TAX AUDIT PROBLEMS AND SOLUTIONS
TECHNICAL ISSUES
1. STEPS FOR FILLING ONLINE TAX AUDIT REPORT
Q1. What are the steps to be followed for E-filling of Tax Audit Report?
Ans. Step 1- One Time Registration of Chartered Accountant at E-filling website
Step 2 – Login to Assessee account at e-filling website and Add CA
Step 3 – Downloading, Preparing Tax Audit Report Utility & Generating XML file.
Step 4 – Uploading XML file at E-filling website from CA’s Login Id
Step 5 – Approval of form uploaded by CA at E-filling website from Assessee’s Login Id
Step 6 – Do not forget to file Income Tax Return in Relevant ITR separately
2. SOFTWARE REQUIREMENTS
Q2. What are operating system and runtime environment requirement for E-filling of Tax Audit Report?
Ans. Operating System – Windows XP with Service Pack 3/ Windows 7/ Windows 8.
Runtime Environment – JRE 1.7 Update 6 and above, 32 Bit is required to run applets for offline forms to work.
3. PROBLEM IN SLOWDOWN OF SYSTEM
Q3. Our system becomes very slow during working on e-utility. What should we do?
Ans. Remove all old versions of Java to improve performance. Better use Google chrome. Can also use Mozilla Firefox.
4. PROBLEM OF MISMATCH IN NAME & DOB AS PER ICAI AND PAN DATA
Q4. I am unable to register as CA as there is difference in name/date of birth as per ICAI and PAN data. What to do?
Ans. It is requested to file form 49 amendment and get data rectified in PAN immediately. Kindly also note that the day you receive a SMS that your pan amendment has been approved, you will be able to register at site whether you actually receive PAN or not.
5. ATTACHMENTS
Q5. What are the documents to be attached to Tax Audit Report?
Ans. B/S, P&L, Schedules, Annexures, Notes, Cost Audit Report and Excise Audit and Other Report, if any, scanned in pdf format after being duly signed by Assessee and CA, whether digital or physical. Kindly note that word/excel file can also be digitally signed.
6. PROBLEM OF NEGATIVE FIGURES
Q6. System is not accepting negative figures in brackets i.e. “()”. What should we do?
Ans. Use negative sign. i.e. minus “-“
7. PROBLEM OF PROVIDING QUANTITATIVE DETAILS
Q7. Due to nature and complexity of the business of the assessee, we do not have quantitative information about the stock. The software is not accepting any comment and it is accepting only numeric value. What should we do?
Ans. Kindly note that Quantitative details of only principle items is to be given. However, in my opinion, if details are not available,
a) Write nil in online form 3CD &
b) Report why quantitative details is not provided in the following two places:
i) In paper form 3CD &
ii) Notes to accounts
c) The Following Statement Should Be Written In Paper Form 3CD As Well As Notes: "Due To Nature & Complexity of Business of Assessee, It Is Not Possible To Provide Quantitative Details"
8. PROBLEM IN ENTRY OF LARGE NO. OF FIXED ASSETS
Q8. An assessee had purchased, say 5000 assets. His details of purchase are there in schedule. Online form 3CD again requires filling each purchase. It is a huge task resulting duplicity of work.
Ans. In view of our time constraint, such fixed assets may be grouped into different blocks of assets and each of these groups can be further divided into 2 parts.
i. Assets put to use on or before 2nd October: For ease of entry in online form 3CD, we will argue that all assets were put to use on 2nd October, wherever possible.
ii. Assets put to use after 2nd October (eligible for half of depreciation): For ease of entry in online form 3CD, we will argue that all assets were put to use on 31st March, wherever possible.
It is also advised to attach the working of calculation of depreciation under the Income Tax act, 1961 as a schedule so that breakup of each group is easily visible to the IT department.
The above can be summarized in the following steps:
Step 1 - All fixed assets may be grouped into different blocks of assets.
