Syed Mahaboob Peer

The “Income Tax Practitioner” is a noble & dignified profession for those who have just passed out an “accountancy examination”, or have just acquired a “Degree in Commerce or Law”. They could take up this Profession of Practicing in Income Tax Law, basing on one’s own abilities.

This is a self-employment opportunity, and thus, the earnings of the Practitioner will be based only on his/her abilities, efforts & even luck.   There will not be any salary, remuneration, honorarium or commission, etc., from the Government to the Income Tax Practitioners.   Yet, there will be a complete satisfaction that they are engaged in an activity that helps the Government to mobilize funds by way of taxes from assesses, and even motivate & encourage new assesses to pay taxes due.

Meaning & Definition of “Income Tax Practitioner”:

If a person practicing in one field, that person is regarded as a Practitioner of that field.   Thus, the person practicing in Income Tax Field is called the “Income Tax Practitioner”.

The Definition for the “Income Tax Practitioner” as given under Rule 49(a) of Income Tax Rules, 1962 is Authorized Income Tax Practitionermeans 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 means that only those persons who are falling under or hailing from those three clauses [i.e., (v) or (vi) or (vii)] are alone could come up as Income Tax Practitioners, and rest of the Authorized Representatives shown under rest of the clauses [i.e., (i) or (ii) or (iii) or (iv) or (via)] have no scope at all to ever become Income Tax Practitioners.

The Definitions laid under each of clause (v) or clause (vi) or clause (vii) of Sub-section (2) of Section 288 of the Income Tax Act, 1961 are as follows:

The Definition laid under clause (v) is “any person who has passed any accountancy examination recognized in this behalf by the Board”.   For the complete list of accountancy examinations recognized in this behalf by the Board, see the Rule 50 of Income Tax Rules, 1962, which is as follows:

RULE 50:         The following accountancy examinations are recognized for the purpose of Clause (v) of Sub-section (2) of Section 288, namely:

(1) The National Diploma in Commerce awarded by the All India Council for Technical Education under the Ministry of Education, New Delhi, provided the Diploma-holder has taken Advanced Accountancy and Auditing as an elective subject for the Diploma Examination.

(2) Government Diploma in Company Secretaryship awarded by the Department of Company Affairs, under the Ministry of Industrial Development and Company Affairs, New Delhi.

(2A) Final Examination of the Institute of Company Secretaries of India, New Delhi.

(3) The Final Examination of the Institute of Cost and Works Accountants of India constituted under the Cost and Works Accountants Act, 1959 (23 of 1959).

(4) The Departmental Examinations conducted by or on behalf of the Central Board of Direct Taxes for Assessing Officers, Class-I or Group “A” Probationers, or for Assessing Officers Class-II or Group “B” Probationers, or for promotion to the post of Assessing Officer Class-II or Group “B” as the case may be.

(5) The Revenue Audit Examination for Section Officers conducted by the Office of the Comptroller and Auditor General of India.

The Definition laid under clause (vi) is “any person who has acquired such educational qualifications as the Board may prescribe for this purpose”.     For the complete list of educational qualifications prescribed by the Board, see Rule 51 of Income Tax Rules, 1962, which is as follows:

RULE 51:         The following educational qualifications are prescribed for the purpose of Clause (vi) of Sub-section (2) of Section 288, namely:

A degree in Commerce or Law conferred by any of the following Universities:

i. Indian Universities: Any Indian University incorporated by any law for the time being in force.

ii. Rangoon University.

iii. English and Welsh Universities: The Universities of Birmingham, Bristol, Cambridge, Durham, Leeds, Liverpool, London, Manchester, Oxford, Reading, Sheffield and Wales.

iv. Scottish Universities: The Universities of Aberdeen, Edinburgh, Glasgow and St. Andrews.

v. Irish Universities: The Universities of Dublin (Trinity College), the Queen’s University, Belfast and the National University of Dublin.

vi. Pakistan Universities: Any Pakistan University incorporated by any law for the time being in force.

The Definition laid under clause (vii) is “any other person who, immediately before the commencement of this Act, was an income-tax practitioner within the meaning of clause (iv) of sub-section (2) of section 61 of the Indian Income-Tax Act, 1922 (11 of 1922), and was actually practicing as such”.     In this connection, it is to be noted that since the present Income Tax Act was enacted in the year 1961 & about 54 years have been passed from its enactment, hereafter there may not be candidates for enlistment as Income Tax Practitioners as per Clauses (vii) of Section 288(2) of the Income Tax Act, 1961, because such aspirants would be above 70 years of age by now.

