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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

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301 Comments

  1. Pranay Jain says:

    Dear All ,

    I think all are jealous of chartered Accountants because to become a Chartered Accountant is very difficult if all Other Non CA Professionals have so much issues with CA then they themself should become CA rather Criticizing CA wont help and everybody knows the Level of CA and other Non CA Professionals no further Clarification is required . CA have the Exclusive Domain of Income Tax & Other Tax Laws is a Universal Truth .

  2. B.S.K.RAO says:

    Rahul Nadkarni Sir,

    Your statement “Just wait some time the regulatory exclusivity enjoyed by ICAI will not remain forever” is highly appreciated Sir. I pray god that let it happen at an early date. The statement gives me hope to stay in tax profession Sir.

  3. Rahul Nadkarni says:

    Dear Balu & Anand
    If the crime of some CAs does not make all CAs criminal in the same logic all the CMAs painted by ICAI are also not incompetent and some CA’s adverse comments on ICAI-CMA does not degrade the CMA profession as a whole. Just wait some time the regulatory exclusivity enjoyed by ICAI will not remain forever. As far as Cost audit is concerned it is ICAI (Accounts) every now and then raises voice for its abolishment. Now when you poke your nose in others matter either in name change issue or relevancy of cost audit, do you expect the counterparty will remain silence? Rather than advising others please show your character and stop this sledging. One more thing please read carefully my last posting on July 22, 2013 at 1:04 PM… Introspect and ask yourself Are all the CAs strictly adheres to the professional ethics ? Again go to ICAI July 13 Journal. Read the article by Y. H. Malegam a candid confession of the profession now these days.. (Pg 66, 1st Para). I agree due to the ineffective leadership in 80’s /90’s and till 2005 ICWAI did not evolve as a force as it should have been at the same time ICAI-Accounts always try to lay down ICWAI coffin as it did not get the cost audit by the statue and Govt. went ahead to create a separate Institute. Now time is changing and do not jump to any conclusion so fast…

  4. B.S.K.RAO says:

    Rahul Nadkarni Sir,

    Why can’t you people make use of the situation prevailing in the article
    & claim your bonafide rights to conduct Audit U/s 44AB of Income-Tax Act
    through your apex body to remove the hurdle for compliance under Income
    Tax Act, which is also in the interest of our nation. If such authority
    is granted to Cost & Management Accountants, more people will join your
    ICAI course to support for voluntary compliance in all Indian tax laws.
    It is right time, you have to make such claim before your President Sri
    Rakesh Singh

  5. Rahul Nadkarni says:

    To Ganesh..

    Go back to history which I came across in July CA journal… it was mentioned that before establishing ICWAI, GOI formed a committee in which then ICAI council members were part of. Now you guys ask yourself what was the necessity to form ICWAI. If the ICWAI has no utility then through your Institute which is much powerful and boast so much arrogance ORDER MCA and MOF to close down ICWAI. Just ponder for a moment and think the real value of Cost and Management Audit will accrue to the society at large not to the Management of Business class. FYI if you refer the “standing committee on finance” comments who heard the name change application of ICWAI.. It was ICAI who vehemently opposed the tag Management as it will create confusion in public. Now the real confusion is there are 2 ICAIs.

  6. Rahul Nadkarni says:

    To Balu & Anand :
    Yes sir we have seen the quality audit in the form of Satyam scam, GTB fiasco and numerous reported/ unreported financial scams. In the hindsight you will also agree that most of the CAs are hands in glove with the management to present a false picture of the financial health of a company. This portal has bravely reported on numerous occasions the crime of CAs. You agree or not the reality is maintenance of accounts and per se Accountancy as a subject is not a rocket science. The kind of self-eulogize you guys display is laughable. And the hatred towards ICWAI is ignorable.

  7. Balu & Anand says:

    “Rahul Nadkarni says:
    July 18, 2013 at 3:05 PM

    What an irony!!! In the name of compliance and statutory obligation even ICWAI has to conduct the audit of its books of accounts by a statutory financial auditor who is a CA. Now do not tell my CA friends that even ICWAI recognizes only the CA’s capability to do statutory audit…. hence they invite the EOI. Its bloody law under which they compel to do so… Not the so called audit expertise blah blah blah…
    If we assume let a Cost accountant be allowed to do same for ICWAI financial audit what difference would it have made…????”

