In India, Institute of Company Secretaries of India, Institute of Cost Accountants of India, Institute of Chartered Accountants of India and Bar Council of India are the four professional bodies passed by an Act of Parliament, whose members are engaged in the line of tax practice. They should shed off their own narrow mindedness and come out of their cocoons and think of the country’s interest. Each one trying to desperately fend off others from what they think is their own sacred area.
Certificate from only Chartered Accountants U/s 44AB introduced in Income-Tax Act in 1984, Since then, CA certificates started entering Income-Tax Act. On date there are 46 plus CA certificates in Income-Tax Act, which is also inherited in draft Direct Taxes Code, 2010. These CA certificates barricade support for voluntary compliance from Non-CA Tax Professionals and new Non-CA Tax Professionals are not entering tax profession. CA certificates are causing strict hurdle for voluntary compliance not only in Income-Tax Act, but also in other Central and State Govt. tax laws (Ex:- In Finance Act, 2012 negative list introduced in Service Tax requiring the assistance of more tax professionals, but number of tax professionals are stand still on date). Tax audit data provided by CBDT has been published in CA Club Website on 16.11.2011. Herein, it is evident that only 59,472 Chartered Accountants are practicing tax law throughout India. There is ceiling of 45 tax audit assignment to be undertaken by each CA, irrespective of Corporates or Non-Corporates. In latest e-filing website of Income-Tax Deptt. only CA’s are treated as Tax Professionals, now existing Non-CA Tax Professionals will also dropout from tax profession and Govt. has to relay on only 59,472 CA’s for seeking compliance U/s 139 of Income-Tax Act.
World over functions of Accounting are classified depending on the area of operation, application and usage. They are as under:-
Cost Accounts > Manufacturing/Processing Activity
Financial Accounts > Trading Activity
Management Accounts > Management Leval/Decision Making
Management Accounts is nothing but application of Ratio Analysis and Cash Flow Statement on Cost and Financial Accounts.
By The Cost and Works Accountants (Amendment) Act, 2011, name has been changed to “The Institute of Cost Accountants of India” and the members got the power to work in the area of Management Accounts also and can re-designate themselves as ACMA/FCMA. Now, it is funny that both institutes passed by an Act of Parliament called by similar short name of “ICAI”. Of course syllabus is almost similar in all the three institutes called by different name of ICSI, ICWAI and ICAI.
In view of the above amendment, Cost Accountants now possess wide power of working in the area of Cost Accounts, Financial Accounts and Management Accounts. Whereas,Chartered Accountants are restricted to work in the area of Financial Accounts only. This being the case, I do not understand why only Chartered Accountants are authorized to conduct Tax Audit U/s 44AB of Income-Tax Act and enjoy monopoly of authority, causing strict hurdle for voluntary compliance.
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Author : B.S.K.RAO, Tax Advocate
E-Mail: raoshimoga@gmail.com
In this computer era, even RBI has fixed limit of Advances exceeding Rs 20 Crore for audit of bank banches. I do not understand why CBDT is still hanging around Rs 1 Crore for tax audit U/s 44AB of Income-Tax Act, that too auditors are appointed & remunerated by assesses which finds no meaning for the word Audit.
Section 44AB is a highly controversial section & trouble some to attract compliance under Income-Tax Act requiring deletion in future. Therefore CBDT should make analytical study of the same by forming a committee to examine why India only little over 2% of population are under tax net
U.D.V. Sir, its the Income-tax Act which specifically restricts the signing functions to CAs only. You cant say that there is no jurisdiction for prohibiting Advocates to issue certificate or Reports in Income-Tax Act. Empowering CAs only to sign is given by the legislature and to grab that right only you are shouting here.
When ICAI claim that it is their prerogative to Audit with the limitation to Financial Accounts only in their statute book, why can’t Legal Practitioners claim that it is the prerogative to practice Income-Tax law with the backing of latest SC & HC verdict and Advocates Act, 1961
LEGISLATURE PROVIDED SPECIAL CLASS OF PERSONS IN ADVOCATES ACT TO PRACTICE LAW AND HENCE APPEARANCE CLAUSE U/S 288(2) NOT REQUIRED IN INCOME-TAX ACT.
Even holding Section 288(2) appearance clause required in statute book of Income-Tax Act, following points should be considered by CBDT to authorize Legal Practitioners to sign off Certificates/Reports in Income-Tax Act:-
1. Legal Practitioners are also authorized to prepare return of income & represent assesses U/s.288(2) of Income-Tax Act read with Rule 12A. Rule 12A inserted by Notification No.2029 Dt.13.6.1962, require Legal Practitioner covered U/s 288(2) to furnish report on the examination of assesses account books & documents in the assessment proceedings.
2. When Legal Practitioners are authorized to prepare return under 12A of Income-Tax Rules, it is presumed that such persons possess knowledge of Income-Tax law read with accounting principle prescribed U/s 145 of Income-Tax Act. Information to be furnished in Certificates/Reports under Income-Tax Act amounts to practice of law as it require interpretation of law more & basic accounting knowledge sufficient.
