TAX PROFESSIONAL
The role of a tax professional, particularly an ‘Accountant’, is central to ensuring statutory compliance under the Income-tax Act, 1961. The term "Accountant" is specifically defined under the Explanation to Section 288(2) of the Income-tax Act (the Act), which states:
“Accountant” means a Chartered Accountant within the meaning of the Chartered Accountants Act, 1949 (38 of 1949) and who holds a valid certificate of practice under sub-section (1) of section 6 of that Act.”
This definition clearly states that only practising Chartered Accountants are authorised to perform certain attestations and certifications mandated by the Act.
Chartered Accountants are required to verify, certify, and audit various financial statements, transactions, and disclosures submitted by taxpayers. Their certification is not merely procedural; it carries legal and financial consequences. From tax audits to claiming specific deductions and exemptions, the involvement of a Chartered Accountant ensures that the taxpayer’s compliance is accurate and in accordance with the law.
In this section, we will cover the following:
• A detailed list of all forms and reports that require attestation/certification by an accountant;
• Penalties and consequences applicable on the Chartered Accountant for non-compliance or incorrect certification;
Under the Income Tax Act, certain forms and audit reports are required to be certified by a Chartered Accountant in practice. These attestations are essential for claiming specific deductions and exemptions and for ensuring statutory compliance.
Below is a list of key forms that require such attestation, along with their relevant provisions.
• Form 3AC - Audit Report under section 33AB(2)
An assessee engaged in the business of tea, coffee or rubber plantation in India, makes a deposit in a special deposit account, the deduction is allowed under section 33AB. This deposit can be utilised by the assessee only for the specified purposes, and any use of the deposit for a non-permitted purpose would result in the withdrawal of the deduction.
To claim this deduction, an assessee is required to get his accounts audited by an accountant and furnish the report of such audit electronically in Form 3AC before one month prior to the due date of furnishing the return of income under section 139(1).
• Form 3AD - Audit Report under section 33ABA(2)
Assessee can claim the deduction under section 33ABA if he is engaged in the business of production of petroleum/natural gas in India for deposit in a special account or site restoration account.
To claim this deduction, an assessee is required to get his accounts audited by an accountant and furnish the report of such audit electronically in Form 3AD before one month prior to the due date of furnishing the return of income under section 139(1).
• Form 3AE – Audit Report under section 35D(4)/35E(6)
As per section 35D, preliminary expenses are allowed as a deduction in 5 equal instalments starting from the previous year when the business is commenced or the new undertaking or unit starts its operation. This deduction is available only to an Indian company or a resident non-corporate assessee.
Similarly, section 35E allows deduction of expenditure incurred, wholly and exclusively, on any operation relating to prospecting for the minerals or on development of a mine or other natural deposit of any such minerals. The eligible expenditure shall be allowed as a deduction in 10 equal instalments over 10 years.
However, the deduction shall be admissible to the assessee, other than a company or a co-operative society, only if its books of account for the year or years in which the expenditure is incurred have been audited by an Accountant. The assessee furnishes such report of audit in Form 3AE , along with his return of income for the first year in which the deduction under section 35D or 35E is claimed.
• Form 3CA -3CD or Form 3CB -3CD – Audit report under section 44AB
Section 44AB mandates an audit of the books of accounts of an assessee who is engaged in business or profession. The tax audit is required if gross turnover or receipts from business or profession exceed the prescribed threshold limit.
Where assessee is required to get his books of accounts audited under any other law, it is sufficient for him to get his accounts audited under that law and furnish a report of such audit and a report in Form 3CA and 3CD by an accountant by the prescribed due date.
The tax auditor is required to enclose a copy of the statutory audit report with Form 3CA . However, where the statutory auditor has not been appointed or the statutory auditor's report is unavailable, the tax auditor can give his audit report in Form 3CB with Form 3CD .
• Form 3CE – Audit report under section 44DA(2)
If royalty or fee for technical services received by a non-resident or a foreign company is connected to a permanent establishment or a fixed place of profession in India, it shall be taxable under the head 'Profit and gains from business and profession' in accordance with the provisions of section 44DA.
Every non-resident and foreign company shall keep and maintain books of account. An accountant shall audit such books of accounts. Such a non-resident or foreign company are required to furnish such an audit report in Form 3CE, duly signed and verified, at least one month prior to the due date of furnishing the return of income under section 139(1).
• Form 3CEA - Report of an accountant under section 50B(3)
In case of a slump sale, every assessee is required to submit a report from a chartered accountant in Form 3CEA . This report must be submitted one month before the due date for furnishing the return of income under section 139(1).
The report should include the calculation of the net worth of the undertaking or division sold. It must also certify that the net worth has been correctly calculated as per the provisions of section 50B.
