Differential Stamp duty charges being paid by CA’s and Advocates on letter of authority for representing the client
For representing the client, an advocate is being charged a fee of Rs.5/- per Letter of Authority while a Chartered Accountant has to pay Rs.100/- per Letter of Authority. In Maharashtra, in respect of representing the client by Chartered Accountants, the Court
fees is governed by the provisions of Bombay Stamp Act, according to which the Letter of Authority must be accompanied by a Court fee of Rs.100/- or a stamp paper valued Rs.100/-
In order to bring uniformity in Court fees for both Chartered Accountants & Advocates for their representing the client before Income-tax Authorities, section 288 which provides “appearance by authorized representative” should be amended to provide for the fees to be charged for authorisation.
Source- Pre-budget Memorandum 2014 on direct taxes by ICAI
CA Dinesh Vaidya
Stamp Valuation Officer, Gujarat has, in response to a query raised by a practicing CA, Amdavad, expressed his opinion that an authorised CA is required to pay the same Fee as payable by an advocate. A copy of opinion can be downloaded from the link below :-
WHEN APPEARANCE CLAUSE IN ALL INDIAN TAXATION LAWS HAS BEEN SUBJECT TO REVIEW OF APEX COURT VERDICT IN THE CASE OF BAR COUNCIL OF INDIA VS A.K.BALAJI, WHERE IS THE QUESTION OF UNIFORMITY IN COURT FEES FOR ADVOCATES & NON-ADVOCATES TO APPEAR BEFORE TAX AUTHORITIES. NON-ADVOCATES SHOULD APPEAR BEFORE TAX AUTHORITIES UNDER CPC/EVIDENCE ACT AGAINST SUMMONS ISSUED FOR THE PURPOSE.
(1) PRESENT INDIAN INCOME-TAX ACT IS HIGHLY COMPLEX & REQUIRE
SIMPLIFACTION IN THE LINES OF INTERNATIONAL TAXATION LAWS. RETURN FORMS ARE ALSO VERY MUCH COMPLEX.
(2) PROCESSING OF RETURNS BY CPS NOT YIELDING GOOD RESULTS. ONLINE RECTIFICATION REQUEST IS ALSO A FAILURE AND WRONG DEMAND MOUNT-UP IN INCOME-TAX DEPTT. ON ONE SIDE AND LOCAL INCOME-TAX OFFICE REJECT RECTIFICATION PETITON FOR SUCH WRONG DEMANDS ON GROUND THAT THE RETURN IN QUESTION IS PROCESSED BY CPC, SAYING THAT WE ARE NO WAY CONCERNED TO SUCH 154 PETITONS.(EVEN THOUGH SUCH PAN IS TRANSFERRED TO LOCAL OFFICE)
(3) ULTIMATELY ASSESSEES & TAX PROFESSIONALS ARE PUT IN TROUBLE. NO ASKER NO TELLER, ONLY GOD SHOULD HELP US IN THE MATTER. I HERE BELOW FURNISH ONE PRACTICAL SITUATION TO UNDERSTNAD THE ISSUE.
EX: IF YOU DECLARE INCOME TAXABLE AT SPECIAL RATE OF TAX BOTH UNDER SPECIAL RATE COLUMN & INCOME FROM OTHER HEADS IN WHICH IT FALL, CPC WILL INCLUDE BOTH & ISSUE INTIMATION LEVYING DOUBLE TAX. THIS IS BECASUE OF DEFECTIVE NATURE OF INCOME-TAX RETURN FORMS. IF YOU INVOKE ONLINE APPLICATION U/S 154, RESULS WILL BE REJECTION. WE DO NOT KNOW WHAT TO DO IN SUCH CASES.