3. Audit means verification, depending on the purpose they are classified as Energy Audit, Environment Audit, Product Audit, Process Audit, Pollution Audit, Legal Audit in USA & Tax Audit in Indian Income-Tax Act. Here, person conducting audit should be specialized in that subject. Hence the word “Audit” is not the domain of Chartered Accountants. Assessing authorities in Income-Tax Deptt. who conduct audit in assessment proceedings are not Chartered Accountants. In conclusion, person specialized in Income-Tax law should issue Certificates/Report under Income-Tax Act.
When Legal Practitioners are the only class of persons entitled to practice law U/s 29 of Advocates Act, 1961 there is no justification for prohibiting them to issue certificate or Reports in Income-Tax Act.
TO CBDT/MINISTRY OF FINANCE,
Ministry of Finance, Govt. of India should understand the present situation of monopoly of authority causing strict hurdle for voluntary compliance in Income-Tax Act & provide alternative professionals for tax audit in order to widen genuine tax base of assessees. This is purely in the interest of nation.
SIR
I HAVE EARLIER IN MY COMMENTS EXPLAINED THAT WORD ” APPEARANCE” & WORD “PRACTICE OF LAW” BOTH DIFFERENT TO EACH OTHER.
MY CA FRIENDS ALWAYS MIXED TO BOTH. APPEARANCE BEFORE ANY AUTHORITY NOT TO AMOUNTING TO PRACTICE OF LAW.
REGARDING THIS NUMBER OF JUDGEMENT’S EXIST.
Raghav Goyal Sab,
As per your argument, let the assessee who maintains the accounts shall do audit also as he is liable for action U/s 277 of Income-Tax Act. Because, assessee appointing & remunerating the auditor to audit his own books will not find any meaning for the word audit. If the Income-Tax Deptt. appoint the auditor to audit the books of accounts of assessee, it has meaning. Auditor should be independent to get the intended results. That is why there is no single instance of utilisation of tax audit report by the Deptt. on date to conclude quality assessment. If you provide me one such proof, I will drop out from the profession.
Sh. BSK Rao ji,
First off all we appreciate Sh. Balu & Anand for perfect interpretation of both of the Acts.
Secondly, I think you have misunderstood the practical application of the Income Tax Act.
In regard to your post on June 14, 2013 at 8:31 PM, we think the following points should be brought in the light;
1. You are absolutely right to say that sole responsibility of a CA is to prepare audit report and not to prepare Income Tax returns of the assessees.
2.But you have mis-understood the piratical aspect that;
a) even advocates are also not authorized to prepare Income Tax returns of any assessee.
b) preparation of Income Tax return is the sole responsibility of the assessee alone.
3) This could be understood form the point that only assessee (or his authorized representative) can sign on the Income Tax return.
4) However, an assessee can ask anybody to assist him/her in preparation of Income Tax return.
And thus, when an assessee goes to any CA’s office or advocate’s office and
ask his him to prepare the Income tax return then;
TECHNICALLY;
he is actually asking him to ASSIST HIM IN PREPARATION ON INCOME TAX RETURN.
Thus, it is very much wrong to admit that CAs should prepare Audit report and hand over it to an advocate to prepare Income Tax return.
That’s all…
Strictly speaking & based on the role given to Advocates & CA’s in their
statute, practice of Income-Tax law should go as per the below procedure
1. CA’s should prepare accounts & final accounts along with audit report
should be handed over to Advocates.
2. Advocates should prepare the Statement of Total Income, prepare the
return & upload it in the Income-Tax Website.
If the above procedure is not followed, it may be challenged in the court
of law with the backing of Advocates Act & recent court verdicts.
Balu & Anand says:
I hope you will at least reply to me and not vanish like the author of this article.
MANDEEP SINGH says:
SIR PL READ SECTION 29 OF ADVOCATE ACT 1961 & SECTION 32 OF CHARTERED ACCOUNTANT ACT 1949. THESE SECTION WILL CLEARLY EXPLAIN YOU AREA OF CA’S.
What Mandeep Sing Says, can not be disputed. Because Section highlighted by the him clearly indicates the role of respective professionals. Therefore, kindly give answers to his question & then divert the topic with the above statement.
To Mr. Balu & Anand
The gist of our argument is exactly what you claim rather believe that only and only CAs are well equipped to do financial and tax audit. You cannot get out of the confusion till the time you recognize that those undertake CWA and CS course also capable enough to do so. Why do you forget that in tier 2 -3 cities I can say at least 10-15 years back when there were not enough Cost Audit and Company secretary firms students pursuing CWA and CS courses were joining CA firms to do petty audit assignments just to get an exposure into practical audit like any CA article clerk. Alas they disappoint soon with the kind of experience. If you are true you will agree that this is the opinion of most CA students in their article ship. Now the Exam pattern which CAs claims is the toughest and the mindless argument that Non-CAs cannot pass it hence the grumbling. Can you say that you have found easily to pass out Non-CA exams like CWA and CS.? In my personal experience I found CA course is rather easy than CWA especially CWA final atleast 12 years back. So please do not generalize things. It depends on person to person. What I said in my previous comments those having multiple qualification cannot undermine other professions, doubt their professional capability but give equal respect. The 3 yr article ship which CAs claim is the base of their expertise is nothing but a time pass. To remove your confusion I had already posted that the need of the hour is open up the financial audit / tax audit arena to CWA and CS and let us see how these guys fare. The so called myth created by ICAI that only CA as a superior knowledge class be allowed to conduct financial and tax audit will soon disappear. Can CAs agree? Now tell me how many times ICAI acted promptly against its erring members. In what time they took action against Satyam auditors till the time MCA gave a piece of their mind. Please find in this web site the number of times CAs are caught red handed taking bribe, arrested by CBI etc.. Recently it was reported that ICAI took action against its member for marrying twice . Please understand Non-CAs are nothing to lose but gain once they are allowed to conduct financial and tax audit and public at large will have an option.The fear allowing others will be risky as audit is a high skill job is unwarranted.Unless you allow others (CWA and CS) how can ICAI claim ? But CAs will definitely feel the heat hence the vehement opposition, degradation against Non-CAs
Sh. Ganesh Ji,
Do you want to say that;
the authorities entrusted upon CAs should be given to Advocates also;
mere because;
the CA exams;
as compared to LLb exams;
are so tough that an ordinary person is not able to come up to the level of such exams.