Step 2 - Each of these groups can be further divided into 2 parts. (i) Assets put to use on or before 2nd October (ii) assets put to use after 2nd October (eligible for half of depreciation)
Step 3 - For assets brought on or before 2nd October, we can argue that those assets were put to use on 2nd October and accordingly relevant entries can be made in the online form 3CD.
Step 4 - For assets brought after 2nd October, we can argue that those assets were put to use on 31st March and accordingly relevant entries can be made in the online form 3CD.
Step 5 – Sale of assets for each of group should be entered in a separate row while filling online form 3CD.
Step 6 - It is also advised to attach the working of calculation of depreciation under the Income Tax act, 1961, as a schedule, so that breakup of each group is easily visible to the IT department.
9. PROBLEM IN VIEWING STOCK FIGURES
Q9. I filled stock details in point 28A. When after validating and saving, I reopen the form; only one stock figure is displayed.
Ans. It is the inherent problem of the software but your xml file contains the correct data. Open the xml file in Internet Explorer and check it. You can edit xml file, however you have to adopt unceremonious way to edit the xml file for the necessary correction for the item in subsequent rows of point 28A. Therefore it is advised to fill up point 28A before filling any other point from point 7 onwards.
10. PROBLEM OF DEPRECIATION IN WEBTEL SOFTWARE
Q10. We have received demand relating to AY 2012-13, for almost for all companies for which income tax return were filled using Webtel software. The demand pertains to non-deduction of deprecation u/s32 in the return processed u/s 143(1) by CPC Bangalore, as claim by us in ITR 6. I just want to know if any other user of Webtel are also facing same problem.
Ans: The Problem Was Faced Many CA Using Webtel Software Due To Non Updation. I Suggest Submitting Revised Return or Making Rectification U/S 154.
11. PROBLEM OF NO SPACE FOR COMMODITY
Q11. In online Form 3CD, nature of business is to be mentioned i.e. Trading/Manufacturing & Retailer/ Wholesaler, but there is no space given for a particular commodity, say, cloth/ medicine/ cement. What should we do?
Ans. You can select, say, retailers & thereafter choose others (i.e. 104, 204, etc as applicable).
12. PROBLEM IN CALCULATION OF NP RATIO
Q12. If any businessman having a cloth business & also keeps photocopy machine/ agent of LIC, the income from photocopy machine / commission received from LIC is used for calculating the NP ratio. If so, then in this case GP ratio is less then NP ratio. So what to do about it?
Ans. You have to calculate NP ratio as a whole of the business for which tax audit was conducted.
13. PROBLEM OF BLANK FIELDS IN SAVED DRAFT XML FILE
Q13. When we reopen draft saved xml file, many fields which we had already entered is showing blank.
Ans. The software has some inherent errors as a result when we reopen draft saved xml file, it shows blank i.e. we have to re-enter the fields again. These fields are 7(B), 8(B), 9(A), 10, 11(D), 12(B), 21(Notes), 22(A), 22 AND 23.
14. PROBLEM OF VIEWING DATA OF XML BEFORE UPLOADING
Q14. How we can view data of XML before uploading?
Ans. You can view the xml file of tax audit report prepared in e utility of department. CA P.K. Agarwalla has prepared the screen shots of the process to view the same. The process is as follows:
Go to Programme Microsoft Office Microsoft Office Access 2003/2007 New blank data base Click blank data base A window with file name database1.accdb will appear on the right hand side pane. Click on create. Your new date base is saved by default in my Documents. (You may save the same to your choice folder)
A new data base is opened. Go to and click External data Click XML file>Browse the xml file for which you want to create/view or save the data Click OKImport XMLClick OKCheck the box "Save import steps" Close.
Your data base is ready, on the left hand side pane the indexes for “All Tables” do appear. By clicking any Table/ any point you can easily view and save its contents presently appearing in the XML file. Once the xml file is saved and the data base is reopened it will show the updated entries lying in the XML file. If some member finds any error in the tables he can easily make corrections opening the utility.