Sathyanarayana Sir,
Kindly give answer to below:-
(1) Indian legislature provided special class of persons called Advocates in Advocates Act, 1961 to practice all Indian laws. Therefore, appearance clause not yet all required in any Indian statute. Bar Council of India Vs A.K.Balaji [SLP (Civil) No(s) 17150-17154/2012] Dt.04.07.2012 (SC) and A.K.Balaji Vs Govt. of India (2012) 35 KLR 290 21.02.2012 (Madras HC) it was clearly held by Hon’ble Supreme Court & Madras High Court that Advocates alone are entitled to practice the Profession of Law both in litigious & non-litigious matters, nullifying the effect of Section 33 of Advocates Act. This also confirms to Section 29 of Advocates Act. The verdict of Supreme Court is the declared law of land binding on all, throughout the territory of India under Article 141 of Indian Constitution & contravention liable for action under Article 129 read with Article 142(2) of Indian Constitution. Income-Tax Act being “LAW” Advocates alone are entitled to Practice, Plead & Act before the assessing authorities of Income-Tax Deptt. On date appearance clause Section 288(2) of Income-Tax Act has been subjected to review of Apex Court, if still retained in statute book, situation may arise that order of assessing authority passed against the representation of non-advocates become in-fructuous, bad in law, null & void. Further, such orders cannot be enforced/appealed.
(2) Appearance of Chartered Accountants in scrutiny proceedings U/s.288(2), other than CPC/Evidence Act against summons issued U/s 131, is also bad in law for the reason that CAs conducting Tax Audit U/s 44AB for revenue can not appear for same assessee in scrutiny proceedings by the strength of power of attorney U/s 288(2) of Income-Tax Act. This is comparable to same Advocate appearing both for Petitioner & Defendant. This position of Chartered Accountants prevailing in Income-Tax Act, requires kind attention of Tax Policy Division of Central Board of Direct Taxes.
I hope that you will give reply to the above issue in question.
DEAR ALL ADVOCATE FRIENDS,
Kindly make individual representation to Bar Council of India to have committee on Unauthorised Practice of Law like that of prevailing in New Jersey, USA, to Supreme Court of India.
MO : 0-9035089036 raoshimoga@gmail.com may be contacted for draft copy of representation
On date appearance clause in Section 288 of Income-Tax Act has been subjected to review of Apex Court, if still retained in statute book, situation may arise that order of assessing officers passed against the representation of non-advocate become in-fructuous, bad in law, null & void. Further, such orders cannot be enforced/appealed.
To,
Tax Policy Divison,
Central Board of Direct Taxes,
North Block, New Delhi-110001
(1) Indian legislature provided special class of persons called Advocates in Advocates Act, 1961 to practice all Indian laws. Therefore, appearance clause not yet all required in any Indian statute. Bar Council of India Vs A.K.Balaji [SLP (Civil) No(s) 17150-17154/2012] Dt.04.07.2012 (SC) and A.K.Balaji Vs Govt. of India (2012) 35 KLR 290 21.02.2012 (Madras HC) it was clearly held by Hon’ble Supreme Court & Madras High Court that Advocates alone are entitled to practice the Profession of Law both in litigious & non-litigious matters, nullifying the effect of Section 33 of Advocates Act. This also confirms to Section 29 of Advocates Act. The verdict of Supreme Court is the declared law of land, binding on all throughout the territory of India under Article 141 of Indian Constitution & contravention liable for action under Article 129 read with Article 142(2) of Indian Constitution. Income-Tax Act being “LAW” Advocates alone are entitled to Practice, Plead & Act before the assessing officers of Income-Tax Deptt. On date, appearance clause Section 288(2) of Income-Tax Act has been subjected to review of Apex Court. This also results in assessing officers passing order against representation of Non-Advocate without the presence of assessee is bad in law, null & void. Such orders can not be subject to further appeal, because this amounts to hearing without giving an opportunity to the assessee.
(2) Appearance of Chartered Accountant in scrutiny proceedings U/s 288(2), other than CPC/Evidence Act against summons issued U/s 131, is also bad in law for the reason that CA conducting Tax Audit U/s 44AB for revenue can not appear for same assessee in scrutiny proceedings by the strength of power of attorney U/s 288(2) of Income-Tax Act. This position is comparable to same Advocate appearing both for Petitioner and Defendant. This practical situation prevailing on date, require kind attention of Policy Division of Central Board of Direct Taxes.