And the level of people who have been able to pass these CA exams is above average???
Is this the reason you are putting forth for delegation of authorities to advocates also???
If yes;
then tomorrow advocates would rise and say;
My Lord, clearing MBBS and MD and MS exams are very tough for an average person;
but passing LLb exams is very-very easy for an average person;
and thus,
we, the advocates; should be give authority to do surgeries and operations of human bodies also….
Am I right???
Supposing the Advocates Act is amended to say that advocates shall practice of law only in HC/SC, are you people going to curtail your work to that only.???
Then What way you say that income tax is law, so only advocates to practice it???
The Incometax Act has specifically excluded you to carryout the attest function for 44AB. You will claim first, if you dont get means you will demand abolition, if you still cant get means you will question about the preamble of the Act itself?????? it goes on prolonging sir without getting anything to anybody like the 3 crore pending cases (Atleast you will get good consideration at the expense of your clients there)….
DEAR CS DINESH JI
1) CAN YOU TELL ME INCOME TAX ACT IS A LAW OR STORY BOOK ?
2) WHAT IS MAIN OBJECT TO ESTABLISH ICAI?
3) CHARTERED ACCOUNTANTS ARE ONLY QUALIFIED ACCOUNTANTS NOT LAW
PROFESSIONAL & I THINK,YOU ARE VERY WELL KNOWN WHAT IS WORK
OF ACCOUNTANTS .
EXCEPT THIS MAIN OBJECT OF ADVOCATE PROFESSION PRACTICE OF LAW & CA PROFESSION PRACTICE OF ACCOUNTANCY.
SIR IF INCOME TAX IS NOT A LAW, THEN U R RIGHT APPEARANCE BEFORE IT DEPARTMENT IS YOUR AREA. IF IT IS A LAW THAN YOU ARE WRONG, IT IS AREA OF ONLY ADVOCATES.
SIR PL READ SECTION 29 OF ADVOCATE ACT 1961 & SECTION 32 OF CHARTERED ACCOUNTANT ACT 1949. THESE SECTION WILL CLEARLY EXPLAIN YOU AREA OF CA’S.
The tom tomming of CAs about their profession and ridiculing others when something remotely associated to accounts/tax law/ finance in which non-CAs raise their voice is not new and surprised. They want the present status quo to remain forever. Dear Non-CAs do not waste your time and energy arguing with likely minds such as Balu & Anand. I challenge in this forum to substantiate his reason that only CAs are better equipped to conduct Financial and Tax audit etc…And I can prove how this practice have land the nation in deep trouble in terms of monumental financial scams and colossal revenue loss to the exchequer A fool can only live in Paradise. Now some self claimed and enlightened CAs comment that a qualified Cost Accountant finds it tough to pass Inter CA. What a laughing stuff?? Did not it prove the arrogant mind set of some of these professionals?
Even there is a book on the LIFE OF A CA STUDENT. Go to the following link:
taxmann.com/bookstore/bookmann-india/life-of-a-ca-student-40-pass-but-49-fail.aspx
M.N.NAGESH Says:
C.S.Dinesh Sir,
I think, Advocates are not claiming power to sign tax audit report, instead seeking deletion of Section 44AB from Income-Tax Act for genuine reason that it is causing strict hurdle for voluntary compliance due to monopoly of authority granted to CA’s & also contrary to Advocates Act. Ie, Advocates alone entitled to practice law, because of the Section 44AB Advocates are required to bow down before CA’s which is against word “Noble Profession”. By latest, Bar Council of India is taking necessary steps in the matter.
Aha, so now it has become a question of ego. The advocates don’t want to “bow down” before anyone because they alone are noble. Mr Nagesh, Can you please explain in what way the doctors, teachers, soldiers, CAs, CSs etc are less noble? And have the advocates ever worried about the millions of cases that keep piling up and are pending for decades before different courts? Are you so naive, that you don’t know that it is only because they can throw their tantrums anytime due to the monopoly that they enjoy to appear before courts? Is this not “causing strict hurdle” for ensuring speedy justice for citizens of India? After all, giving justice is one of the Directive Principles of our Constitution. (I am assuming that the so called advocates making noise here are at least aware of what is the meaning of the Directive Principles of our Constitution) Now, to ease the burden of courts and to ensure speedy justice, why don’t you recommend to amend the Advocates’ Act to allow CAs also to appear before courts?