    The difference would have been that between Poor Quality and Proper Quality 🙂

  8. Rahul Nadkarni says:

    What an irony!!! In the name of compliance and statutory obligation even ICWAI has to conduct the audit of its books of accounts by a statutory financial auditor who is a CA. Now do not tell my CA friends that even ICWAI recognizes only the CA’s capability to do statutory audit…. hence they invite the EOI. Its bloody law under which they compel to do so… Not the so called audit expertise blah blah blah…
    If we assume let a Cost accountant be allowed to do same for ICWAI financial audit what difference would it have made…????

  9. CA. M. Lakshmanan says:

    Mr. B.S.K Rao has suggested that “Govt. should definitely think about alternative professionals for tax audit”.Can any one suggest that the Veterinary Doctors can conduct heart surgery of human beings due to shortage of thoracic surgeons?

  10. Balu & Anand says:

    Somebody in this forum commented earlier that the audit of ICWAI is done by Cost Accountants and not by CA’s. Recently, the ICWAI has invited expression of interest for both statutory and internal audits. Statutory audit is to be by CA’s only while internal audit is open to cost accountants.

    This is for general information only and not for raking up any more controversies.

  11. Raghav Goyal says:

    Sh. BSK Rao ji,

    You are once again misunderstanding the practical implications, here now, of the comments of people favoring CAs.

    The sole purpose to explain the toughness of CA course is to tell you that the work of audit, which is of utmost importance for nation building, has been handled by the most competent persons in India i.e. The Chartered Accountants.

    No XYZ person has been entrusted with such authorizations and powers(like of audit) without having proved himself to overcome the benchmarks set by the INTERNATIONAL BODIES.

    And if you say “If CA course is so much tough to pass, Govt. should definitely think about alternative professionals for tax audit” then I would also request you to write of the President of India to chalk out some easy alternatives to MBBS, MD, MS courses also, because these are also as tough as The Chartered Accountancy course.

  12. MANDEEP SINGH says:

    sir
    to minimize pass percentage in any profession not amounting to TOUGHNESS OF ANY PROFESSION.
    secondly i agree MR. BSK RAO JI govt. should seek other alternative to increase genuine base of tax for india.

  13. B.S.K.RAO says:

    I do not understand why everybody in this blog who talk in favour of CA’s will talk only about toughness of the course etc, instead of wrongful action of ICAI and the issue in question. If CA course is so much tough to pass, Govt. should definitely think about alternative professionals for tax audit. If not genuine tax base in India can not be widened.

  14. Raghav Goyal says:

    Sh. BSK Rao ji,

    I myself tried to clear CA Inter exams but could not clear that even after 5 attempts.
    But I cleared my B.com. and M.com. from A+ accredited university so easily that I could understood the difference between the status and level between the ICAI and Universities.

    After that, whenever, we have to recruit and appoint any Chartered Accountant and any Non-CA in our organization;
    we started asking all of them a same question that;

    WHAT DID IT COST TO YOU TO BECOME A CA or NON-CA(as the case may be)??

    Most common answer from Chartered Accountants is;
    IT COSTED ME MY COLORFUL YOUTH TO BECOME A CA.

    AND;
    Most common answer from a Non-CA is;
    ———–college fees, petrol fee, etc etc and——- that’s all.

    NOW;
    From the comparison of their answers we could understand;
    WHY A CA QUALIFIED PERSON SHOULD BE MORE DIGNIFIED AMONG THE OTHER PROFESSIONALS!!!!!

  15. B.S.K.RAO says:

    Raghav Goyal Sab,

    I am not opposing/commenting any individual Chartered Accountants, but opposing the collective wrongful/unacceptable action of ICAI which are not in the interest of our nation & goes in convenience of its members only. From my article, common man can understand what is what. I do not understand why individual CA’s make personal comments on me ? I think that their inner soul accepts the reality in the article & feel anguish about the issue in question? ICAI should remember that the principle of action and reaction are equal opposite will prevail, whatever may be the power of ICAI.

  16. MANDEEP SINGH says:

    sir
    CA examination controlled by ICAI that is reason you feel CA examination is tough one. reason for it ICAI Wants to give employment at any cost to its members.
    for this purpose ICAI is doing efforts to establish their members in field of law.
    WHICH IS AREA OF ADVOCATES NOT OF CA’S.
    Q. CA examination is tough one to pass.
    Ans. as per BSK RAO have already stated that cost accountant, CS even that B.COM graduate have same syllabus.
    IF CA EXAMINATION CONTROL GIVEN TO UNIVERSITIES WITH SAME SYLLABUS. AFTER THAT TOUGHNESS OF CA EXAMINATION COMPARED TO OTHER PROFESSIONS WILL BE GENUINE ONE.