(3) In Opinion No.23 of Committee on the Unauthorised Practice of Law appointed by New Jersey Supreme Court states as under:-
“….we find that the dual practices of law and accounting….by lawyers would not violate the Cannons of Professional Ethics. Nor does it appear to us that any other rules of our Supreme Court would be violated by such dual practices.”
The above three genuine points may be considered by Central Board of Direct Taxes in full fledged budget 2014
Committee for un-authorised practice of law of Supreme Court of New Jersey gave opinion as under:-
In Opinion 23 (January 9, 1964), the court was asked: “May a member of the Bar of New Jersey engage in the practice of law in this State simultaneously with the practice of public accounting?” In response, the court’s opinion states:
“… we find that the dual practices of law and accounting … by lawyers would not violate the Cannons of Professional Ethics. Nor does it appear to us that any other rules of our Supreme Court would be violated by such dual practices.”
IN CANADA CASES ON LAW POINT HANDLED BY ONLY LAWYER NOT AS LIKE IN INDIA. IN INDIA ICAI IS NOT GIVEN EMPHASIS ON PRACTICE OF ACCOUNTANCY. BUT ICAI HAVE EYE TO CAPTURE LAW PROFESSION FOR ITS MEMBERS.
The main difference between a tax lawyer and a chartered accountant or C.A. relates to their training and knowledge. Tax lawyers are specifically trained in the area of tax law. Since their area of expertise is tax law, they will not only have specialized knowledge of the legal system as it pertains to taxes, but tax lawyers will also be up-to-date on all of the newest tax laws and regulations as well as the latest court decisions and rulings . knowledge that is crucial for the adequate defence of their clients. interests and rights. Chartered accountants, on the other hand, are mostly trained to count, analyze, record and report on the financial matters of a business or individual. They obviously possess general knowledge of tax law but not to the same extent as a tax lawyer especially as it pertains to the adequate defence of clients. rights in the face of a tax dispute with the Canada Revenue Agency. Moreover, and perhaps most importantly, everything that is communicated to a tax lawyer, whether in a written or verbal form, is protected by lawyer-client privilege (or attorney-client privilege as it is sometimes referred) and cannot be used against the client in a court of a law. Tax lawyers cannot be compelled to testify against anyone who has consulted them on a legal matter, regardless of whether or not they are or have ever been an actual client of said tax lawyers. Chartered accountants and other tax professionals are not afforded this protection and can be called to divulge information about their clients and even testify against their current or former clients in a court of law.
Whereas chartered accountants for the most part are trained to count and analyze the numbers, tax lawyers, and all lawyers for that matter, are trained to present legal arguments in their clients. favour and fight to the end to defend the interests of their clients.
I SUGGEST THE MINISTRY OF FINANCE GOVT. OF INDIA TO JUST COMPARE THE INCOME-TAX LAW OF OUR COUNTRY WITH THAT OF OTHER COUNTRY’S, IT WILL COME TO CONCLUSION, HOW MUCH OUR INCOME-TAX LAW IS COMPLEX ONE, BECAUSE OF ADVISE/SUGGESTION TAKEN FROM ICAI (FINANCIALS) SINCE FROM 1984
Stamp duty on documents authorizing appearance on behalf of assessee.
After the issue of Board’s Circular No. 50 (XL-43) D of 1956, dated the 28th December, 1956, the question has been raised whether accountants and income tax practitioners should file vakalatnamas or powers of attorney and, if the latter, what the scales of court fees or stamp duties leviable
thereon.The Board have been advised that a document purporting to authorize a person who is not a pleader or mukhtar duly appointed under section 7 of the Legal Practitioners Act, 1879, is not a vakalatnama or a mukhtarnama and requires to be stamped as a power of attorney under the Stamp Act. Therefore, the power of attorney in favour of a registered accountant or an income-tax practitioner or any other person who is not a duly appointed mukhtar under section 7 of the Legal Practitioners Act is a power of
attorney (and not a vakalatnama or mukhtarnama) and requires to be stamped not under the Court Fees Act, but under the provisions of the Stamp Act as in force in the particular area; i.e., subject to the local amendments.
