Clause 30C of Form 3CD requires the Tax Auditor to report “Impermissible Avoidance Arrangements” (IAA) entered into by the assessee during the previous year and to quantify the tax benefit arising in the aggregate in the previous year to all the parties to such arrangement.
The tax auditor should examine whether the Principal Commissioner or the Commissioner or the Approving Panel has, in any earlier previous year, declared any arrangement as IAA. If any arrangement has been declared to be an IAA, the tax auditor should further examine whether any transaction pertaining to or in connection with such declared IAA has taken place during the previous year under the audit. If yes, the tax auditor is expected to report this fact in the audit report. The tax auditor should also report tax benefits in the previous year arising from such transactions to all the parties to the arrangement. If he is unable to ascertain the tax benefit arising in the previous year, in the aggregate, to all the parties to the arrangement, he should indicate the same in Form 3CA or Form 3CB, as the case may be.
The auditor should examine if any reference has been made for declaring an arrangement as an impermissible avoidance arrangement in any earlier previous year. If such references have been made, the auditor should report the fact in Form 3CA or Form 3CB, as the case may be.