Who are Constituent Income Tax Practitioners? And, what would be the future of those Constituent Income Tax Practitioners?
Any Act which allows Enlistment/Enrolment of the Practitioner, and have overall power & control over such Practitioners (including departmental power to exercise & initiate the disciplinary action against such enrolled Practitioners) shall be the Parent-Act, and the Practitioner Enrolled/Enlisted under the Act is treated as the Constituent Practitioner of that Act.
Any Practitioner Enlisted/Enrolled in one Act (Parent-Act), and on the base of such Enlistment/Enrolment (under the Parent-Act) derives the right to & Practice externally in another Act, such Practitioner will be an Un-constituent Practitioner of the later Act.
The enactment of both “Advocates Act” and “Income Tax Act” were simultaneous in the year 1961 and since both of such Acts were enacted by the Parliament their legality is in parallel and equal.
The purpose of introducing the “Advocates Act” is to cover the “Judicial issues” pertaining to Legal Matters, Court Trials & Ensuring proper Justice. The purpose of introducing the “Income Tax Act” is for that of mobilizing funds through proper & due collection of Tax and to cater the needs of Income Tax Payers including their righteousness.
However, the Learned Authors of the Income Tax Act, having approved the fundamental Right of Advocates to Practise before any other authority or person before whom such advocate is by or under any law for the time being in force entitled to practice [Vide Section 30(iii) of the Advocates Act, 1961, which read as ”before any other authority or person before whom such advocate is by or under any law for the time being in force entitled to practice”], and having identified essential legal scope for them in probable Tax Disputes under the Income Tax Act, have already kept the special provision for their involvement, apart from the constituent “Income Tax Practitioners”. The Advocates practicing in any Civil Court in India are also externally allowed to represent the Income Tax Assessees under Income Tax Law [vide Clause (iii) of Sub-section (2) of Section 288 of the Income Tax Act, 1961]. Since the Advocates are constituents of the Advocates Act, and are already Enlisted with the respective State Bar Councils, for them there is no provision for their additional Enrolment or Enlistment with the Jurisdictional CITs or under the Income Tax Act. Thus, Advocates are externally authorized to represent, but they are Non-constituents to under the Income Tax Act.
Similarly, considering the expertise in professional specialization (i.e., in Financial Accounting, Different types of Accounts Auditing & Taxation) of the Chartered Accountants, etc., they are also allowed to represent the Income Tax Assessees [vide Clause (iv) of Sub-section (2) of Section 288 of the Income Tax Act, 1961 read with suffixed “Explanation”]. Since the “Accountants” are already Enlisted with the respective Professional Bodies and constituents of such of those respective Acts of those Professional Bodies, for them also there is no provision for their Enrolment or Enlistment with Jurisdictional CITs or under the Income Tax Act. Thus, Chartered Accountants, etc., are also externally authorized to represent, but they are also Non-constituents to the Income Tax Act.
The Non-Advocates (i.e., those who have acquired Degrees in Law from the Recognized University, and are neither enrolled at any State Bar Council nor practicing in any Civil Court in India) are eligible to act as “Authorized Representatives” to represent Income Tax Assessees on the status of “Income Tax Practitioners” under the Income Tax Act and are eligible to be enlisted as Authorized Income Tax Practitioners with the Jurisdictional CITs [vide Clause (vi) of Sub-section (2) of Section 288 of the Income Tax Act, 1961 read with Rule 51 of the Income Tax Rules, 1962]. The Non-Advocates Enlisted with the Jurisdictional CITs are treated as the Constituent Income Tax Practitioners under the Income Tax Act.
The Persons who have passed any Accountancy Examination recognized by the Board [vide Clause (v) of Sub-section (2) of Section 288 of the Income Tax Act, 1961 read with Rule 50 of the Income Tax Rules, 1962] and have Enlisted with the Jurisdictional CITs are treated as the Constituent Income Tax Practitioners under the Income Tax Act.
The Persons who have acquired a Degree in Commerce from Recognized Universities [vide Clause (vi) of Sub-section (2) of Section 288 of the Income Tax Act, 1961 read with Rule 51 of the Income Tax Rules, 1962] and have Enlisted with the Jurisdictional CITs are treated as the Constituent Income Tax Practitioners under the Income Tax Act.