C.B.R. Circular No. 9 (XL-48) of 1958 dated May 13, (1958) 34 ITR 19 St.
@Ananthanarayanan
1) It is not at all required to mention here that only “ADVOCATES & LAWYERS” are the class of persons entitled as “Legal Practitioners” with prerogative power. Hence it is not at all required to classify Advocates to Court Practice.
2) Accountants & Secretaries are not “Legal Professionals” at all. Accountant must do accounting job & Secretaries must do secretarial job….. so simple.
3) Than why Non-Legal Professionals are encroaching Legal Profession (in the context of Latest Hon’able Supreme Court & Madras High Court Judgement) unethically & illegally. If they do so, than they are liable to Penal Legal Action under various Acts..
4) One question is there: Is there no scope in Accounting work or Secretarial Work??? Need of hour to think about these Job. Develop practice in these particular areas & not at all by encroaching Noble Legal Profession unethically & illegally.
A question to my all my advocate and CA brothers –
Even though it is presumed that appearance before tax authorities is in the territory of CAs, is it ethical enough for a body like ICAI to allow its members to 1. write books for a client; 2. do tax audit of the client; 3. represent him before tax authorities.
Isn’t there a conflict of interest considering CAs are in one class evenif clients are different?
Sathyanarayana Sir,
This is the crux of the matter, by conducting tax audit CA are representing the assessee under appearance caluse U/s 288(2)and enjoying both the power of audit & representation. This will come to an end…… in view of latest Supreme Court verdict.
Further, CA not issued tax audit report in a particular case which is subject matter of scrutiny, can not be asked to appear against summons U/s 131 of Income-Tax Act, even though assessee prefer to take another CA not conducted tax audit of assessee case in question
Further, Non-Advocates along with assessee can definitely appear before Income-Tax authorities in assessment proceedings. This can not be questioned by any body. But Non-Advocates alone can not appear before tax authorities by the strength of power of attorney on behalf of assessees
Sathyanarayana says,
Mr Sathyanarayan, I am not saying CAs can not appear before Income-Tax Authorities. Appearance clause in all Indian tax law by non-advocates has been subject to review of SC verdict. Of course non-advocates can appear, but under CPC/Evidence Act against specific summons issued U/s 131 of Income-Tax Act on such CA who issued Tax Audit Report. If not order passed by AO against the hearing of non-advocates on behalf of assessee is null & void, also liable for action U/s 45 of Advocates Act. Further, such order can not be subject to further appeal. This is the reality, that may be questioned by HC & SC against PIL
Sir in foreign countries POWER OF ATTORNEY of two kinds.
1) Power of Attorney at law:- This kind of POA can be only in favour of
Advocate.
2) Power of Attorney in fact:- This kind of POA can be given in favour of
Non-Advocates including Certified Accountant. They are not authorised for
Practice of law”
3) CANADIAN INCOME TAX LAW:- If a case is represented by certified
Accountants before Revenue Agency. Than this kind of representation considered as compromise & in such cases assessee have no right appeal of before High court.
