Below is a table where, Income tax department has released a list of FAQ discussing various situations where an Income tax return could be considered as defective based on tax audit and other audit.
FAQs based on other Audit reports and Forms:
| Question No. | Relevant ITR Types | Description | Response |
| 1 | ITR-3, 5 & 6- PFA/Defective | How to claim deduction & avoid adjustment u/s 80-IA or u/s 80-IB or u/s. 80 IC or u/s 80IE or U/s 80IAC or 80IAB? | Form 10CCB needs to be filed within the time allowed to claim deduction. The amount of deduction claimed in return should not be more than the deduction mentioned in the form against corresponding section and to the extent of income available in BP after brought forward adjustment.
Any difference may result in adjustment through restriction of claim in corresponding section. |
| 2 | ITR-3, 5 & 6 – PFA/Defective | How to claim deduction & avoid adjustment u/s 80JJAA? | Form 10DA needs to be filed within the time allowed to claim deduction. The amount of deduction claimed in return should not be more than the deduction mentioned in the form. Any difference may result in adjustment through
restriction of claim for the said section. |
| 3 | ITR-3, 5 & 6 –PFA/Defective | Is it required to file return within due date to claim Part-C deductions & deduction u/s 10AA? | Yes, it is required to file the return within due date /extended due date as per section 139(1) to claim Part-C deductions & deduction u/s 10AA. |
| 4 | ITR-3, 5 & 6 –PFA/Defective | How to claim deduction & avoid adjustment u/s 80LA or u/s 80LA (1)? | Form 10CCF needs to be filed within the time allowed to claim deduction. The amount of deduction claimed in return should not be more than the deduction mentioned in the form against corresponding section. Any difference may result in adjustment through restriction of claim in corresponding section. |
| 5 | ITR-3, 5 & 6 – PFA/Defective | How should the profit mentioned in form 29B/29C should be reflected in the Schedule MAT/AMT in return of income? | The amount of profit & other figures mentioned in the return of income should match with the amount of profit & other figures mentioned in Form 29B / 29C. |
| 6 | ITR- 6 – PFA/Defective | How should the profit mentioned in form 66 should be reflected in Schedule BP for “Chapter-XII-G (tonnage)” in return of income? | The amount of income offered in return should match with the amount of profit mentioned in Form 66. Further it is mandatory to file Form 66 to avoid defective notice. |
| 7 | ITR- 6 – PFA/Defective | Whether form 10-IB, 10-IC & 10-ID are required to be filed each year? | No, form 10-IB, 10-IC & 10-ID as applicable is required to be filed only in the first year of opting for the same. However please ensure that this form is filed within due date. Only when you missed to file the form within the due date, file the same again in the next year within the due date. Please note that once opted for new tax regime, one cannot go out of the same. However, one can move from 115BA to 115BAA or 115BAB to 115BAA. |
| 8 | ITR- 6 – PFA/Defective | Is it mandatory to file form 3CE if income is offered u/s 44DA in Schedule BP? | If the amount of income offered in return u/s 44DA then it is mandatory to file Form 3CE with in the time allowed. If the form is not filed, then return can be rendered defective. |
FAQs based on tax Audit report:
| Q. No. | Relevant ITR Types | Description | Response |
| 1 | ITR-3, 5 & 6 – PFA/Defective | How much of the sum received from employees and not credited to the employees account on or before the due date as per the section 36(1) (va) is required to be disallowed? | Taxpayers are required to deposit the contributions received from employees for various funds within the due date as per section 36(1)(va). Further the details of the due date as per the respective Acts need to be reported correctly by the Auditor in clause 20(b) of Form 3CD. Any payment made beyond the due date as per the Act and reported in the Audit report is required to be disallowed u/s 36(1)(va). |
| 2 | ITR-3, 5 & 6 – PFA/Defective | How to disclose the Dividend income received u/s. 2(22)(e)? | Details of dividend income received u/s. 2(22)(e) with in the financial year is required to be disclosed in the clause 36A of form 3CD. Further the same needs to be offered in Schedule OS of ITR at appropriate places. |
