters “115BAD” have been substituted with “115BAD/115BAE”.
Clause 12: A reference to section 44ADA has been included to determine whether the profit and loss account includes profit computed on a presumptive basis.
In PART B, A. in clause 12, the figures and letters “44AD” have been substituted with “44AD, 44ADA”.
Clause 18: Sub-clause (ca) has been substituted to require adjustments to the Written Down Value (WDV) under different provisos to section 115BAA/115BAC/115BAD for specified assessment years.
In clause 18, the following sub-clauses shall be substituted:
(ca) Adjustment made to the written down value-
(i) under the proviso to sub-section (3) of section 115BAA (for assessment year 2020-21 only);
(ii) under the first proviso to sub-section (3) of section 115BAC or the proviso to sub-section (3) of 115BAD (for assessment year 2021-22 only);
(iii) under the second proviso to sub-section (3) of section 115BAC (for assessment year 2024-25 only)
Clause 19: The amendment includes a reference to section 35ABA and any other relevant section for determining amounts admissible under different sections.
In clause 19, the following changes shall be made in the table:
(i) After the row with entry “35(2AB)”, the row with entry “35ABA” shall be inserted;
(ii) After the row with entry “35E”, the row with entry “any other relevant section” shall be inserted;
Clause 21: Reference to expenditures for any purpose which is an offense or prohibited by law, or expenditure to compound an offense, etc., has been included.
In clause 21, the following changes shall be made:
- (I) In sub-clause (a), in the table, under the column relating to ‘Nature’:
(i) for the words “Expenditure by way of penalty or fine for violation of any law for the time being in force”, the words and brackets “Expenditure for any purpose which is an offense or is prohibited by law or expenditure by way of penalty or fine for violation of any law (enacted in India or outside India)” shall be substituted;
(ii) after the row with the words “Expenditure by way of any other penalty or fine not covered above”, the row with the words “Expenditure incurred to compound an offense under any law for the time being in force, in India or outside India” shall be inserted;
(iii) for the words “Expenditure incurred for any purpose which is an offense or which is prohibited by law”, the words “Expenditure incurred to provide any benefit or perquisite, in whatever form, to a person, whether or not carrying on a business or exercising a profession, and acceptance of such benefit or perquisite by such person is in violation of any law or rule or regulation or guideline, as the case may be, for the time being in force, governing the conduct of such person” shall be substituted;
- (II) In sub-clause (b), in paragraph (ii), in sub-paragraph (B), the word “payer” shall be substituted with “payee”.
Clause 26 & Clause 22: Reporting requirement in respect of compliance under section 43B(h) relating to the amount payable to micro and small enterprises has been added.
Clause 32(a): A reference to losses/allowances not allowed under section 115BAE and the amount adjusted by way of withdrawal of additional depreciation on account of opting for taxation under section 115BAE has been included.
In clause 32, in sub-clause (a):
- (I) In the table, for the figures and letters “115BAD”, the figures and letters “115BAD/115BAE” shall be substituted in column (5);
- (II) In the table, the figures and letters “115BAD^” shall be substituted with “115BAD/115BAE^” in column (6);
- (III) The words and figures “To be filled in for assessment year 2021-22 only.” shall be substituted with “To be filled in only for assessment year 2021-22 and 2024- 25, as applicable.”, below the table.
The amendments introduced by the CBDT to Form No. 3CD for the Assessment Year 2023-2024 represent a significant step towards enhancing the accuracy and transparency of tax audit reporting. Tax professionals and assessees must familiarize themselves with these changes to ensure compliance with the updated regulations. Keeping pace with such amendments is crucial for maintaining tax compliance and avoiding potential penalties or legal issues amidst the evolving regulatory landscape.