I hope you will at least reply to me and not vanish like the author of this article.
deccanchronicle.com/130307/news-current-affairs/article/over-3-crore-cases-pending-courts-india-government
Over 3 crore cases pending in courts in India: Government
New Delhi: Over three crore cases are pending in various courts across the country and this ‘unacceptable level’ can be reduced by appointment of more judges and modernisation, Law Minister Ashwani Kumar said on Thursday…..
Do anyone on this forum know that;
INDIA CHARTERED ACCOUNTANCY Course;
has been recognized as;
one of the world’s toughest courses;
by GUINNESS WORLD RECORD book and;
LIMCA’s WORLD RECORD book.
Instead, Indian Chartered Accountancy Course has also been recognized as;
a tougher course than;
INDIA IAS or IPS courses.
Has any other course been recognized as such?????
Please answer…else don’t do commentary in this forum…
C.S.Dinesh Sab,
At this stage, if Income-Tax Deptt. does not wake-up & understand the reality of the issue prevailing on date, our country will be put in trouble for the benefit of few vested interest
Mandeep ji,
If you go by political reasons, then everything will seem to be based on the politics only for you. One of the member from the Advocate fraternity lost the case at the initial level which was nullified by amendment in parliament even before the case reach the HC level and this fact cannot denied by anyone.
Just take a statistics of number of members of BCI and that of other Professional bodies. You will find that the CA,CS,CMA are very less. Still you people are not able to get the fruit means the senior members of your council are aware of the quality of work done by the CAs… Dont try to damage these which will destroy the wishes of many students who are entering the profession. Just because you could not appear and pass CA, dont destroy your next generation by trying to abolish a professional body.
C.S.Dinesh Sir,
I think, Advocates are not claiming power to sign tax audit report, instead seeking deletion of Section 44AB from Income-Tax Act for genuine reason that it is causing strict hurdle for voluntary compliance due to monopoly of authority granted to CA’s & also contrary to Advocates Act. Ie, Advocates alone entitled to practice law, because of the Section 44AB Advocates are required to bow down before CA’s which is against word “Noble Profession”. By latest, Bar Council of India is taking necessary steps in the matter.
B.S.K.RAO says:
June 7, 2013 at 10:26 AM
If uploading of tax audit report by only CA’s made, it amounts to practice of law by Chartered Accountants & contrary to Advocates Act, 1961 read with latest SC Verdict. Further, Income-Tax Deptt. is liable for action under Article 129, read with Article 142(2) of Indian Constitution for contempt of court.
The fact that the Same Supreme Court categorically ruled that CAs stand on a different footing on audit matters is conveniently forgotten. The article in question itself is in contempt of the Hon’ble SC.
Mr BSK Raoji, are you still considering taking up my challenge for a public debate and answer my questions or do we formally conclude that you don’t have the answers and close this issue?
Lets move on to other topics.
MR. DINESH JI.
I ALREADY EXPLAINED, THERE IS NOTHING RIGHT IN INCOME TAX ACT 1961.
OTHER PERSONS DOING “PRACTICE OF LAW” ON MERE WORD APPEARANCE U/S 288 OF INCOME TAX ACT.
SIR I WANT TO EXPLAIN HERE, CIVIL & SESSION COURTS ALSO ALLOWED TO OTHER PERSONS APPEARANCE TO REACH ON CORRECT JUDGEMENT.
ANY EMPLOYEE OF ANY DEPARTMENT, IF HE GOT AUTHORITY LETTER FROM DESIGNATED OFFICER OF THE DEPARTMENT. BUT IT DOESN’T MEAN THEY ARE AUTHORIZED FOR PRACTICE OF LAW AS LIKE ADVOCATE.
MR. DINESH JI AS PER INDIAN LAW, NON ADVOCATES ARE VIOLATING ADVOCATE ACT 1961. EVERY PERSON TREATED ACCORDING TO ACT IN WHICH HE COMMITS ANY OFFENCE. BCI HAS POWER TO REGISTER FIR AGAINST NON ADVOCATES WHO ARE DOING PRACTICE OF LAW. IT IS BENEVOLENCE OF BCI NOT TAKING ANY ACTION. PL NOT CHALLENGE TO BCI.
SIR AS PER RTI ICAI ADMITTED THAT IT DOESN’T NOT ISSUED ANY CERTIFICATE FOR “PRACTICE OF LAW” TO ITS MEMBERS.
SIR AS PER TAX PROFESSIONAL- CHARTERED ACCOUNTANT for this political backup may be reason because it is against main object of “advocate profession”.
SIR YOU WILL FIND YOUR ANSWER TO THE COMMENT JUNE 7,2013 AT 2.33PM
PL READ MY COMMENT MAY 30, 2013 AT 12.34 A.M
TO MINISTRY OF FINANCE
In another 10 to 20 years, almost all Non-CA Tax Professionals who entered tax profession in 1980’s will die. In view of Certificates/Reports by only CA’s in Income-Tax Act, new Non-CA Tax professionals are not entering tax profession. Then, Govt. has to relay on only 59,472 CA’s for seeking compliance U/s 139 of Income-Tax Act.
Now, it is right time our esteemed Central Govt. should come out with measures for increasing tax professionals to increase genuine tax base of assesses under Income-Tax Act. I hope that Central Govt. will come out with Tax Practitioners Bill either in the lines of Australia on in the lines of Republic of South Africa.
