To, Chairman, CBDT
Hope this letter finds you in good health. I am writing with reference to the notification no. 33/2014 dated July 25, 2014, wherein new formats for Tax Audit Report in Forms 3CA, 3CB, and 3CD have been introduced. It is sure that the CBDT must have accorded due care to the prevailing conditions prior to implementing this change with a view to bringing in enhanced transparency in the Tax Audit Reports. I am, however, concerned with the timing of this notification which has shattered the working of tax professionals and the companies. Instant applicability from the date of publication, with no proper reasons revealed whatsoever for this abrupt midyear implementation, has disturbed the work-in-progress, since with respect to Assessment Year 2014-15, audits commenced immediately after March 31, 2014. Furthermore, most of the audits have even been finalized in accordance with the existing format (however all may not have yet been uploaded on the IT web portal), which means that the professionals and companies would now need to put in extra labors and money to collect new piece of data as mandated under the new format. You must also consider the fact that the tax audit reports of banks, FIs, PSUs, and many other assesses have been already been signed.
You must be aware about the controversy over the publication of the notification in the Official Gazette and also that the schematic of e-filing of newly introduced forms is still not available. It would have been appreciative if the new schema for the AY 2014-15 was announced prior to March 31, 2014 so that the companies, professionals, and software providing firms could have prepared themselves in advance. The esteemed institution, CBDT, can introduce all forms including ITRs and their schemas well in advance to steer clear of any omissions due to hurried execution. For the new formats announced on July 25, 2014, no schema is yet available on the website. Even in the last year, the schema was revised on a weekly basis resulting in delays as the customized software vendors too demand time to incorporate the changes. Thorough testing of the schema prior to its announcement is what that was very essential to prevent the stakeholders from extraneous tasks and strains.
It is quite evident that the ‘sudden and midyear’ introduction of new formats was not planned and thought over properly, which is why the non-availability of new schema has caused grave unrest. Due to this non-availability, a sheer confusion prevails among the stakeholders with respect to applicability of the new formats for the Assessment Year 2014-15. Also, the milieu has resulted in two kinds of assesses, one who have already filed Audit Reports prior to July 25, 2014 and others, who are now supposed to comply with the new guidelines. It is to be noted that the task of preparing Tax Audit Reports is not mechanical, rather it demands expert knowledge, study, and proper guidance from the ICAI, however ‘Guidance Notes’ on new formats have not still been issued by this apex body of Auditors in India. With reference to the facts enumerated above, may I please request you to consider the following recommendations:
- To postpone the applicability of Notification no. 33/2014 dated July 25, 2014 to the AY 2015-16 and reinstate the old forms for and up to AY 2014-15 so as to make effective utilization of the valuable time of assesses and auditors spent in preparing reports in existing formats.
- To extend the date of filing Tax Audit Reports under the existing format for at least 2 months as a compensation for days (commencing from the date of announcement of new formats i.e. July 25, 2014) for which the professionals have been paralyzed due to non-availability of the new schema.
- To notify any such future modifications in the formats of Tax Audit Reports in the period, December to March, after the conclusion of normal Tax Audit to ensure smooth working throughout the Audit period.
- To avoid any revisions in the utility schema, unless warranted, once the same has been released for a particular Assessment Year.
- To accommodate the proper Audit Report format in the Form 3CA and 3CB in accordance with the Audit Standards in force, after due consultation with the DTC wing of the ICAI.
- To invite unbiased comments and constructive suggestions from the ICAI in preparing the schema, post which any bugs shall be tested, and a foolproof system of filing be made applicable from the Assessment Year 2015-16. FICCI, ASSOCHAM, and all other valuable stakeholders must also be consulted with a view to according more effectiveness to the Tax Audit Report.
- To pay requisite heed to the request for postponement of the new format made by the ICAI, a statutory body under an Act of the Parliament which is also a regulatory body for matters concerning the audits of corporates in our country, to the Finance Minister, Secretary of the Revenue Department, and to your good self.
I am sure that the above recommendations will be paid heed to in light of the ongoing disorder so that all the stakeholders are prevented from any waste of funds and labors. The final verdict of yours is anxiously awaited and it is expected that reasonableness will be rendered supreme place. You must appreciate the fact that India is known as one of the most tech-savvy nations of the world and any such slipups prove that there exists a grave tailback in the system. I thank you for your valuable time and am looking forward to your swift consideration of this subject-matter. I am readily available for any feedback/ suggestions at all possible times.
Dr. Sunil Gupta
Director: PNB, GIC, REC, FICCI