PRACTICING IN LAWS Vs. PRACTICING IN TAXATION/ INCOME TAX
There is much difference in between “Practicing in Laws” and “Practicing in Financial Accounting, Auditing & Income Tax/Taxation”. To understand the difference clearly, first of all, we must know the following:
The “Practicing in Laws” mostly involves theoretical thinking, verbalization, confident expression, argument, speaking about & articulation of thinnest conception, perception, & emphasis on implied thought, belief & viewpoint of the authors of the Law, of course, with supporting evidences & proofs. Under the “Practicing in Laws” what is required is thorough knowledge of & acquaintance with all Laws of the Land both in vogue & even repealed. In this aspect requirement of Knowledge of Laws & Paper Work is on the ratio of “90 : 10” basis. The Legal Practitioners are undoubtedly intellectuals. The Profession of “Practicing in Laws” is such a superior and noble one.
The “Practicing in Financial Accounting, Auditing & Taxation/Income Tax” or “Practicing in Taxation” or “Practicing in Income Tax” mostly involves Practical Paper Work pertaining to Financial Accounting preparation in realistic functionalities, viabilities, feasibilities, possibilities and hands on practicable explicabilities of the transactions of a business or service. In this aspect requirement of Expertise in procedural understanding in Income Tax matters & Paper Work is on the ratio of “50 : 50” basis. The Profession of “Practicing in Income Tax/Taxation” is such a practically workable one.
The Practitioners in Laws (Advocates & Lawyers) are usually called as “Counsel”, but the Income Tax Practitioners are usually called as “Representatives”. The “Counsel” stands to mean “advise”, “guide”, “instruct”, “direct”, “encourage”, “recommend” and even “warn”, etc. The “Representative” stands to mean “Agent”, “messenger”, “courier”, “convincer”, “diplomat”, “moderator”, “mediator”, “negotiator”, etc.
ADVOCATES VS. CHARTERED ACCOUNTANTS:
Further, since 1984, with the introduction of Tax Audit Certificate from Chartered Accountants as mandatory under Section 44AB of the Income Tax Act, the prominence of the Chartered Accountants in the field of Income Tax has somewhat enhanced as they are highly qualified specialists in Financial Accounting. Thus, the Practice of Income Tax involving accounts verification, preparation and submission of Returns and appearance before authorities in scrutiny assessment proceedings, etc., which the Legal Practitioners are finding it difficult to Practise Income Tax independently, as it involves approaching to & obtain “Audit Certificates” from the Chartered Professionals.
Similarly, even the “constituent Income Tax Practitioners” are also facing the same doldrums situation (problem), as they too are Non-Chartered Accountants.
Under these circumstances, it is given to understand that the Advocates are/have approaching/approached the Hon’ble Courts disputing against the right conferred to the Chartered Accountants under Section 44AB of the Income Tax Act, 1961 and for finding the legal alternatives in lieu of Audit Certification.
However, Advocates are ignoring the fact that the Advocates Act, 1961 itself has given the prominence to the Chartered Accountant. The Section 12(2) of the Advocates Act, 1961 read as “The accounts of a Bar Council shall be audited by auditors duly qualified to act as auditors of companies under the Companies Act, 1956 (1 of 1956), at such times and in such manner as may be prescribed”. Thus, if they seek entitlement to carry out the “44AB Audit Certification”, first of all, they need to amend the Section 12(2) of the Advocates Act, 1961. Because, the “auditors duly qualified to act as auditors of companies under the Companies Act, 1956 (1 of 1956)” are none other than the Chartered Accountants. If the Advocates could themselves substitute the Chartered Accountants’ expertise & services, why should the accounts of the Bar Councils needed to be audited by the Chartered Accountants? If so, they need to amend the Section 12(2) of the Advocates Act, 1961.
Further, Section 33 of the Advocates Act, 1961 read as: “Except as otherwise provided in this Act or in any other law for the time being in force, no person shall, on or after the appointed day, be entitled to practise in any court or before any authority or person unless he is enrolled as an advocate under this Act”. In fact, the Section 33 of the Advocates Act, 1961, though compelling as Advocates alone entitled to practice, it clearly contains an exception like “Except as otherwise provided in this Act or in any other law for the time being in force”.