TO MINISTRY OF FINANCE
As per the latest available records with me, 59,472 Chartered Accountants, 2,427 Cost Accountants & 5,170 Company Secretaries are practicing throughout India. If Central Board of Direct Taxes granted powers to sign off 44AB Certificate to Cost Accountants & Company Secretaries in 1984, considering the reality of the fact that course curriculum is almost similar in all three institutes, revenue collection might have touched not less than 15 times the present revenue collection.
Logic behind the above claim is as under:-
Cost Accountants & Company Secretaries residing in the area other than capital cities do not have sufficient work to setup an independent office. If such powers to issue 44AB report might have been given to them in 1984 itself, many of them might have preferred to take up these courses since from 1984 & their total strength also might have touched in the range of 1,20,000 members. In order to sustain in profession, they too might have propagated Income-Tax law & supported voluntary compliance U/s 139 of Income-Tax Act.
MEASURES TO WIDEN TAX BASE
*Tax audit data provided by CBDT has been published in CA Club website on 16.11.2011. Herein, it is evident that only 59,472 Chartered Accountants are practicing tax law throughout India. Here, Govt. should understand that because of CA Certificates in Income-Tax, new Non-CA Tax Professionals are not entering tax profession.
*Tax audit by only CA’s introduced in 1984. If such authority might have also been given at least to Cost Accountant & Company Secretaries whose institutes syllabus are almost similar to CA Institute, more number of such related professionals might have entered tax profession to support voluntary compliance & tax collection at this time might have touched not less than the 20 folds the existing collection.
*Why our esteemed Central Govt. can not understand this simple logic for widening genuine tax base of assesses, but still rely on only CA’s for tax collection ?
Hon’ble Finance Minister Sri.P.Chidambaram Sir,
In line No.121 Tax Proposals-Budget Speech 2013, you have stated that “An emerging economy must have a tax system that reflects best global practice. I propose to set up a Tax Administration Reform Commission to review the application of tax policies and tax laws and submit periodic reports that can be implemented to strengthen the capacity of our tax system”
In line No.154 Tax Proposal-Budget Speech 2013, you have stated that “Direct Taxes Code (DTC) is work in progress. The DTC is not intended to be an amended version of the Income-Tax Act, 1961, but a new code based on the best international practice that will be compatible with the needs of a fast developing economy”.
Based on the above, can we presume that action to widen genuine tax base will be taken in DTC by encouraging diversified group of tax professionals to enter tax practice in India on introduction of Tax Practitioners Bill prevailing in other countries ?
I AGREED TO MR. BSK RAO JI.
TO CERTIFY AUDIT REPORT SHOULD BE LEAVE ON ASSESSEE.
MY CA FRIENDS OFTEN ASK QUESTIONS ADVOCATES CHARGE MORE FEES IN HIGH COURTS & SUPREME COURTS THEN FEES CHARGED BY CA TO CERTIFY AUDIT REPORT.
SIR I DON’T HAVE ANY ANIMOSITY WITH CA’S. BUT I WANT TO EXPOSE TRUTH BEHIND THE AUDIT CERTIFICATES.
SIR IN COURTS CLIENT HAS OPTION OF “IN-PERSON” APPEARANCE TO PLEAD HIS CASE BEFORE COURTS, IT DOESN’T MATTER HE KNOWS THE PROCEDURE OF COURT OR NOT. IT IS NOT COMPULSORILY FOR CLIENT TO TAKE SERVICES OF ADVOCATES AS LIKE AUDIT REPORTS UNDER INCOME TAX ACT.
THESE REPORTS ARE INTRODUCED WITH A MOTIVE TO GIVE ONLY IDENTITY & FINANCIAL ADVANTAGE TO ITS MEMBERS.
WHAT IS REASON A ASSESSEE CAN’T CERTIFY AUDIT REPORTS WHEN A CLIENT HAS PRIVILEGE TO PLEAD HIS CASE BEFORE COURTS.
POLITICAL BACKUP CANN’T BE DENIED. ARE YOU AGREE WITH ME. THANKS
Section 30 of Advocates Act states :
Right of advocates to practise.—Subject to provisions of this Act, every advocate whose name is entered in the State roll shall be entitled as of right to practise throughout the territories to which this Act extends,—
(i) in all courts including the Supreme Court;
(ii) before any tribunal or person legally authorised to take
evidence; and
(iii) before any other authority or person before whom such
advocate is by or under any law for the time being in force
entitled to practise.
The Income tax law would be covered in the said clause (iii) which is the law for the time being in force. This law now implicitly restricts the meaning of tax professional to CAs only. This being the case, Non-CAs are clearly go out of the scope.
If the author’s claim of amending the 44AB or abolishment of 44AB if they couldnt amend happens, then the section 29 of Advocates Act should also be amended to include the Non-Advocate professionals like CS/CMAs to practise the law in courts.
As pointed out by Mandeep singh that by 10 years experience, a person would be well versed in Taxation means the same logic should be applied in letting the decade experienced CS/CA/CMA members to appear and argue in courts.
If you feel the inequity in distributing the tax audit report work only to CAs, then you must agree about the monopoly right given to advocates in court of law.
The Advocates, with very very (??) good incidents pointed out by Mr.Balu&Anand, will surely not allow the amendment of Advocates Act.
