CBDT notifies Amendments of Income Tax Audit Form 3CD, 3CEB and 65 [Read Notification]

The Central Board of Direct Taxes ( CBDT ) has notified Amendments of Income Tax Audit Forms Form 3CD, Form 3CEB and Form 65 in a recent gazette notification.

The notification reads as follows: –

“In exercise of the powers conferred by section 295 read with sections 44AB and 92E of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely:-

(1) These rules may be called the Income-tax (Fourth Amendment) Rules, 2024.

(2) They shall come into force on the date of their publication in the Official Gazette.

In the Income-tax Rules, 1962, in Appendix II,––

in Form No. 3CD,––

in PART A, in clause 8a, for the figures and letters “115BAD”, the figures and letters “115BAD/115BAE” shall be substituted;

in PART B,––

in clause 12, for the figures and letters “44AD”, the figures and letters “44AD, 44ADA” shall be substituted;

            in clause 18, for sub-clause (ca), the following sub-clauses shall be substituted, namely:–– “(ca) Adjustment made to the written down value––

under the proviso to sub-section (3) of section 115BAA (for assessment year 2020-21 only);

under the first proviso to sub-section (3) of section 115BAC or the proviso to sub-section (3) of 115BAD (for assessment year 2021-22 only);

under the second proviso to sub-section (3) of section 115BAC (for assessment year 2024-25 only).”;

in clause 19, in the table,––

after the row with entry “35(2AB)”, the row with entry “35ABA” shall be inserted;

after the row with entry “35E”, the row with entry “any other relevant section” shall be inserted;

in clause 21, ––

in sub-clause (a), in the table, under the column relating to ‘Nature’,––

for the words “Expenditure by way of penalty or fine for violation of any law for the time being force”, the words and brackets “Expenditure for any purpose which is an offence or is prohibited by law or expenditure by way of penalty or fine for violation of any law (enacted in India or outside India)” shall be substituted;

after the row with the words “Expenditure by way of any other penalty or fine not covered above”, the row with the words “Expenditure incurred to compound an offence under any law for the time being in force, in India or outside India” shall be inserted;

for the words “Expenditure incurred for any purpose which is an offence or which is prohibited by law”, the words “Expenditure incurred to provide any benefit or perquisite, in whatever form, to a person, whether or not carrying on a business or exercising a profession, and acceptance of such benefit or perquisite by such person is in violation of any law or rule or regulation or guideline, as the case may be, for the time being in force, governing the conduct of such person” shall be substituted;

in sub-clause (b), in paragraph (ii), in sub-paragraph (B), in item (IV), for the word “payer”, the word “payee” shall be substituted;

in clause 26, for the brackets, letters and word “(f) or (g)”, the brackets, letters and word “(f), (g) or (h)” shall be substituted;

in clause 32, in sub-clause (a),––

in the table, in column (5), for the figures and letters “115BAD”, the figures and letters “115BAD/115BAE” shall be substituted;

in the table, in column (6), for the figures and letters, “115BAD^”, the figures and letters “115BAD/115BAE^” shall be substituted;

below the table, for the words and figures “To be filled in for assessment year 2021-22 only.”, the words and figures “To be filled in only for assessment year 2021-22 and 2024- 25, as applicable.”, shall be substituted;

In Form No. 3CEB, in the Annexure thereto, in Part C ( Specified domestic transaction ), serial number 25 shall be re-numbered as serial number 26 thereof and before serial number 26 as so renumbered, the following shall be inserted, namely:—

“25. Particulars in respect of specified domestic transaction in the nature of any business transacted between the persons referred to in sub-section (4) of section 115BAE:

Has the assessee entered into any specified domestic transaction with any person referred to in sub-section (4) of section 115BAE which has resulted in more than ordinary profits expected to arise in such business?

If ‘yes’, provide the following details :

Name of the person with whom the specified domestic transaction has been entered into.

Description of the transaction including quantitative details, if any.

Total amount received or receivable or paid or payable in the transaction–

as per books of account;

as computed by the assessee having regard to the arm’s length price.

Method used for determining the arm’s length price [See sub-section (1) of section 92C].

Yes/No.”;

In Form No. 65,––

under the heading “Verification”, after clause (4), the following clause shall be inserted, namely:––

“ (5) *I certify that the applicant company is a unit of an International Financial Services Centre and has filed the application within three months from the date on which the deduction under section 80LA of the Income- tax Act, 1961 is no longer applicable.”;

in the Annexure, in PART A, for clause 6, the following clauses shall be substituted, namely:––

“ 6. Date on which the company became a qualifying company [to be given only in case of a company which becomes a qualifying company after the initial period] (enclose evidence in support of the claim)

6A. (a) Has the applicant  company availed of deduction under section 80LA of the Income- tax Act, 1961?

(b) If so, please specify the date on which such deduction is no longer applicable?”.

Note : The principal rules were published in the Gazette of India, Extraordinary, Part II, section 3, sub-section (ii), vide notification number S.O. 969 (E), dated the 26th March, 1962 and were last amended vide notification number G.S.R 153 (E), dated the 1st March, 2024.”

Notably, tax auditors are required to report unpaid dues to micro and small enterprises in Form 3CD of the Tax Audit Report. The assessee shall be required to add back to its total income the disallowance reported in Form 3CD of its Tax Audit Report.

Accordingly, such assesse will be required to file its Income Tax Return ( ITR ), failing which the income-tax department through the Centralised Processing Centre ( CPC ), Bengaluru, shall add back the disallowance and recompute tax liability while processing the ITR.

Here, as there has been no change in Form 3CD with respect to Section 43B(h) of the Income Tax Act, there are slim chances of an extension for the MSME 45-Day Payment mandate.

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