Chartered accountants ARE NOT PROFESSIONALS TO PLEAD & ARGUE AS LIKE ADVOCATES. THEY ARE ONLY ACT AS A POWER OF ATTORNEY HOLDER EXECUTED IN FAVOR OF ANY PERSON OR CHARTERED ACCOUNTANT. HERE WE CAN’T MAKE DIFFERENCE BETWEEN CHARTERED ACCOUNTANT & ANY OTHER PERSONS. UNDER POWER OF ATTORNEY ACT BOTH HAVE SAME POWERS & WE CAN’T COMPARE CA’s WITH ADVOCATES DUE TO SECTION 288(2). THIS SECTION ONLY GIVES APPEARANCE POWER BEFORE AUTHORITIES & SILENT OVER POWER OF ” PRACTICE OF LAW”
“As per section 2(p) of the Kerala Stamp Act, 1959, ‘power of attorney’ includes any instrument (not chargeable with a fee under the law relating to court fees in force) empowering a specified person to act for and in the name of the person executing it Under article 16 of the Second Schedule of the Kerala Court Fees Act, 1959, the instruments that are chargeable to court fee are mukhtarnama, vakalatnama or any paper signed by an advocate signifying or intimating that he is retained for a party An authorisation by a person of a chartered accountant or an income-tax practitioner to represent his case in income-tax proceedings is not an instrument specified in article 16 of the Second Schedule to the Court Fees Act and, therefore, subject to payment of no court fees under the Court Fees Act That being so, such an authorisation can only be considered as a ‘power of attorney’ as defined in section 2(p) of the Kerala Stamp Act, 1959, in respect of which stamp duty is payable as specified in article 44 of the Schedule thereof Accordingly, while a vakalatnama signed by an advocate is chargeable to court fee under the Court Fees Act, an authorisation in the case of a chartered accountant or an income-tax practitioner is only a ‘power of attorney’ which is subject to stamp duty under the Stamp Act
Court is the area of the advocates.
Other appellate authorities and adjudicating authorities – areas are not advocates areas.
Section 288
Income-tax Act, 1961—Section 288(1), (2) and (4)—Scope of the expression “any legal practitioner who is entitled to practice in any civil court in India” in section 288(2)(iii)—Whether it includes an Advocate—Clarification regarding
F. No. 274/15/79-ITJ, dated 6-5-1980 from Central Board of Direct Taxes
The Board has considered the question whether the expression: “any legal practitioner who is entitled to practise in any civil court in India” in section 288(2)(iii) of the Income-tax Act includes an advocate mentioned in section 30 of the Advocates Act, 1961, in addition to those mentioned in section 55 of that Act.
It has been clarified that the expression “legal practitioner” has been defined in section 2(1)(i) of the Advocates Act, 1961 to mean an advocate, vakil or attorney of any High Court, a pleader, mukhtar or revenue agent. While section 30 of the Advocates Act deals with the right of advocates to practise, section 55 deals with the rights of certain existing legal practitioners, such as pleader or vakil, attorney, mukhtar or revenue agent. who were entitled to appear in any court or revenue office or before any authority of person under the pre-existing laws. All the above categories of persons are entitled to practise in any civil court in India. There is no justification in drawing a distinction between section 30 and section 55 of the Advocates Act. Section 55 is merely intended to preserve the pre-existing rights of certain practitioners. Otherwise, the substance of the rights mentioned in sections 30 and 55 is the same.
The second question is whether the disqualification under section 288(4) of the I.T. Act applies to an advocate. It has been clarified that advocates are not being exempted under the provisions of section 288(4) of the I.T. Act.
The last question is whether section 288(4) of the I.T. Act does not contemplate that an advocate who can appear as of right under section 30 of the Advocates Act before the Supreme Court and High Courts should be disqualified under section 288(4) from appearing before the income-tax authorities and the Appellate Tribunal which are subordinate to the High Court and the Supreme Court.
It has been clarified that the right of an advocate to practise in all courts is not an absolute right. The Advocates Act itself deals with several provisions relating to the conduct of advocates. Apart from that, section 288 of the I.T. Act contains certain disqualifications. The mere fact that section 30 of the Advocates Act confers a right on advocates to practise in all courts, including the Supreme Court, does not mean that by another piece of legislation like the I.T. Act, the right to practice before the income-tax authorities and the Appellate Tribunal should not be regulated.