    In present time if we compare toughness of CA examination with other professions then it will be partiality with other professions, reason other professions examinations are controlled by Indian universities.
    ICAI is single one & number of universities control examination of ADVOCATE PROFESSION. IT IS MAIN DIFFERENCE BETWEEN TOUGHNESS OF TWO PROFESSIONS.

  17. Raghav Goyal says:

    Ok
    This is the reason why Mr. Rao is so opposed to Chartered Accountants.

    Rao sahib, if you could not clear the CA exam and also your son is only a Cost Accountant it does not mean that you LOOSE HEART AND start teasing CAs AND START WRITING TO THE PRESIDENT OF INDIA.

    Rao sahib, if you don’t mind we would recommend you and your son should attempt to clear the Chartered Accountancy exams again and again, which are very-very difficult to pass by an average-man.

    WE REQUEST ALL THE RESPECTED COMMENTATORS ON THIS FORUM TO GIVE GOOD LUCK WISHES TO Mr. RAO AND HIS SIN IF THEY TRY AGAIN and AGAIN TO CLEAR THE CA EXAMS, again, which are very-very difficult to pass by an average-man.

    Thanking you,,

  18. B.S.K.RAO says:

    Balu Sir,

    I have sent detailed discussion & arguments in the matter to your e-mail address, till date you have not responded to my mail ?

  19. Balu & Anand says:

    To s/sh Ganesh, Balan, CS Dinesh, Raghav Goyal and all others,

    First let me thank you all for putting up spirited arguments on the issue. But I think it is time for all of us to say enough is enough and go away gracefully. This is because, the people who are making tall claims here are incapable of saying anything logical. Even now, i will not say all non CAs are like this. But the people who make noise here including the author has only made the non CAs cut a sorry figure in front of all sensible people. All of us in fact got a first hand demonstration of how the lawyers manage to prolong a case to keep themselves employed. Raise an argument and when the opposite side answers, they ignore and act as if the real issue is something else.

    This brings us to the CAs themselves. Do we need to prove our credentials in front of these people and do we need a certificate of merit from them ?

    Lets move on to other subjects. Mr BSK Rao did not get into a public argument with me nor did he the courtesy to answer my questions but wanted my mail id for a private talk.
    My email id is balunand AT rediffmail DOT COM. Lets see if he has any arguments in private !

  20. Balan says:

    If something is not fetching any income to you or if you cant do something that fetches more income, you will cry like a child to get those which you dont actually deserve. Thats what most of the Non-CA professionals shouting here.

    Why dont you contest yourself and win in MP elections to go to parliament for changing these laws without any more additional qualifications. (After all, you people want something beyond your means only..)

  21. Ganesh says:

    Mandeep ji,

    If you really have such information which proves the 44AB as meaningless, you should have demanded for deletion from the beginning itself. After shouting for so many days to sign 44AB, you understood that you will not get it anymore and hence you are saying something new now.

    Different HCs give different verdict for same kind of cases. It doesnt mean that one is wrong and the another is right. Everything is based on the information available.

    Furnish the details with you to the Ministry to demand your wish. We will be there to override your information with additional evidence from ourside.

  22. MANDEEP SINGH says:

    My friend CA’S,
    I HAVE INFORMATION WHICH IS PROVIDED BY THE DEPARTMENT. IF WE GO THROUGH SUCH INFORMATION THAN SECTION 44AB OF INCOME TAX ACT IS MEANINGLESS.

    I THINK SUCH INFORMATION IS SUFFICIENT FOR MINISTRY OF FINANCE & CBDT TO DELETE SECTION 44AB. WHICH IS COMPLETELY FAILURE TO INCREASE REVENUE OF GOVERNMENT SINCE 1984 AS WELL AS REDUCE BURDEN FROM ASSESSING OFFICERS.

  23. Raghav Goyal says:

    Now, Sh BSK Rao ji,

    You can see that the auditors of even corporates are appointed by the management itself.
    Even then auditors give adverse comments in their audit report against the management.
    And Sh. Balu and Anand have already proved you how these audit reports are used by the department against assessees.

    Thus, with due respect due your profession,
    we request you to take back your words “I WILL DROP OUT FROM PROFESSION”…

  24. Balu & Anand says:

    Section 12 of the Advocates Act:

    12. Accounts and audit.—(1) Every Bar Council shall cause to
    be maintained such books of accounts and other books in such
    form and in such manner as may be prescribed.