• Form 3CEB - Report from an accountant to be furnished under section 92E relating to international transactions and specified domestic transactions
As per Section 92E, any person who has entered into an international or specified domestic transaction during a previous year is required to file Form 3CEB .
• Form 3CEJ - Report from an accountant under section 9A on arm’s length remuneration paid by an eligible investment fund to its fund manager
Apart from the report required under section 92E, the fund manager is also required to get a report from an accountant for the activities carried out for the fund. This report must be prepared in Form 3CEJ , verified by the accountant, and submitted by the taxpayer on or before the due date of furnishing the return of income under section 139(1).
• Form 3CEJA – Report from an accountant to be furnished for purpose of section 9A regarding fulfilment of certain conditions by an eligible investment fund
The fund manager is required to get a report from an accountant for the activities carried out for the fund, in addition to the report required under section 92E. This report should be in Form 3CEJA , verified by the accountant, and submitted by the taxpayer on or before the due date of furnishing the return of income under section 139(1).
• Form 3CLA - Report from an accountant under section 35(2AB) on in-house scientific research and development facility
Section 35(2AB) allows a deduction to a company which is engaged in the business of bio-technology or in any business of manufacture or production of any article or thing (except those specified in the Eleventh Schedule). This deduction is allowed for the expenditure incurred on in-house research, other than any expenditure on land or building, and an approved development facility. An application for approval shall be made in accordance with Rule 6.
Further, Rule 6 provides that the company shall maintain a separate account for each approved facility which shall be audited annually and a report of audit in Form 3CLA shall be furnished electronically by an accountant to the prescribed authority on or before the due date for furnishing the return of income under section 139(1), for each succeeding year.
• Form 6B – Audit report under section 142(2A)
As per section 142(2A), the Assessing Officer, at any stage of proceedings before him, may direct an assessee to get his accounts audited, if prescribed conditions are satisfied. Such directions can be given even if accounts have already been audited under any other law.
The assessee is required to get his accounts audited by the accountant and furnish the audit report in Form 6B .
• Form 10B - Audit report required to be filed by certain charitable or religious trusts/institutions
To avail of the exemption under Section 11, Section 12, or Section 10(23C), it is mandatory for a trust to get its books of accounts audited. The books of accounts are required to be audited where the total income of the trust before exemption under Sections 11 and 12 or Section 10(23C) exceeds the maximum amount not chargeable to tax. An accountant should audit the accounts of the trust for that year.
The audit report has to be furnished in Form 10B at least one month prior to the due date of submission of return of income.
Form 10B is to be filed:
o If the total income of the trust or institution, without giving effect to the provisions of Sections 11 and 12 or Section 10(23C) (iv), (v), (vi), (via) of the Act, exceeds Rs 5 crores during the previous year;
o If such a trust or institution has received any foreign contribution during the previous year, or
o If such a trust or institution has applied any part of its income outside India during the previous year.
• Form 10BB - Audit report required to be filed by certain charitable or religious trusts/institutions
To avail of the exemption under Section 11, Section 12 or Section 10(23C), it is mandatory for a trust to get its books of accounts audited. The books of accounts are required to be audited where the total income of the trust before exemption under Sections 11 and 12 or Section 10(23C) exceeds the maximum amount not chargeable to tax. The accounts of the trust for that year should be audited by a Chartered Accountant. The audit report has to be furnished in Form 10BB at least one month prior to the due date of submission of return of income.
Form 10B is to be filed:
o If the total income of the trust or institution, without giving effect to the provisions of sections 11 and 12 or Section 10(23C) (iv), (v), (vi), (via) of the Act, is up to Rs. 5 crores;
o If such trust or institution has not received any foreign contribution during the previous year; and
o If such trust or institution has not applied any part of its income outside India during the previous year.
• Form 10CCB – Audit report to claim deduction
An industrial undertaking eligible for deduction under sections 80-IA, 80-IB, 80-IC, 80-IAB, 80-IAC, and 80-IE has to file Form 10CCB .
The assessee shall be eligible to claim a deduction under these provisions provided its books of accounts, for the previous year for which the deduction is claimed, are audited by an accountant. The audit report has to be furnished electronically in Form 10CCB one month prior to the due date of furnishing the return of income under section 139(1).
• Form 10CCC – Certificate for highway project reserve account
Section 80-IA(6) provides a deduction for the profits and gains of housing projects or other activities integral to a highway project. The deduction is allowed based on the percentage of completion of the activities involved in the project out of the money transferred to the special reserve account.
The assessee shall be eligible to claim a deduction under this provision provided its books of accounts, for the previous year for which the deduction is claimed, are audited by an accountant. Assessee is required to submit a certificate in Form 10CCC from an accountant specifying the amount credited to the reserve account and the amount utilised during the relevant previous year for the highway project.
