Tax Audit | Detailed Analysis of Clause 9 and 10

Tax audit under section 44AB of the Income Tax Act, 1961 helps in checking fraudulent practices by the tax assessee. It facilitates the administration of tax laws through a proper presentation of accounts before the tax authorities and saves the time of Assessing Officers in carrying out multiple routine verifications. The Assessing Officer’s workload will be substantially reduced by tax audit and AO can attend to more important and investigational aspects of the assessee. In this respect, clause 9 and clause 10 of Form 3CD assists AO in providing transparent non-monetary information on partner details and the nature of business, if changed.

Checklist on Clause 9: Details of Partners/ Members

1. Has the auditor obtained a schedule from the assessee indicating the name of partners/members along with their profit-sharing ratio
2. Has the auditor checked the retirement deed/ amendment deed/ admission deed to ascertain any change in the partners/members and their profit sharing ratio

Checklist on Clause 10: Nature of Business or Profession and their Changes

1. Whether the details of every type of business carried out by the assessee during the previous year are mentioned under this clause
2. Has the auditor examined the financial statements and other related documents to ascertain whether there has been any change in the nature of business or profession carried on by the assesseeThis discussion not only includes a checklist but also a detailed analysis of Clauses 9 and 10, explaining their reporting requirement.

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