So the ICAI and its members may be required to amend their own law by providing rights to CAs for representing their clients in courts.
All the professional institutes namely, ICAI, ICAI, ICSI, IAI restrict their members with so many regulations, which is not there in Advocates Act leading to street fights and rowdeesam among themselves.
The Advocates Act need to be amended to enable the CS/CA/CMA who represent their clients in their respective field to appear in the courts too to represent their clients. This will reduce the financial burden of the assessees to a large extent.
Most of the Advocates argue cases based on the points noted down by the CAs only in Income tax matters. This goes unnoticed when Mandeep singh claims about financial burden of assessees.
He argued for claiming signing power of 44AB first, then claimed deletion of the said provision, then claimed for deletion of the course itself thus showing his immaturity in accepting the truth in a proper way.
One thing which need to be mentioned here is that not all advocates are crying like some people here for something which they dont deserve. There are good Advocates who gracefully accept the respect which the professional institutes deserve and they do carry out their professionalism in their respective field when it comes to court of law. Just like Satyam case Auditors, there are advocates who shout for something which they DONT DESERVE.
The CBDT information received by the ICAI has to be probed into and the offenders need to be punished for making such fraudulent reports.
K.MUKAMBIKA commented….
“The shocking findings by ICAI and submission of such findings with CBDT, It shocked CBDT too. CBDT didn’t waste their time and started their own comfort regime of digitalization of submission of Tax Audit reports. Now Tax audit report digitally signed by the tax auditor shall be allowed to be uploaded along with the return of income, But the billion dollar question is what we have done to investigate and to take action against those who are offenders in such cases. It is quite possible that cases where No COP is there or part time COP is there, their names and membership numbers have been misused by the offenders.”
SHOCKING INDEED!
This should be investigated thoroughly to see if the Non CAs like advocates etc some of whom also pose as tax consultants and practitioners are fraudulently uploading returns by putting some CA’s membership number, which are in public domain and can be easily obtained from different websites. That way, they must be also cheating their clients by claiming they have paid some CA for the report.
If uploading of tax audit report by only CA’s made, it amounts to practice of law by Chartered Accountants & contrary to Advocates Act, 1961 read with latest SC Verdict. Further, Income-Tax Deptt. is liable for action under Article 129, read with Article 142(2) of Indian Constitution for contempt of court.
Rao ji,
I agree that I purposely did in not mentioning about the threat made by the UFM by delegating the powers to other sister institutes. But dont forget that this is how you advocates are arguing in courts. Not only your strength matters but also the weakness others too becomes strength for you. This is how the Vodafone case was lost by the Govt. This fact of not arguing properly by the Department representative was also revealed in many forums and meetings.
TO INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA
If ICAI realy at least 1% concerned about India & Indian Govt. revenue, let it members do the job of accounting profession only, for which it was constituted & do not enter into others area of operation ie, “PRACTICE OF LAW”
K.MUKAMBIKA MADAM,
Importance given to Tax Audit by fixing heavy penal cause is the main cause for these events. Hence, I suggest Govt. either delete Section 44AB or delete Section 271B of Income-Tax Act, leave the option of tax audit to assesses, rather taking the option of uploading the same. This is in the interest of revenue. This claim is also made on the ground that since 1984 there is no single instance of utilisation of such tax audit report by the Deptt. to conclude quality assessment.
ICAI FALLING INTO DISREPUTE
Against the application filed U/s 6 of RTI Act for seeking information about number of persons holding certificate of practice as at 31.12.2012, Institute of Company Secretaries of India & Institute of Cost Accountants of India have correctly provided such information. Whereas, Institute of Chartered Accountants of India not provided such information. Now the question is, will it not amounts to falling into disrepute ?
See link: mbaclubindia.com to down load documentary evidence as proof
for the above statement.
Dear all Freinds in this blog,
ICAI has received inputs from CBDT regarding TAX AUDIT and the following is the summary of the report so received.
In the year 2011-12, An issue of Conduct of Excessive Tax audits was surfaced at the various levels of the Institute in its committees and council. There was a proper response to the representation made to CBDT by one of committee of ICAI .It simply sought tax audit data based on returns e-filed during the year 2010-11. The Institute duly received the data relating to number of tax audits conducted by the members along with the membership numbers of the tax auditors and that while processing the data provided by the Income-tax Department, it was observed that a number of tax audits reports were filed by the assessee by quoting fake membership details of the Chartered Accountants. Such as
a) 696 membership numbers (1385 tax audits conducted) quoted by the assessees in e-returns do not subsist at all.
b) 420 membership numbers belong to deceased members. Among the same 369 members passed away before 31.3.2011. The number of audits conducted by them is 3621. Further, 51 members passed away after the said date. 2287 tax audits have been uploaded in respect of such 51 deceased members. In respect of 51 members, there is a possibility that they might have died after signing the audit report.
Further it was pointed out that
1. Approx. 9,500 Members conducted tax audits in excess of specified limit of 45
2.Approx. 2,700 Members with NO COP as on 21.01.2012 conducted Tax Audits.
3. Approx. 736 Members holding Part time COP conducted Tax Audits.
The shocking findings by ICAI and submission of such findings with CBDT, It shocked CBDT too. CBDT didn’t waste their time and started their own comfort regime of digitalization of submission of Tax Audit reports. Now Tax audit report digitally signed by the tax auditor shall be allowed to be uploaded along with the return of income, But the billion dollar question is what we have done to investigate and to take action against those who are offenders in such cases. It is quite possible that cases where No COP is there or part time COP is there, their names and membership numbers have been misused by the offenders.