Scope of Work & Tasks in this Profession:

The main tasks involved in the profession of “Income Tax Practitioner” are as follows:

1. Regularly and periodically verifying accounts of his/her Clients (Assessees) for timely alarming/encouraging payments of advance tax, at the end of each financial year finalizing the annual accounts, and preparing final statements of accounts from the books of accounts of Individuals (includes Proprietory Concerns, Salaried Employees, etc.), Hindu Undivided Families (HUF), Partnership Firms, Cooperative Societies, Companies, Non-Profits & Charitable Trusts and Societies, etc.,

2. Preparing statement of income for income tax purposes (by observing all eligible deductions as per IT Law), preparing and filing Income Tax Returns of the IT Assessees,

3. In “compulsory audit” cases, arranging for audit by a Practicing Chartered Accountant has to be done.

4. 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,

5. 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

6. To assist, explain case details and carry out discussions with Advocate/s who was/were 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.

Whether any experience or skills required?

The necessary aptitude, skill, expertise and ability to carry on with any profession will always be in forefront.     However, Command over or workable knowledge in English Language, ability to understand clearly the “Income Tax Act & Rules” and Proper Interpretation thereof, proper “finalization of accounts” and preparing “financial statements” in accordance with the provisions of Income Tax Law and properly preparing “Income Tax Returns” together with “convincing nature, quality liaisoning & representation” will be sufficient to carry on as an Income Tax Practitioner.

Registration as an Authorized Income Tax Practitioner:

The interested candidate for getting enlisted/registered) as “Authorized Income Tax Practitioner” has to submit his/her application in Form No.39 [accompanied with documentary evidence for his/her eligibility as per the applicable clause of Sub-section (2) of Section 288 of the Income Tax Act, 1961] in compliance with the Rule 54(1) of Income Tax Rules, 1962, to the Jurisdictional Commissioner of Income Tax of the area in which the applicant is practicing.

Procedure/process for disposing the Application in Form No.39 by the Jurisdictional CIT:

In fact, there is no specific process or procedure in Income Tax Act or Rules for disposing the applications received in Form No.39.   However, there is an iota in Rule 54(2) of the Income Tax Rules, 1962.

As per Rule 54(2) of Income Tax Rules, 1962, the Jurisdictional CIT may, after thorough perusal of the application, communicate to the applicant about the deficiencies in the Application.

On receipt of such communication, if the applicant suitably complies with it by furnishing or fulfilling or removing the shortcomings in the application, the Jurisdictional CIT shall enter the name of the applicant in the “Register of Income Tax Practitioners” in Form No.38 maintained by the CIT and shall issue a “Certificate of Registration” in Form No.40 to the Applicant as stipulated under Rule 55 of Income Tax Rules, 1962.

If the Jurisdictional CIT enlists the name of the Applicant in the Register in Form No.38 and issues a “Certificate of Registration” in Form No.40, from that day he/she (aspirant) will not only be a “Registered Income Tax Practitioner” but also become the Constituent Practitioner of & under the Income Tax Act, 1961, providing scope to the Department to exercise its powers to take disciplinary actions against the Income Tax Practitioner, if any.

Otherwise, he/she will be just “Income Tax Practitioner”, on the strength of Rule 49(a) of the Income Tax Rules, 1962, so long as he/she could act as Authorized Representative on behalf of the Income Tax Assessees as per Clause (v) or Clause (vi) of Sub-section (2) of Section 288 of the Income Tax Act, 1961.

The condition of “prior practicing for not less than one year”:

Yes, in present Rule 55 of the Income Tax Rules, 1962, there is a condition that the applicant to have been “practicing before the Income Tax Authorities for not less than one year on the date of application” in the aspect of “Registration as an Income Tax Practitioner”. This is the main hurdle being encountered by the first generation applicants.   In fact, there is no need to pay greater importance to this condition, because any aspirant to become Registered Income Tax Practitioner would naturally be working while learning all the tasks of this profession under any Senior ITPs.   The problem is with IT Authorities, who misunderstood the purpose of this condition or misinterpret the law as per their fancy or need.   To understand clearly about the applicability of that condition we need to peruse the (applicable) necessary applicable clause/s of Section 288(2) and Rule 55 carefully.