Detailed procedural step for Microsoft Access Office 2007 as well as Microsoft Office 2003 is attached (2 files attached – namely “Importing XML in MS Office 2003 version” & “Importing XML in MS Office 2007 version” herewith for ready understanding.
15. PROBLEM OF PRINTING/SAVING UPLOADED XML FILE
Q15. There is no provision for saving or printing downloaded Forms 3CB-3CD, or XML file.
Ans. U can save the work in middle by using “Save Draft” Button. To view the print option opens the xml file in Microsoft Access 2007 using new projects. U can find the Data in tabular form.
16. PROBLEM OF FAKEPATH
Q16. When we are uploading the 3CA and 3CD online one error is coming cannot read fake path file. I have placed the XML file in c drive fakepath folder and using Google chrome for that. Please help on the issue.
Ans. Kindly check the name of folder is “fakepath” and not as fake path, in C drive.
17. PROBLEM IN VIEWING XML FILE FROM CLIENT’S LOGIN
Q17. We uploaded form 3CD of a client. When it is viewed from the client’s login (i.e. for approving or rejecting), the dates in point no. 16(b) of form 3CD is getting interchanged (i.e. in the due dates column actual dates are seen and vice versa). But there is no mistake at our end. We have filled in the data in the income tax offline utility correctly and generated xml.
Ans. Your XML File contains the right data. Do not worry, upload it.
18. HOW TO PRINT UPLOADED XML FILES
Q18. CA has no option to print uploaded xml files. How to print?
Ans. CA has no option to print uploaded xml files. However, it can be printed from assessee’s login id, even before approval by assessee as the said xml file can be downloaded, from assessee’s login id, in the pdf format by default.
19. PROBLEM IN GETTING ACTIVATION LINK/SMS FOR COMPLETING REGISTRATION
Q19. A Chartered Accountant in practice registered himself with his DSC in the e-filing website. But he neither received any sms nor any activation link in his e-mail. When he tried again to register himself, the message was that he is already registered. But when he tried to log in, it was informed that the link is not activated. What should he do now?
Ans. Go to login page and enter your User ID i.e. ARCA(Mem. No.) e.g. ARCA300700 and enter your Password as given then click on "Resend Activation Link". You will get a mail from the site. If it does not work then reset your Password by sending mail at validate@incometaxindia.gov.in
20. UNABLE TO SEE XML IN ASSESSEE’S LOGIN
20. I had uploaded one Form 3CD, 10 days back and same was reflecting in my log in and I also received message for uploading. Now when I go to assessee log, same form is not available for validation. When I try to re-file from my log in I am getting massage that you are already submitted and assessee has not rejected/accepted.
Ans. Kindly Go to Work lists and approve it.
21. NON ACCEPTANCE OF NEGATIVE FIGURES IN FORM 29B
Q21. In the department utility, the point no.9 of Annexure A of Form 29B is not accepting negative figures.
Ans. Kindly Type 0, Until Such Inherent Error in Software Is Rectified By Department
22. USE OF SPECIAL CHARACTERS
Q22. Can we use special characters while typing address?
Ans. No, special characters are not allowed while typing address.
23. PROBLEM OF NON GENERATION OF XML
Q23. The department utility is opening the saved data and saving draft successfully but it does not generate XML file when we click generate XML file
Ans. First validate it and generate
24. PROBLEM OF SWAPPING OF DUE DATE AND ACTUAL DATE
Q24. I have noticed that under the Clause No. 16(b) there is an error in the utility. The columns of due date and actual date for payments as show in the utility have been reversed against the actual data being generated in the XML file. The column headers should be swapped. The same is also evident from the form being generated at the time of approval.