The audit report has to be furnished electronically in Form 10CCC along with return of income under section 139(1).
Form 10CCF – Report under section 80LA
A Schedule Bank or a foreign Bank or a unit of IFSC is eligible to claim deduction under Section 80LA. In case of a bank, 100% of the income is deductible for first 5 consecutive assessment years, thereafter 50% for next 5 assessment years. In case of a unit of an IFSC, 100% of income is deductible for 10 consecutive assessment years out of 15 years.
The assessee claiming deduction under this provision shall electronically furnish the following documents along with the return of income:
(a) Report of a Chartered Accountant in Form 10CCF certifying that the amount of deduction has been correctly claimed;
(b) A copy of permission obtained under section 23(1)(a) of the Banking Regulations Act, 1949 or copy of permission or registration obtained under the International Financial Services Centre Authority Act, 2019.
• Form 10DA - Report under section 80JJAA
Every assessee earning business income and liable for a tax audit is eligible to claim a deduction under section 80JJAA for additional employee costs. The deduction shall be allowed for 30% of the additional employee cost in three assessment years. Thus, the total deduction will be 90% of the additional wages, spread over a period of three assessment years.
Assessee is required to furnish the report of an accountant electronically in Form 10DA . It is required to furnish this report must be furnished one month before the due date for furnishing the return of income.
• Form 15CB – Certificate of an accountant
A payer responsible for making payment to any non-resident person shall furnish information about such payment to the Income-tax Dept. in Form 15CA . Assessee is also required to obtain a certificate in Form 15CB from an accountant if the aggregate amount of payment exceeds Rs. 5 lakhs.
• Form 29B - Report under section 115JB for computing the company’s book profits.
A company liable to pay tax as per the provisions of MAT is required to file a certificate from an accountant in Form 29B to the effect that the book profits have been correctly calculated.
The certificate shall be filed electronically one month before the due date of furnishing of return of income under section 139(1) or along with the return of income furnished in response to a notice issued under section 142(1)(i).
• Form 29C - Report under section 115JC for computing adjusted total income and AMT
Every assessee (other than a company) is subject to Alternative Minimum Tax ('AMT') if he has claimed any of the following deductions:
i. Deduction under any provision (other than Section 80P) included in Chapter VI-A under the heading 'C- Deduction in respect of certain income'; or
ii. Deduction under Section 10AA; or
iii. Deduction under Section 35AD.
The AMT is payable by the assessee if the tax payable by him on his total income (computed as per normal provisions of the Act) is less than 18.5% of 'adjusted total income'. In such a case, the adjusted total income is taken as the total income of the assessee, and tax is levied on the same at the rate of 18.5%.
Every assessee subject to this provision shall file a certificate from an accountant in Form 29C to the effect that the adjusted total income and AMT have been correctly computed. The report shall be filed one month before the due date of furnishing the return of income under Section 139(1).
• Form 49C - Annual Statement under section 285
Section 285 mandates that a non-resident operating a liaison office in India must submit an annual statement of such office's activities for the financial year in Form 49C . The annual statement shall be duly verified by the Chartered Accountant or the person authorised in this behalf by the non-resident person, who shall be known as the Authorised Signatory.
The annual statement must be furnished electronically with a digital signature within 8 months of the end of the financial year.
• Form 56F – Report under section 10AA
Section 10AA(5) read with Rule 16D of the Income-tax Rules, mandates that an assessee claiming deduction under Section 10AA must furnish a report in Form No. 56F . This report, certified by an accountant, ensures that the deduction has been correctly claimed in accordance with the provisions of Section 10AA.
It must be filed electronically under digital signature one month before the due date of furnishing the return of income under Section 139(1).
• Form 66 – Audit report under section 115VW
Section 115VW read with Rule 11T provide that an option for tonnage tax scheme by a tonnage tax company shall not have effect in relation to a previous year unless such company maintains separate books of account in respect of the business of operating qualifying ships and furnishes the accountant’s report in Form No. 66 one month prior to the due date for furnishing the return of income.
• Form 10BC – Audit report furnished in case of an electoral trust
Rule 17CA(12) provides that every electoral trust shall get its accounts audited by an accountant. A report of such audit shall be furnished electronically in Form No. 10BC, along with particulars forming part of its Annexure, to the CIT or DIT having jurisdiction over the electoral trust. Such Audit report is required to be furnished on or before the due date for furnishing the return of income by a company under Section 139.
• Form 10BBC – Certificate in respect of compliance with the provision of section 10(23FE)
Section 10(23FE) exempts income in the nature of dividend, interest, long-term capital gains and income from InVITs unit held by a wholly owned subsidiary of the Abu Dhabi Investment Authority, a Sovereign Wealth Fund or a Pension Fund from tax. The exemption is allowed on fulfilment of certain conditions.