As per present Sub-section (2) of Section 288 of the Income Tax Act, 1961, there are eight (8) clauses [including “Clause (via)”], each clause stating the category of person/s to be eligible to get authorized by the Income Tax Assessees for representing them (assessees) before the Income Tax Authorities and even before the Hon’ble ITAT.

The present Rule 55 of the Income Tax Rules, 1962, is applicable to or covering only four (4) clauses [including “Clause (via)”] of the present Sub-section (2) of Section 288 of the Income Tax Act, 1961,.

The “Clause (via)” was inserted in Sub-section (2) of Section 288 of the Income Tax Act, 1961, by the Taxation Laws (Extension to Union Territories) Regulation, 1963 with effect from 01-04-1963.   However, the “Clause (via)” was inserted in Rule 55 by the IT (Fourth Amendment) Rules, 1979 with effect from 21-07-1979.   Thus, to arrive at the original statute of Rule 55 (as it might be prior to 21-07-1979), one has to keep aside the “Clause (via)”, and then, read & understand the original rule position.   Prior to 21-07-1979, the Rule 55 statute, if appropriated, may read as follows:

 “If the Commissioner is satisfied that the Applicant fulfills the requirement of –

Clause (v) of Sub-section (2) of Section 288 of IT Act,

OR

Clause (vi) of Sub-section (2) of Section 288 of IT Act,

OR

Clause (vii) of Sub-section (2) of Section 288 of IT Act, 1961 and has been practicing before the Income Tax Authorities for not less than one year on the date of application,

the Commissioner shall enter the name of the Applicant in the Register and issue him a Certificate of Registration in Form No.40.”

 From the above original statute of Rule 55, it is evident that the “condition of prior practicing” is applicable to Clause (vii) only, and for the remaining two clauses such condition is not applicable.     To construe that the above view of the “condition of prior practicing” is applicable to Clause (vii) only is exactly appropriate, even the Application/Form No.39 itself stands in defense of the above view.     In the middle of the prescribed Application/Form No.39, one could find three (3) starred (*) paras each pertains to each clause of the three (3) clauses [i.e., (v), (vi) and (vii)].   The Starred (*) 3rd para alone insists to mention at-least three (3) cases dealt in by the applicant.

Further, whereas imposing other than the ‘prescribed in Act’ is ultra-virus, the following statement clearly stands to show the applicability of the “condition of prior practicing” in the Rule 55 statute, prior to 21-07-1979, quite in accordance with the definitions laid under the Clauses (v), (vi) and (vii) of Sub-section (2) of Section 288 of the Income Tax Act, 1961, as follows:

 

Clause No. of the Section 288(2) of Income Tax Act

 Clear eligibility criteria stated in the Clause & Section of the IT Act  Extent of Rule 55 Application

 

 Clause (v) of Sub-Section (2) of Section 288 of Income Tax Act, 1961.  any person who has passed any accountancy examination recognized in this behalf by the Board  

As per Clause (v) of Sub-Section (2) of Section 288 of Income Tax Act, 1961.

 Clause (vi) of Sub-Section (2) of Section 288 of Income Tax Act, 1961.  any person who has acquired such educational qualifications as the Board may prescribe for this purpose, i.e., Degree in Commerce or Law  As per Clause (vi) of Sub-Section (2) of Section 288 of Income Tax Act, 1961.
 Clause (vii) of Sub-Section (2) of Section 288 of Income Tax Act, 1961.  any other person who, immediately before the commencement of this Act, was an income tax practitioner within the meaning of clause (iv) of sub-section (2) of section 61 of the Indian Income-Tax Act, 1922 (11 of 1922), and was actually practicing as such  As per Clause (vii) of Sub-Section (2) of Section 288 of Income Tax Act, 1961 and has been practicing before the Income Tax Authorities for not less than one year* on the date of application.

[*Whereas Section 288(2)(vii)is insisting to have been “Practicing”, the Rule 55 insists a least period of one year to reckon for the purpose of eligibility]

The above statement clearly exhibits the fact pertaining to the applicability of the “condition of prior practicing” to Clause (vii) only.

