Same PAN, Different AYs: Will Each Tax Audit Count Separately Under UDIN Ceiling?

A tax audit under Section 44AB of theIncome-tax Act, 1961 applies when a person carrying on business or profession crosses the prescribed limit or falls under the relevant tax audit condition.

The audit report is filed in Form 3CA or Form 3CB, along with Form 3CD. The report relates to a specific previous year and assessment year.

The confusion starts when the same taxpayer has pending tax audits for more than one assessment year. For example, one business has the same PAN and needs tax audit reports for AY 2025-26 and AY 2026-27. The question is whether this is one assignment because the PAN is the same, or two assignments because the assessment years are different.

For UDIN ceiling purposes, the assessment year is a key factor. Same PAN with different assessment years results in separate tax audit assignments.

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Legal Position Under Section 44AB

Section 44AB requires audit of accounts for a relevant previous year where the conditions of the section are met. The tax audit report is not a lifetime certificate for the taxpayer. It is linked to a specific year of income, books, turnover, deductions, expenses, disclosures, and tax positions.

Each assessment year has its own computation, return, audit report, and Form 3CD disclosures. Turnover for one year does not become turnover for another year. Depreciation, TDS defaults, related party transactions, GST reconciliation, cash payments, and loans are also year-specific.

So, where the same PAN has tax audit reports for different assessment years, each year is treated as a separate assignment.

Simple Rule for Same PAN and Different AYs

The rule is easy to apply:

The key point is that PAN alone is not enough. The assessment year must also be the same.

Example 1: Same PAN, Two Assessment Years

Mr. A runs a retail business in Kerala. His PAN remains the same. His accounts for FY 2024-25 and FY 2025-26 require tax audit under Section 44AB.

The tax audit for FY 2024-25 relates to AY 2025-26. The tax audit for FY 2025-26 relates to AY 2026-27.

Even though the PAN is the same, the two tax audits relate to two different assessment years. Therefore, they count as two separate assignments under the UDIN ceiling.

Example 2: Books Finalised Together After Delay

A partnership firm delays its accounts for two years due to internal disputes. Later, the partners settle the accounts and approach a CA for tax audit reports for AY 2026-27 and AY 2027-28.

The firm has the same PAN for both years. But each assessment year has different turnover, expenses, balances, tax positions, and reporting requirements.

The CA must treat them as two separate tax audit assignments for the ceiling count.

Example 3: Same PAN, Branches Across India

A company has one PAN and branches in Mumbai, Delhi, Pune, and Hyderabad. The tax audit report is for AY 2027-28.

The audit covers the head office and all branches for the same assessment year. This is one tax audit assignment because the PAN and assessment year are the same.

If the same company also requires a tax audit report for AY 2026-27, that second year becomes another assignment.

Compliance Impact for CAs

This rule affects assignment planning. A CA must count tax audits on a PAN-plus-assessment-year basis, not PAN alone.

A proper tax audit tracker must include:

• Name of assessee
• PAN
• Assessment year
• Previous year
• Form 3CA or Form 3CB
• Section 44AB category
• Date of signing
• UDIN generation date
• Signing member
• Ceiling count status

A CA who checks the PAN but ignores the assessment year will undercount the assignments. This creates risk where the member is close to the 60 tax audit limit.

The date of signing also matters. The assignment is counted in the financial year in which the tax audit report is signed. But the separate nature of the assignment is decided by the assessment year.

Impact on Taxpayers

Taxpayers must not assume that pending tax audits for multiple years are treated as one job. Each year requires a separate review of books and disclosures.

For small business owners, freelancers, and professionals, this means each year must have complete records. Bank statements, invoices, GST returns, TDS details, loan confirmations, stock data, expense proofs, and fixed asset records must be year-wise.

A weak record for one year does not get cured because another year has proper books. Each assessment year stands on its own.

Common Mistakes to Avoid

• Treating Same PAN as One Assignment for All Years: This is incorrect. Same PAN does not combine different assessment years under one tax audit assignment.
• Ignoring Year-Wise Form 3CD Disclosures: Form 3CD contains year-specific disclosures. Cash payments, TDS defaults, depreciation, loans, deductions, and GST reconciliation must match the year under audit.
• Clubbing Old Pending Audits: If old audits for different assessment years are signed in the same financial year, each one counts as a separate assignment under the ceiling.
• Tracking by Client Name Instead of Assessment Year: A firm must not track tax audits by client name alone. The correct tracking method is PAN-wise and assessment-year-wise.
• Assuming Group Entities Merge: Group entities with separate PANs count as separate assessees. Promoter control does not merge tax audit assignments.

Conclusion

The UDIN ceiling looks beyond the PAN. It also looks at the assessment year linked to the tax audit report.

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