If Advocates alone are entitled to practice even in Audit & Taxation, what for the presence of the Section 30(iii) in Advocates Act, 1961 is there? It has to delete the Section 30(iii) from the Act. Further, it is also needed to amend the Section 33 of the Advocates Act, 1961 by deleting the exception like “Except as otherwise provided in this Act or in any other law for the time being in force”.
In the meanwhile, there was much ado about the mandate of “44AB Audit Certification to be only by the Chartered Accountants”. Similarly, there is also most hue & cry about the probable injustice to other Tax Practitioners (Other than Chartered Accountants). A few of such arguments/comments are as follows:
1) When 5 classes of persons are authorized to prepare return under income-tax act & represent their clients, there is no justification in conferring right to certify the audit to one class of professionals – chartered accountants.
2) When the chartered accountants are conducting tax audit for the revenue, how could he/she attend/appear for the same case in scrutiny proceedings.
3) If advocates are not allowed to do the audit certification, the CAs should not be allowed to argue the case before any direct or indirect tax authority.
4) Why should the tax-peyers are to pay the fees for audit required by the revenue?
5) Is there any special arrangement / understanding for generation of additional source of income / employment to CAs ?
6) The CA professionals are dominating in the field and making the scenario for the exploitation and self benefit ignoring the national interest.
7) The business need of the country is versatile and different professionals shall be able to serve the business world upto their ability. Dominance by a single professional body in a field seldom bring good to anyone except for that professional.
8) Let other tax professional too have the same privileges so that the business world will get the best service instead of monopolistic and limited consultancy.
9) The income tax disputes must ordinarily be settled in the departments of income tax itself. This is a good idea. But greedy bureaucrats and professionals some time misguide the assessees, demanding huge amounts.
10) Against any violation of law advocates always stand ahead to fight against such violation, and also be ever ready to fight against injustice.
11 When non-CAs, like Income Tax Commissioner/AC/DC/AO is capable of scrutinizing the certificates and documents filed under the income tax act, how you expect that all the departmental people should be law graduates?
12) Kindly remember that the IAS/IRS officers who are appointed as departmental heads in India are not the masters in the field.
13) Those, after acquiring engineering/ medical/ veterinary/ agricultural and horticultural graduation, could pass IRS are appointed as heads of income tax department who has not passed CA. Many times it is very difficult to convince even the basic accounting concepts to them.
14) What is the use of the 44AB audit and certificates from the CA?
15) Let the assessees choose his own tax consultant either CA/ADVOCATE/ITP/TRP etc, and there should not be any restriction on the free practice in the field of taxation.
16) Let the Central Government take a right decision at the right time, and I hope the right time has come now by introducing the Tax Practitioners Bill.
17) The Assessing Officers, who are not Chartered Accountants, conducting audit in scrutiny proceedings, then why the Chartered Accountants alone are authorised to issue certificates in All Indian Taxation, which is also one of the burning issue through out India as on date.
The bold move on behalf of Advocates and the consequent Judgments of the Hon’ble Madras High Court and Hon’ble Supreme Court of India, have left a fear in the minds of the Constituent Income Tax Practitioners of the Income Tax Act, i.e., Authorized Income Tax Practitioners (i.e., other than Advocates, Chartered Accountants, etc.), who have enlisted in the Register of Income Tax Practitioners maintained by the Jurisdictional Commissioners of Income Tax (including those who have submitted their applications in Form No.39 for enlistment in the Register of Income Tax Practitioners, disposal of which are pending at the Jurisdictional Commissioners of Income Tax, as on the date of Judgment pronounced by the Most Hon’ble Supreme Court of India).
What about the future of exclusive “Constituent Income Tax Practitioners” (including those prospective CITPs whose applications in Form No.39 are still pending for disposal at the Jurisdictional Commissioners of Income Tax? Now the time has come that the All India Federation of Tax Practitioners has to see and work out for the alternative legal protection for these “Constituent Income Tax Practitioners” (including those prospective ITPs whose applications in Form No.39 are pending at the Jurisdictional Commissioners of Income Tax). Also, it is the time for the Government of India to frame any right and transparent policy regarding protection of Income Tax Practitioners.
(Views Expressed herein are the personal views of the Author)