Ans. This is the inherent problem. Kindly do not swap the dates at the time of data entry. IT department had been communicated with such problems
Source:- https://www.facebook.com/canitesh.more
TECHNICAL ISSUES
1. STEPS FOR FILLING ONLINE TAX AUDIT REPORT
Q1. What are the steps to be followed for E-filling of Tax Audit Report?
Ans. Step 1- One Time Registration of Chartered Accountant at E-filling website
Step 2 – Login to Assessee account at e-filling website and Add CA
Step 3 – Downloading, Preparing Tax Audit Report Utility & Generating XML file.
Step 4 – Uploading XML file at E-filling website from CA’s Login Id
Step 5 – Approval of form uploaded by CA at E-filling website from Assessee’s Login Id
Step 6 – Do not forget to file Income Tax Return in Relevant ITR separately
2. SOFTWARE REQUIREMENTS
Q2. What are operating system and runtime environment requirement for E-filling of Tax Audit Report?
Ans. Operating System – Windows XP with Service Pack 3/ Windows 7/ Windows 8.
Runtime Environment – JRE 1.7 Update 6 and above, 32 Bit is required to run applets for offline forms to work.
3. PROBLEM IN SLOWDOWN OF SYSTEM
Q3. Our system becomes very slow during working on e-utility. What should we do?
Ans. Remove all old versions of Java to improve performance. Better use Google chrome. Can also use Mozilla Firefox.
4. PROBLEM OF MISMATCH IN NAME & DOB AS PER ICAI AND PAN DATA
Q4. I am unable to register as CA as there is difference in name/date of birth as per ICAI and PAN data. What to do?
Ans. It is requested to file form 49 amendment and get data rectified in PAN immediately. Kindly also note that the day you receive a SMS that your pan amendment has been approved, you will be able to register at site whether you actually receive PAN or not.
5. ATTACHMENTS
Q5. What are the documents to be attached to Tax Audit Report?
Ans. B/S, P&L, Schedules, Annexures, Notes, Cost Audit Report and Excise Audit and Other Report, if any, scanned in pdf format after being duly signed by Assessee and CA, whether digital or physical. Kindly note that word/excel file can also be digitally signed.
6. PROBLEM OF NEGATIVE FIGURES
Q6. System is not accepting negative figures in brackets i.e. “()”. What should we do?
Ans. Use negative sign. i.e. minus “-“
7. PROBLEM OF PROVIDING QUANTITATIVE DETAILS
Q7. Due to nature and complexity of the business of the assessee, we do not have quantitative information about the stock. The software is not accepting any comment and it is accepting only numeric value. What should we do?
Ans. Kindly note that Quantitative details of only principle items is to be given. However, in my opinion, if details are not available,
a) Write nil in online form 3CD &
b) Report why quantitative details is not provided in the following two places:
i) In paper form 3CD &
ii) Notes to accounts
c) The Following Statement Should Be Written In Paper Form 3CD As Well As Notes: "Due To Nature & Complexity of Business of Assessee, It Is Not Possible To Provide Quantitative Details"
8. PROBLEM IN ENTRY OF LARGE NO. OF FIXED ASSETS
Q8. An assessee had purchased, say 5000 assets. His details of purchase are there in schedule. Online form 3CD again requires filling each purchase. It is a huge task resulting duplicity of work.
Ans. In view of our time constraint, such fixed assets may be grouped into different blocks of assets and each of these groups can be further divided into 2 parts.
i. Assets put to use on or before 2nd October: For ease of entry in online form 3CD, we will argue that all assets were put to use on 2nd October, wherever possible.
ii. Assets put to use after 2nd October (eligible for half of depreciation): For ease of entry in online form 3CD, we will argue that all assets were put to use on 31st March, wherever possible.
It is also advised to attach the working of calculation of depreciation under the Income Tax act, 1961 as a schedule so that breakup of each group is easily visible to the IT department.
The above can be summarized in the following steps:
Step 1 - All fixed assets may be grouped into different blocks of assets.
