Accounting and taxation go hand in hand like twin brothers, and no practices in the taxation or accounting field can be materialized without having mutual constant interaction between taxation laws and commerce, although academically they are distinct and most important subjects for practical dispensation in every financial activity. Not only this, these two fields are so interdependent on each other that a completely self-sufficient practice concept is unimaginable without outsourcing various services from other professionals to run the practice.
If we look at the age-old practicing landscape from an Indian perspective, it is the only profession involving different types of professionals like advocates, CAs, CMAs, CS, BCom or MCom graduates, and both direct and indirect taxation practices are open for these professionals. For better understanding, it is pertinent to mention that, except for a few big corporate houses in large cities where audit, accounts, and taxation have distinct persons and professionals responsible for handling them, in general, particularly in small towns and rural areas— which constitute 70% of national economic activities and taxation and accounting assignments—almost all the assessees’ tax, audit files, and accounts remain under the care of only a single professional, such as an advocate, CA, or CMA. These professionals mostly render all services, from maintaining accounts, audits, company or partnership registration, and trade licenses to tax return filings, by outsourcing other services mutually. In this way, for more than 100 years, Indian taxation and accounting practices have been going on.
Now, in my 27 years of steady ITAT practice life, while dealing with a large number of advocates, CAs, CMAs, and accountants, a very grim reality is often confronted: the gross mishandling of tax proceeding cases and immense suffering of their clients, surprisingly not always due to any willful negligence of the lower consultants, but due to situations. For example, most of the defaults are related to wrong filing of returns, failure to file revised returns within the time frame, and mishandling of scrutiny and first appeal. These are pivotal in giving birth to billion-dollar tax demands every year, mostly in direct taxes, which are not sustainable in the court of law or in the tribunal. However, these hapless small-town and rural assessees are widely being denied legal recourse and relief due to the serious limitation of legal knowledge of most of the professionals, who mostly rely on tax filing handbooks instead of having access to relevant bare acts, sections, case laws, journals, and articles, due to a very poor English base. Their knowledge is often so rudimentary that it is little distinguishable from a daily laborer, as buying degrees in India is often the easiest option.
Adding to the woes are the CAs’ and CMAs’ practices, which are largely concentrated on daily accounting and auditing for fat pecuniary gains. It is very common among these professionals to offer their clients’ hard-earned money to government settlement schemes like DTVS, VDS, etc., instead of taking the time to fight their clients’ most genuine cases in the court of law. This is often due to poor legal knowledge, lack of access to legal resources, or a cunning mentality that avoids the headache of time- and energy-consuming litigation, which may cost their ready-to-handsome-income jobs like auditing, company registration, and project and loan obtaining jobs in collusion with bank managers.
Not only are these professionals to blame, but many spendthrift clients also prefer to take all services under one roof, without knowing that ultimately many of them will be left roofless for paying out huge, often illegal, tax demands in settlement schemes. In practice, every year thousands of businesses shut their doors under the yoke of either tax recovery by the IT department through attachments or paying huge taxes under DTVS without rhyme or reason, but only because of their consultants. The situation is assuming a more serious proposition in rural and semi-urban economic areas due to the flooding of government stringent compliance regulations, penalties, and taxes, versus equally callous assessees and negligent consultants. This will soon brew the biggest financial peril in the highly troubled horizon of the Indian economy, leading to the demise of millions of small and medium businesses.
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