Tax Audit Checklist on Clause 14 of Form 3CD Under the Income Tax Act, 1961

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Clause 14(a) requires the tax auditor to state the method of valuation of closing stock employed in the previous year-whether at cost or at market rate or at the lower of the cost and the market rate. It requires the tax auditor to report facts. Whereas, Clause 14(b) requires the tax auditor to state whether there is a deviation from the method of valuation prescribed under section 145A. If the answer is “yes”, the tax auditor must report the details of the deviation and the effect thereof on the profit or loss.

However, the tax auditor is not required to state the appropriateness of the method of valuation employed or whether it is the same as in the preceding year.

This story discusses the tax audit checklist on clause 14 of Form 3CD under the Income Tax Act, 1961.

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