Step 2 - Each of these groups can be further divided into 2 parts. (i) Assets put to use on or before 2nd October (ii) assets put to use after 2nd October (eligible for half of depreciation)
Step 3 - For assets brought on or before 2nd October, we can argue that those assets were put to use on 2nd October and accordingly relevant entries can be made in the online form 3CD.
Step 4 - For assets brought after 2nd October, we can argue that those assets were put to use on 31st March and accordingly relevant entries can be made in the online form 3CD.
Step 5 – Sale of assets for each of group should be entered in a separate row while filling online form 3CD.
Step 6 - It is also advised to attach the working of calculation of depreciation under the Income Tax act, 1961, as a schedule, so that breakup of each group is easily visible to the IT department.
9. PROBLEM IN VIEWING STOCK FIGURES
Q9. I filled stock details in point 28A. When after validating and saving, I reopen the form; only one stock figure is displayed.
Ans. It is the inherent problem of the software but your xml file contains the correct data. Open the xml file in Internet Explorer and check it. You can edit xml file, however you have to adopt unceremonious way to edit the xml file for the necessary correction for the item in subsequent rows of point 28A. Therefore it is advised to fill up point 28A before filling any other point from point 7 onwards.
10. PROBLEM OF DEPRECIATION IN WEBTEL SOFTWARE
Q10. We have received demand relating to AY 2012-13, for almost for all companies for which income tax return were filled using Webtel software. The demand pertains to non-deduction of deprecation u/s32 in the return processed u/s 143(1) by CPC Bangalore, as claim by us in ITR 6. I just want to know if any other user of Webtel are also facing same problem.
Ans: The Problem Was Faced Many CA Using Webtel Software Due To Non Updation. I Suggest Submitting Revised Return or Making Rectification U/S 154.
11. PROBLEM OF NO SPACE FOR COMMODITY
Q11. In online Form 3CD, nature of business is to be mentioned i.e. Trading/Manufacturing & Retailer/ Wholesaler, but there is no space given for a particular commodity, say, cloth/ medicine/ cement. What should we do?
Ans. You can select, say, retailers & thereafter choose others (i.e. 104, 204, etc as applicable).
12. PROBLEM IN CALCULATION OF NP RATIO
Q12. If any businessman having a cloth business & also keeps photocopy machine/ agent of LIC, the income from photocopy machine / commission received from LIC is used for calculating the NP ratio. If so, then in this case GP ratio is less then NP ratio. So what to do about it?
Ans. You have to calculate NP ratio as a whole of the business for which tax audit was conducted.
13. PROBLEM OF BLANK FIELDS IN SAVED DRAFT XML FILE
Q13. When we reopen draft saved xml file, many fields which we had already entered is showing blank.
Ans. The software has some inherent errors as a result when we reopen draft saved xml file, it shows blank i.e. we have to re-enter the fields again. These fields are 7(B), 8(B), 9(A), 10, 11(D), 12(B), 21(Notes), 22(A), 22 AND 23.
14. PROBLEM OF VIEWING DATA OF XML BEFORE UPLOADING
Q14. How we can view data of XML before uploading?
Ans. You can view the xml file of tax audit report prepared in e utility of department. CA P.K. Agarwalla has prepared the screen shots of the process to view the same. The process is as follows:
Go to Programme Microsoft Office Microsoft Office Access 2003/2007 New blank data base Click blank data base A window with file name database1.accdb will appear on the right hand side pane. Click on create. Your new date base is saved by default in my Documents. (You may save the same to your choice folder)
A new data base is opened. Go to and click External data Click XML file>Browse the xml file for which you want to create/view or save the data Click OKImport XMLClick OKCheck the box "Save import steps" Close.
Your data base is ready, on the left hand side pane the indexes for “All Tables” do appear. By clicking any Table/ any point you can easily view and save its contents presently appearing in the XML file. Once the xml file is saved and the data base is reopened it will show the updated entries lying in the XML file. If some member finds any error in the tables he can easily make corrections opening the utility.