| 3 | ITR-3, 5 & 6 – PFA/Defective | How to disclose the effect on profit due to ICDS & the method of valuation of stock specified under section 145A? | In the audit report, auditor is required to report the “increase in profit”, “decrease in profit”, and “net effect” separately in the columns provided at SI. No. 13(e) and 14(b). In the return of income at schedule ICDS, the “net impact” on profit due to ICDS adjustments shall be shown separately against each line item. In addition, at schedule OI, Sl. No. 3a the sum of all the positive items of 13(e) and 14(b) shall be shown and at SI. No. 3b the sum of all the negative items of 13(e) and 14(b) shall be shown. The net difference of 3(a) minus 3(b) is not expected to be less than the difference of all the positive and negative items of 13(e) and 14(b). It is seen that some of the adjustment items of schedule BP are a repeat item in ICDS adjustments also and are separately identifiable. Example. “Adjustments due to depreciation”. The impact of such adjustments having dual / multiple impact may be reported using other appropriate columns of schedule BP, so as to nullify the impact of dual/ multiple adjustment. |
| 4 | ITR-3, 5 & 6 – PFA/Defective | How to disclose “Amount debited to profit and loss account and disallowable u/s. 37” in income tax return? | In the audit report, auditor is required to report the amount disallowable u/s. 37 at the clause 21(a) and 21(g) of form 3CD. Taxpayer is required to report at least the same amount disallowable u/s. 37 in SI. No. 7j of Part A – OI of ITR which is reported at the clause 21(a) and 21(g) of form 3CD. In case, the amount reported in ITR in SI. No. 7j of PART A – OI of ITR is less than the amount disallowable u/s. 37 at the clause 21(a) and 21(g) of form 3CD then the difference will be added to the total income of the taxpayer. |
| 5 | ITR-3, 5 & 6 – PFA/Defective | How to disclose “Amount disallowed u/s. 43B in preceding previous year but allowable during previous year” in return of income? | In the audit report, auditor is required to report the amount disallowed u/s. 43B in preceding previous year but allowable during previous year at the clause 26(A)(a) of form 3CD. Taxpayer is required to report the same amount disallowed u/s. 43B in preceding previous year but allowable during previous year in SI. No. 10i of Part A – OI of ITR which is reported at the clause 26(A)(a) of form 3CD. In case the amount reported in ITR in SI. No. 10i of PART A – OI of ITR is more than the amount disallowed u/s. 43B in preceding previous year but allowable during previous year at the clause 26(A)(a) of form 3CD then the difference will be added to the total income of the taxpayer. |
| 6 | ITR-3, 5 & 6 – PFA/Defective | How to disclose “Amount debited to profit and loss account and disallowed u/s. 43B” in return of income? | In the audit report, auditor is required to report the amount disallowed u/s. 43B at the clause 26(B)(b) of form 3CD. Taxpayer is required to report at least the same amount disallowed u/s. 43B in Sl. No. 11i of Part A – OI of ITR which is reported at the clause 26(B)(b) of form 3CD. In case, the amount reported in ITR in SI. No. 11i of PART A – OI of ITR is less than the amount disallowed u/s. 43B at the clause 26(B)(b) of form 3CD then the difference will be added to the total income of the taxpayer. |
| 7 | ITR-3, 5 & 6 – PFA/Defective | How to disclose “Amount not credited to profit and loss account” in return of income? | In the audit report, auditor is required to report the amount not credited to profit & loss account at the clause 16(a) to 16(d)of form 3CD. Taxpayer is required to report at least the same amount not credited to profit & loss accounting Sl. No. 5(a) to 5(d) of Part A – OI of ITR which is reported at the clause 16(a) to 16(d) of form 3CD. In case, the amount reported in ITR in SI. No. 5(a) to 5(d) of PART A – OI of ITR is less than the amount not credited to profit & loss account at the clause 16(a) to 16(d) of form 3CD then the difference will be added to the total income of the taxpayer. |
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