Those who are honest to their professional commitments are the victims because of these offenders act. The victim are having their legitimate right to receive compensation from the offenders .The offenders or third parties responsible for their behavior should, where appropriate, make fair restitution to victims. Such restitution does include the restoration of rights of Tax Audits. Such powers are vest with the council only and unfortunately, there was no discussion at all in the council over the subject. If the intention of Council Members is to ignore the same because of vote bank, I feel history will not forgive them for their conduct.
Ganesh Says,
Few years back, when CAs requested for extension of time for 44AB cases, our Honourable Union Finance Minister refused the request which resulted in offices of CAs running day and night for completion of their work on time.
In continuation…..FM also said if you don’t, I will entrust such work to others, this you have to remember. That is why worked day & night.
Please argue technically on highlighting the legal point, like that of Mandeep Singh, K.Mukambika & U.D.Venkatesh without mentioning such events.
Ganeshji,
You are right. But we are wasting our time arguing with these people. They are only following the age old trick of shoot and scoot. Throw some wild allegations and claims in the air and then vanish. If you challenge them for a public debate, there will be no response but after a few days they will reappear with another batch of wild claims and again vanish.
You know who is ethical now !
Audit means verification, depending on the purpose they are classified as Energy Audit, Environment Audit, Product Audit, Process Audit, Pollution Audit, Legal Audit in USA & Tax Audit in Indian Income-Tax Act. Here, person conducting audit should be specialized in that subject. Hence the word “Audit” is not the domain of Chartered Accountants. In conclusion, person specialized in Income-Tax law should issue Certificates/Report under Income-Tax Act. Further, in CBDT circular bearing No.387 Dt.6.7.1984 issued for tax audit, it is clearly mentioned that it is an audit for tax purpose
Judges of High Court can deliver judgment on any matter including taxation irrespective of their basic degree in Science, Arts or Commerce. This being the case, distinguishing Advocates on the basis of B.Sc, LL.B, B.A, LL.B & B.Com, LL.B does not have any merit on the ground that High Court judges are elevated from within Advocates practicing at High Court. Assessing officers in Income-Tax Deptt. who audit the books of accounts of business enterprise in the process of scrutiny assessment are not Chartered Accountants & issue of 46 Plus CA Certificates in Income-Tax Act require interpretation of Income-Tax law more than the understanding of basic accounts. Then, why apprehension about Advocates capability to understand basic accounts for issue of Certificates in Income-Tax Act. Hence, it is clear that Certificates/Reports from only CA’s introduced in Income-Tax Act with the main intent to bar Non-CA Tax Professionals from Income-Tax practice.
MADRAS HIGH COURT VERDICT WITH SPECIFIC MENTION
AS TO PRACTICE OF CA’S CONTRARY TO ADVOCATES ACT
BAR COUNCIL OF INDIA SHOULD TAKE ACTION IN THE
MATTER
A.K. Balaji Vs. Government of India
(2012) 35 KLR 290 (Mad.)
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 21.02.2012
C O R A M
THE HON BLE Mr. M.Y. EQBAL, CHIEF JUSTICE
and
THE HON BLE Mr. JUSTICE T.S. SIVAGNANAM
W.P. No.5614 of 2010
and
M.P. Nos.1, 3 to 5 of 2010
Head Note:-
Advocates Act, 1961 – There is no bar for foreign lawyers or law firms to visit India for temporary periods on a “fly in and fly out” basis to advise their clients on foreign law and diverse international legal issues. They are however not permitted to practice Indian law, either in relation to litigation or advisory matters, unless they qualify and enroll as advocates and fulfill the requirements of the Act and Rules. The activities performed by BPOs and LPOs do not constitute practice of law and hence do not conflict with the Act. The Bar Council of India may take necessary steps in relation to the practice of law by chartered accountants and management firms, which is contrary to the Act.
TO CENTRAL BOARD OF DIRECT TAXES
CBDT should admit that legislature has provided special class of persons called Advocates/Legal Practitioners to practice law in India, by virtue of the same they are the only class of persons entitled to practice law U/s 29 of Advocates Act., 1961 before any court or authority or person & now ambiguity so as to litigious & non-litigious matter well decided by Hon’ble Supreme Court of India.
Furnishing information in Form No.3CD U/s 44AB by CA’s on interpreting Income-Tax law more, fall within the definition of “practice the profession of law in non-litigious matters” liable for action U/s 45 of Advocates Act, 1961 as per the verdict in the case of Bar Council of India Vs A.K.Balaji Dt.04.07.2012 (SC) read with Advocates Act, 1961.
Bar Council of India should take necessary steps in the above matter.
TO CBDT/MINISTRY OF FINANCE
As per Section 288(2) of Income-Tax Act, 1961 read with Rule 12A of Income-Tax Rules, 1962 authorised representatives specified in Clause (iv), (v), (vi) &(vii) of Sub Section (2) of Section 288 are treated as persons other than “Legal Practitioners” who are deemed to be in practice of Income-Tax law.