Detailed procedural step for Microsoft Access Office 2007 as well as Microsoft Office 2003 is attached (2 files attached – namely “Importing XML in MS Office 2003 version” & “Importing XML in MS Office 2007 version” herewith for ready understanding.
15. PROBLEM OF PRINTING/SAVING UPLOADED XML FILE
Q15. There is no provision for saving or printing downloaded Forms 3CB-3CD, or XML file.
Ans. U can save the work in middle by using “Save Draft” Button. To view the print option opens the xml file in Microsoft Access 2007 using new projects. U can find the Data in tabular form.
16. PROBLEM OF FAKEPATH
Q16. When we are uploading the 3CA and 3CD online one error is coming cannot read fake path file. I have placed the XML file in c drive fakepath folder and using Google chrome for that. Please help on the issue.
Ans. Kindly check the name of folder is “fakepath” and not as fake path, in C drive.
17. PROBLEM IN VIEWING XML FILE FROM CLIENT’S LOGIN
Q17. We uploaded form 3CD of a client. When it is viewed from the client’s login (i.e. for approving or rejecting), the dates in point no. 16(b) of form 3CD is getting interchanged (i.e. in the due dates column actual dates are seen and vice versa). But there is no mistake at our end. We have filled in the data in the income tax offline utility correctly and generated xml.
Ans. Your XML File contains the right data. Do not worry, upload it.
18. HOW TO PRINT UPLOADED XML FILES
Q18. CA has no option to print uploaded xml files. How to print?
Ans. CA has no option to print uploaded xml files. However, it can be printed from assessee’s login id, even before approval by assessee as the said xml file can be downloaded, from assessee’s login id, in the pdf format by default.
19. PROBLEM IN GETTING ACTIVATION LINK/SMS FOR COMPLETING REGISTRATION
Q19. A Chartered Accountant in practice registered himself with his DSC in the e-filing website. But he neither received any sms nor any activation link in his e-mail. When he tried again to register himself, the message was that he is already registered. But when he tried to log in, it was informed that the link is not activated. What should he do now?
Ans. Go to login page and enter your User ID i.e. ARCA(Mem. No.) e.g. ARCA300700 and enter your Password as given then click on "Resend Activation Link". You will get a mail from the site. If it does not work then reset your Password by sending mail at validate@incometaxindia.gov.in
20. UNABLE TO SEE XML IN ASSESSEE’S LOGIN
20. I had uploaded one Form 3CD, 10 days back and same was reflecting in my log in and I also received message for uploading. Now when I go to assessee log, same form is not available for validation. When I try to re-file from my log in I am getting massage that you are already submitted and assessee has not rejected/accepted.
Ans. Kindly Go to Work lists and approve it.
21. NON ACCEPTANCE OF NEGATIVE FIGURES IN FORM 29B
Q21. In the department utility, the point no.9 of Annexure A of Form 29B is not accepting negative figures.
Ans. Kindly Type 0, Until Such Inherent Error in Software Is Rectified By Department
22. USE OF SPECIAL CHARACTERS
Q22. Can we use special characters while typing address?
Ans. No, special characters are not allowed while typing address.
23. PROBLEM OF NON GENERATION OF XML
Q23. The department utility is opening the saved data and saving draft successfully but it does not generate XML file when we click generate XML file
Ans. First validate it and generate
24. PROBLEM OF SWAPPING OF DUE DATE AND ACTUAL DATE
Q24. I have noticed that under the Clause No. 16(b) there is an error in the utility. The columns of due date and actual date for payments as show in the utility have been reversed against the actual data being generated in the XML file. The column headers should be swapped. The same is also evident from the form being generated at the time of approval.
Ans. This is the inherent problem. Kindly do not swap the dates at the time of data entry. IT department had been communicated with such problems
Source:- https://www.facebook.com/canitesh.more
Many thanks for your Blog Post. Good Resource for All.
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