In the case of a pension fund, one of the prescribed conditions is that it must file its return of income on or before the due date specified under Section 139(1) and submit a certificate in Form No. 10BBC from an accountant along with the return.
• Form 64D – Statement of income paid or credited by investment fund to be furnished under section 115UB
The investment fund is required to furnish a statement of income paid or credited to its unit holders in Form No. 64D, duly verified by an accountant, to the Principal Commissioner or Commissioner of Income-tax on or before 15th June of the financial year immediately following the previous year in which such income was paid or credited.
• Form 64E – Statement of income paid or credited by a securitisation trust to be furnished under section 115TCA
The securitisation trust shall furnish a statement of income paid or credited to its investors in Form No. 64E, duly verified by an accountant, to the Principal Commissioner or Commissioner of Income-tax on or before 15th June of the financial year immediately following the previous year in which such income was paid or credited.
• Form 3CT – Report verifying that the income attributable to assets located in India
The transferor of the share of, or interest in, a company or an entity that derives its value substantially from assets located in India, shall obtain and furnish along with the return of income a report in Form No. 3CT duly signed and verified by an accountant providing the basis of the apportionment in accordance with the formula and certifying that the income attributable to assets located in India has been correctly computed.
• Form 64A – Statement of income distributed by a business trust to be furnished under section 115UA
The statement of income distributed by a business trust to its unit holder shall be furnished by the business trust to Pr. CIT/CIT, in Form No. 64A , , duly verified by an accountant on or before 15th June of the financial year following the previous year during which the income is distributed.
• Form 5BA – Certificate of an accountant under sub-rule (6)of rule 8B
Every infrastructure capital company, infrastructure capital fund, infrastructure debt fund, or public sector company shall, within two months from the end of each specified financial year as mentioned in Rule 8B(3), submit a certificate from an accountant in Form No. 5BA , specifying the amount (released from zero coupon bonds) invested in each year.
• Form 64 – Statement of Income paid or credited by a Venture Capital Company or Venture Capital Fund
Form 64 is a statement of income paid or credited by a Venture Capital Company or Venture Capital Fund, as required under section 115U(2) of the Income Tax Act. It must be verified by an accountant and submitted electronically with a digital signature.
• Form 62 - Certificate of production level for availing carry forward of losses and unabsorbed depreciation under section 72A
As per Rule 9C, the amalgamated company owning an industrial undertaking of the amalgamating company by way of amalgamation, shall achieve at least 50% of the installed capacity of the industrial undertaking of the amalgamating company within four years from the date of amalgamation and maintain that level for at least five years.
To substantiate compliance, the amalgamated company is required to furnish Form 62 , duly verified by an accountant, based on the books of account and other relevant documents. This form must be submitted to the Assessing Officer along with the return of income for the assessment year in which the prescribed level of production is achieved, and for each of the subsequent assessment years falling within the five-year period.
• Form 26A - Certificate under First proviso to section 201(1)
As per Rule 31ACB, the certificate from an accountant under the first proviso to Section 201(1) shall be furnished in Form 26A to the Director General of Income-tax (systems) or the person authorised by him.
• Form 27BA - Certificate under First proviso to section 20C(6A)
As per Rule 37J, tthe certificate from an accountant under the first proviso to Section 206C(6A) shall be furnished in Form 27BA to the Director General of Income-tax(systems) or the person authorised by him.
• Form 10-IJ - Certificate to be issued by accountant under clause (23FF) of section 10
The specified fund shall be required to furnish an annual statement of exempt income in Form 10-II on or before the due date of filing the original return of income. Further, such annual statements shall be required to be certified by and filed by an accountant in Form No. 10-IJ at least one month prior to the due date of filing the return of income.
• Form 10-IL – Verification by an Accountant under sub-rule (3) of rule 21AJA
An investment division of an offshore banking unit must:
(a) Maintain separate and fair accounts for all its transactions, properly recording and allocating income and expenses; and
(b) Get these accounts audited by an accountant, who must submit an audit report in Form 10-IL electronically with a digital signature one month prior to the due date of furnishing return of income.
PENALTY AND CONSEQUENCES
Failure by an accountant to furnish the required certificate or audit report can have serious implications for the taxpayer. In such cases, the assessee may be denied the benefit of certain deductions or exemptions under the Income-tax Act and may also be subject to interest and penalties due to non-compliance.
Penalty for Accountant
As per Section 271J of the Income-tax Act, 1961, if an Accountant, Merchant Banker, or Registered Valuer furnishes incorrect or inaccurate information in a report or certificate, a penalty of Rs. 10,000 per report or certificate may be levied.