    (2) 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.

    Only a CA is qualified to act as an auditor under the Companies’ Act.

    Thus, it is now clear that the Advocates Act itself acknowledges and confirms that they are not even competent to audit their own Council’s accounts. I wonder how they are claiming competence to audit other people’s accounts!

  25. Raghav Goyal says:

    Sh BSK Rao ji,

    In regard to your comment on June 18, 2013 at 10:08 AM,

    we think you have again mis-understood the practical applications of acts(here, the companies act).
    Sir, it is true that auditors in corporate sector are appointed by shareholder themselves only.
    But, Practically, the promoters are themselves are major shareholders of these companies. They are also, themselves, the Top Managing Team in such companies.
    Especially in private limited companies…

    And now plz,,, don’t start cursing the Ministry of Corporate Affairs for all this like you are cursing CBDT.

    And also, We would be thankful to you if you could guide us through the following issues:

    1. If yo are saying that the core of the problem in Tax Audits lies in the fact that the Tax Auditor is appointed by the Assessee himself, and this hinders the independence of Auditors;
    then,
    wouldn’t it be enough if the audits are assigned by Income Tax Department itself;
    rather than widening the scope of auditorship among Non-CAs also??

    2. And If, the independence of CAs are affected because of their appointment by the assessee himself;
    then how would you make it sure that the Independence of Advocates or any other Non-CA professional wouldn’t be affected by the same reason??

  26. Balu & Anand says:

    BSK Rao says:

    “Balu & Anand Sir,

    All the cases quoted by you are Corporates, wherein auditors are appointed by share holders in the meeting & not by the assesses. I am talking about tax audit of non-corporates wherein management & ownership is vested on the same person. Here the concept of audit itself is wrong. Here if the auditor report wrong claims, next time he will not appoint him again, therefore he will not report wrong claims to enable the assessing authority to conclude quality assessment. This is the scenario prevailing throughout India. This is what I have intended to say & concern of Non-CA Tax Professionals.”

    Raoji,

    This is another one of your shifting track technique when cornered. Nowhere in your article you have made any distinction about corporate or non corporate assessees. Your demand palin and simple is that Non CAs are equal in competence to CAs and as such should be allowed to conduct tax audits. Please be honest to stick on to your original stand and defend it if possible.

    In any case, your argument that is given now is equally devoid of merit. You are casting aspersion on the integrity of all tax payers and CAs. First of all, even the appointment of auditors of a corporate entity other than CAG appointments, are made on the recommendation of the Board of Directors. Therefore, if any non corporate assessee is averse to qualified reports and would remove the auditor for that, then the same thing can happen to a corporate assessee as well.

    Secondly and more important, even if your argument is correct, this does not justify that non CAs should be allowed to sign audit reports. Unless, you are implying that the non CAs would be willing to sign anything to please the assessee just to get the audit work. In that case you could be right !

    But your own integrity is in question now.

  27. B.S.K.RAO says:

    Balu & Anand Sir,

    All the cases quoted by you are Corporates, wherein auditors are appointed by share holders in the meeting & not by the assesses. I am talking about tax audit of non-corporates wherein management & ownership is vested on the same person. Here the concept of audit itself is wrong. Here if the auditor report wrong claims, next time he will not appoint him again, therefore he will not report wrong claims to enable the assessing authority to conclude quality assessment. This is the scenario prevailing throughout India. This is what I have intended to say & concern of Non-CA Tax Professionals.

  28. U.D.VENKATESH says:

    If CBDT wants to retain Section 44AB, it should provide alternative tax professionals for tax audit to increase genuine tax base of assesses. If not definitely it can not widen genuine tax base of assesses to meet international standard of 70% to 80% of population under the tax net, by confining such powers only to scares group of tax professionals.

  29. B.S.K.RAO says:

    TO BAR COUNCIL OF INDIA

    It is requested to delete the words “or in any other law” from Section 33 of Advocates Act & direct CBDT adhere to the judgment of Supreme Court in the case of Bar Council of India Vs A.K.Balaji. On the strength of this Apex Court verdict, BCI should ensure that only Advocates appear before the Income-Tax authorities at all levels. Further, it will also give boost to our fight against repressive policies of Ministry of Finance, Ministry of Corporate Affairs & Central Board of Direct Taxes, which are in convenience of ICAI, ignoring nation’s revenue interest.

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