Now, CBDT should admits that it amounts to allowing persons other than Advocates/Legal Practitioners to practice Income-Tax law in contravention of Supreme Court verdict & liable for action under Article 129, read with Article 142(2) of Indian Constitution for contempt of court.
Balu & Anand have brought out some links which clearly shows the other side of Advocates. These things cannot be seen among the members of CA/CS/CMA institutes. The members of these institutes can proudly say that they are the members of their respective institutes as against those junior advocates who may hesitate to tell the name of their seniors who are involved in the allegations mentioned in those inks.
First the author claimed signing power of 44AB which was shifted to abolishment the section. Now the gear has shifted to abolishment of courses.
Instead of supporting these things, Non-CAs please appeal for the real issue which needs to be addressed i.e, amendment of section 44AD. If an assessee with turnover below 1 crore claims net profit of less than 8%, such cases also require to be audited and tax audit ceiling of 45 cases per CA excludes these cases. So a CA can audit and attest lakhs of cases covered in it. The Govt. should increase the turnover limit for tax audit and also introduce another section to authorise the Non-CAs to certify 44AD cases. This will satisfy the thirst of many Non-CAs. If we keep on trying to pluck the fruit of CAs which we dont deserve, then the end result would be amendment of 288 which will retain only the accountant within the meaning of the explanation therein.
The number of practising members of ICAI at the end of March 2012 was about 82,000 as against the figure claimed in this article. Out of this, about 56,000 members are FCAs and about 26,000 are ACAs.
No CA will do the mistake of signing more than the prescribed ceiling limit. The CBDT has to probe in to find out the culprits and penalise them. Still these advocates will keep on counter questioning and thus diverting the case which would end-up in case being dismissed or being prolonged till the next generation of the culprit.
The issue of legal practice by foreign law firms, lawyers, legal process outsourcing (LPO) providers and others like chartered accountants is a bone of contention between Indian legal fraternity and these persons.
It seems the matter is on the verge of being decided by the highest court of India. In a recent interim order by the Supreme Court of India, the court held that till the matter is finally decided by it, the Reserve Bank of India shall not grant any permission to the foreign law firms to open liaison offices in India under Section 29 of the Foreign Exchange Regulation Act, 1973 ( now FEMA 1999).
The Supreme Court of India also clarified that the expression “to practice the profession of law” under Section 29 of the Advocates Act, 1961 covers the persons practicing litigious matters as well as non-litigious matters other than contemplated in para 63(ii) of the impugned order and, therefore, to practice in non-litigious matters in India the foreign law firms, by whatever name called or described, shall be bound to follow the provisions contained in the Advocates Act, 1961.
This means that foreign law firms and LPOs cannot practice either litigation or non litigation related issues in India anymore. This also means that Indian LPO service providers like Perry4Law would witness an enhanced role in the LPO segment of India.
Of course, the foreign law firms or foreign lawyers can visit India for a temporary period on a “fly in and fly out” basis, for the purpose of giving legal advice to their clients in India regarding foreign law or their own system of law and on diverse international legal issues. However, foreign LPO or an LPO having non legal personals have to close their shops in India immediately.
This also means that chartered accountants (CA), companies secretaries (CS), etc who are in full time practice cannot engage in either litigation or non litigation related activities in India. If they engage in such activities that would clearly be illegal.
All companies, individuals, etc, whether Indian or foreign, who engage the services of such persons would be doing the same at their own risks as such services would not be recognised by Indian law. This should be avoided till the matter is conclusively resolved by the apex court of India.
MINISTRY OF FINANCE & CORPORATE AFFAIRS
It is suggested to curtail the powers of conducting academic courses of respective institute on vesting the same to universities. Let them frame policies concerned to them to be adhered by all in the course of performing the professional activity. If this happens, our country will be saved from clutches of vested interest
Balu & Anand ji,
You have pointed out an important thing which differentiates Advocates from ICAI members.
Few years back, when CAs requested for extension of time for 44AB cases, our Honourable Union Finance Minister refused the request which resulted in offices of CAs running day and night for completion of their work on time.
Is there any single instant of provision made by the BCI for running courts on sundays and festival holidays to reduce the pending cases?….?? Many of the courts are closed due to boycotting by the Advocates frequently and Advocates do charge fees from their clients for their visits which end-up in adjournment only.
ICAI has restricted the ceiling limit for tax audit by its members for equitable distribution of work among them which other professionals cannot carryout. In that case, how can an advocate carryout about 70 tax audit cases and search for more than one CA to get it signed..??
Its high time, not for 44AB amendment, but for the ICAI to make more regulations on members by instructing them, not to sign the tax audit cases carried out by Non-CAs without their control over it.
Talking about big-suit case by some people here, so many cases of advocates making false claim for their clients’ insurance claim and make forgeries in records. Just put some key words in net and you will get so many instances for such false claims. Even damages which are not claimable are forged and made as legal claim by advocates. Such cases are also available.
So many people have approached me and my friends for offering their accounts and audit services and none of them were CAs. Still Non-CAs claim that they are equal to CAs means, Being a student of ICAI for couple of decades, I must be given the signing power first.
And Mandeep singh ji along with other claimants need to be elected for Ministry of Finance so that whoever argues in favour of CAs in this blog will automatically be termed as Chartered Accountants and certification power be under section 44AB be given to them and hurrah!! I will be signing the 44AB cases!!!!!!.