Tax Return Preparers (TRP) vs. Income Tax Practitioner (ITP)

Syed Mahaboob Peer

TRP- The Tax Return Preparers (TRP) Scheme has been conceptualized by the Income Tax Department (ITD) and launched in 2006-07 to assist small and marginal taxpayers in preparing and filing their tax returns.    The Role of TRP is that of preparing “Returns of Income” under Section 139 of the Income Tax Act for any assessment year for & on behalf of an eligible person, who may require furnishing the same. However, the TRP is restricted from preparing and furnishing the Return of Income for an assessment year when such an eligible person’s books of accounts are required to be audited under Section 44AB of the Act or under any other law for the time being in force OR such an eligible person is not resident in India during the previous year relevant to such assessment year OR when such an eligible person is to file or furnish a revised return of income under Sub-section (5) of Section 139 of the Act for any assessment year (unless the TRP has furnished the original return of income for that assessment year) OR when a return of income which is required to be furnished in response to a notice under Clause (i) of Sub-section (1) of Section 142 or Section 148 or Section 153A of the Act.

The Educational Qualification prescribed for TRP aspirants is that such Candidates should possess a bachelor’s degree from a recognized university in any of the subjects, viz., Law (LLB), Economics (B.A. / B.Sc.), Statistics (B.A. / B.Sc.), Mathematics (B.A. / B.Sc.), Commerce (B.Com.), Business Administration/Business Management (BBA / BBM).

The Government is Supporting TRPs only, through (1) Arranging for their training by NIIT, (2) Post training, web-based advanced learning to upgrade their skills, (3) Helpdesk to clarify TRPs’ doubts pertaining to their work, (4) Monitoring and coordinating their activities and providing logistical support through a Resource Centre & making payments of charges/fees for the services of TRPs.

ITP: The nomenclature “Authorized Income Tax Practitioner” is seen under Rule 49(a) right from the introduction of the Income Tax Rules, 1962.     As per Rule 49(a) the “Authorized Income Tax Practitioner” means any Authorized Representative as defined in clause (v) or clause (vi) or clause (vii) of Sub-section (2) of Section 288 of the Income Tax Act, 1961.   It is to be noted here that since the Income Tax Act, 1961 is aged about 54 years now, the candidates under Clause (vii) of Sub-section (2) of Section 288 of the Income Tax Act, 1961 would be aged over 70 years.

Apart from preparing & filing Income Tax Returns on behalf of Taxpayers/Assessees, the Income Tax Practitioners have to carry out the following responsibilities for & on behalf of the Taxpayers/Assessees:

1. In “compulsory audit” cases, arranging for audit by a Practicing Chartered Accountant has to be done.
2. Appearing before the Assessing Officer and Representing Client/s (Assessee/s), as & when called for hearing of the case in connection with Assessment Proceedings and furnishing particulars of accounts, statements and/or other documents, etc., to the Assessing Officer,
3. If the Assessment Order passed by the AO is found unsatisfactory or against IT Law, Preparing & filing Memorandum of Appeal for & on behalf of Client/s (Assessee/s) and to Appearing before the Income Tax Authorities, and even before the Hon’ble Income Tax Appellate Tribunal, and personally Representing Client/s (Assessee/s), and
4. To assist, explain case details and carry out discussions with Advocate/s who are to be engaged by the Client/s (Assessee/s) for filing further Appeals before the Hon’ble High Court and Hon’ble Supreme Court of India, if the need arises.

The Educational Qualifications prescribed for “Income Tax Practitioners” is just passing an “accountancy examination”, or acquired just a “Degree in Commerce or Law”.     But, not allowing others graduates, such as, Economics (B.A. / B.Sc.), Statistics (B.A. / B.Sc.), Mathematics (B.A. / B.Sc.), Commerce (B.Com.), and Business Administration/Business Management (BBA / BBM) to be eligible to become Income Tax Practitioners is looking strange, when they could become TRPs or Departmental AOs.

There will not be any financial burden, overheads of expenditure or training costs to the Government in the aspect of availing services of the Income Tax Practitioners. There will not be any payments from the Government to the Income Tax Practitioners by way of salary, remuneration, honorarium, commission, service charges or fees.

However, when the subject of Enlistment/Registration as Income Tax Practitioners with the Jurisdictional Commissioners of Income Tax comes on screen/scene before Jurisdictional CITs, the officials are turning hostile directly by insisting certain unwanted things which are nowhere stated in the statutes of Income Tax Law.

Whereas there is no financial burden on Government in introducing more & more Income Tax Practitioners, it is improper that the Government is particularly spending much on making TRPs.   Why such a difference between TRP & ITP? Why such a bias on Income Tax Practitioners?   If the Legal-Hitch or Mesh in the Income Tax Rules, 1962 are removed, more & more graduates will become Registered Income Tax Practitioners, and then automatically the number of assessees or taxpayers could be improved without any burden on exchequer.

If the reason for such partiality, discrepancy & divergence is mainly due to the opinion that the initial basic Training is provided to the TRPs, the CBDT or Ministry of Finance could plan for establishing an “Indian Institute of Income Tax Practitioners” or “Indian Institute of Tax Practitioners” for arranging Pre-Registration/Enlistment & Post-Registration/ Enlistment training & advanced/post-training, web-based advanced learning to upgrading the professional skills, in support of the prospective Constituent Income Tax Practitioners.