[F. No. 274/15/79-ITJ, dated 6-5-1980 from Central Board of Direct Taxes]
Dear Sri. BSK Rao,
You said accounting is easy to explain. Here is one example the AO is disputing accounting issue and asking for representation by CA:
Material imported (2 Nos) USD 1000/-
Customs and clearing chgs Rs.350/-
Sales amount(1 No.) Rs.35000/-
Opening Stock Nil
Closing stock (1 No.) to be valued and explained to the AO
Gross profit To be ascertained and explained to the AO with reference to section 145
Also the AO is asking what exchange rate to be applied as on 31.3.2012 with legal interpretation?.
My question is how advocate will explain this with reference to IT act?
Or both CA and advocate appear jointly and explain Or Ca will explain accounting calculation to advocate and advocate will appear and explain to AO or CA will be summoned and asked to stand as witness to explain accounting matter?
Or there is need to amend Advocate Act to include CAs to represent and certify all financial related matters. Because Advocates are signing statement of affairs(List of assets and liabilities ) as Notary furnished by the election contesting candidates which they are not competent.
Please Reply
dear sir,
CA profession is suppressing the growth of CS and CWA by their size and number of members and their presence in the parliament.
Let there be Advocates who can give pressure and competition to this CA profession.
in case changes are brought, it should be like this.
Advocates -only to courts
CAs – Audit and accounts only- tribunal relating to Income Tax
Cs- internal audit and secretarial- Tribunal relating to other acts.
CWAs internal audits and cost audit.-Tribunal relating to other acts.
otherwise open up all, let the skill and talent prevail over the prescriptions
It will be a worthy proposal if only Advocates are allowed to practice law before the authorities. Then there will not be any question of uniforminty for use of court fees on authority letter.
Under this circumstances where, the parliament is richer with as many advocates as members, we wish the lawmakers prescribe that only Advocates be allowed to practice law and bar other such so called authorised representatives to plead.
TO
The President,
ICAI (Financials),
New Delhi
Indian legislature provided special class of persons called Advocates in Advocates Act, 1961 to practice all Indian laws. Therefore, appearance clause not yet all required in any Indian statute. Bar Council of India Vs A.K.Balaji [SLP (Civil) No(s) 17150-17154/2012] Dt.04.07.2012 (SC) and A.K.Balaji Vs Govt. of India (2012) 35 KLR 290 21.02.2012 (Madras HC) it was clearly held by Hon’ble Supreme Court & Madras High Court that Advocates alone are entitled to practice the Profession of Law both in litigious & non-litigious matters, nullifying the effect of Section 33 of Advocates Act. This also confirms to Section 29 of Advocates Act. The verdict of Supreme Court is the declared law of land, binding on all throughout the territory of India under Article 141 of Indian Constitution & contravention liable for action under Article 129 read with Article 142(2) of Indian Constitution. Income-Tax Act being “LAW” Advocates alone are entitled to Practice, Plead & Act before the assessing officers of Income-Tax Deptt. On date, appearance clause Section 288(2) of Income-Tax Act has been subjected to review of Apex Court.
Furnishing Certificate & Reports in Income-Tax Act require both interpretation of facts & law. Interpretation of facts is not a tough job, but interpretation of law is a tough job. Practice of law is the PREROGATIVE POWER of Advocates in India. Whereas practice of Cost Accounts, Management Accounts & Financial Accounts are not the prerogative powers of respective professional body. Because, penalty has been prescribed U/s 45 of Advocates Act, 1961 for persons illegally practicing the Profession of Law. Under Indian Constituion CAG’s are the Auditors with wide powers. This is the answer for personal comment made by ICAI (Financials) on B.S.K.Rao, in the letter addressed to J.Saravana, CBDT, New Delhi Dt.29.01.2013 Ack. by CBDT on 30.01.2013
In the above circumstance, how come CA’s Plead & Act before the Tax Authorities ? which amounts to contempt of court ! Therefore, the suggestion in the above article is not relevant for Mininistry of Finance, Govt. of India to take action.
Instead, I before pray Ministry of Finance to delete appearance clause from all Indian taxation statute. I hope that ministry will consider my suggestion before SC issuing contempt order.