It’s a Clear Misunderstanding:

Though the “condition of prior practicing” in Rules 55 pertains directly to Section 288(2)(vii) only, the Rule 54(1) directs the applicants to submit their Form No.39 to the “Jurisdictional CIT of the area in which the applicant is practicing” which also implies the condition of “prior practice”.   Therefore, it is an unavoidable obligation to the applicants under Clause (v) and Clause (vi) also to prove that he has commenced practicing.

The Jurisdictional CITs are either unable to understand or confused about the condition of “prior practice” implied in Rules 54(1) and 55 of Income Tax Rules, 1962.   Either way, it is almost simply to ‘indicate/confirm that the “applicant” has started to act as an Income Tax Practitioner’ only.

However, the fact is that there are no specifically prescribed proofs either in ‘Act’ or in ‘Rules’ to prove that the “Applicant has been practicing before the Income Tax Authorities” [vide Order bearing F. No. RTI/CIT/TPT/2014-15 dated 13-03-2015 passed u/s 7(1) of the Right to Information Act, 3005 issued to an Applicant under the Act]  Thus, simply external testimony like the “Certificate issued by the applicant’s Senior ITP” or the “Certificate/s issued by the Assessee/s” or atleast a “Certificate issued by a Recognized Person (like MLA, Corporator, etc.) of the locality in which the Applicant has the Practice” have to be approved, but the IT Authorities should not insist anything else per their fancy.

However, some Income Tax Authorities are intentionally ignoring the facts and willfully erring in insisting to produce documentary evidence in lieu of prior practicing in the cases of the candidates under two clauses [i.e., (v) and (vi) of Section 288(2)], which is most unfair.    So, it has become an unavoidable hectic task on behalf of the aspirants to struggle a lot in attempting to convince the IT Authorities, in one way or the other, or end up their professional efficiencies just by rendering them under their Senior ITPs for years together.

Thus, the prevalent situation and ill-fate of the first generation ITPs has lead to arouse so many “Substantial Questions of Law” in connection with Section 288(2) and relevant Rules (under Income Tax Law), which are to be urgently tackled positively by the CBDT or Ministry of Finance or the Judiciary.   A few of such questions are as follows:-

1. Whether imposing other than those laid under Act is “ultra-virus” or not?

2. Whether the Rule 55 of the Income Tax Rules, 1962 is having a legal hitch or not?

3. Whether the Rule 55 is ill-drafted or not?

4. Whether the condition “and has been practicing before the Income Tax Authorities for not less than one year on the date of application” laid under Rule 55 of the Income Tax Rules, 1962 is really applicable to the Clauses (v) and (vi) of Sub-section (2) of Section 288 of the Income Tax Act, 1961?

5. Whether the condition “and has been practicing before the Income Tax Authorities for not less than one year on the date of application” laid under Rule 55 of the Income Tax Rules, 1962 is exclusively pertaining to Clause (vii) of Sub-section (2) of Section 288 of the Income Tax Act, 1961 or not?

Therefore, either the Ministry of Finance / Central Board of Direct Taxes has to expedite the issue of a Circular/Notification with suitable clarification in this regard, or the Judiciary has to infer in this matter in the interest of those educated youth, who are aspiring to be & become the Registered Income Tax Practitioners.

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0 responses to “Dignified Self-Employment: Income Tax Practitioner”

  1. SYEDA KHADERBI, MA., M.Com., says:

    Hello Deepak Sinhaji,

    The Author of this Article has clearly stated that the “condition of prior practicing” in Rule 55 pertains directly to Clauses (via) and (vii) of Section 288(2) only, but the Rule 54(1) directs the applicants under Clauses (v) and (vi) of Section 288(2) to submit their Form No.39 to the “Jurisdictional CIT of the area in which the applicant is practicing”. It is almost simply to ‘indicate / confirm that the “applicant” has started to act as an Income Tax Practitioner’ only. The fact is that there are no specifically prescribed proofs either in ‘Act’ or in ‘Rules’ to prove that the “Applicant has been practicing” [vide Order bearing F. No. RTI/CIT/TPT/2014-15 dated 13-03-2015 passed u/s 7(1) of the Right to Information Act, 2005 issued to an Applicant under the Act] Thus, simply external testimony like the “Certificate issued by the applicant’s Senior ITP” or the “Certificate/s issued by the Assessee/s” has to be approved. Why won’t you try to get in writing (atleast under Right to Information Act)as to where it is stated as compulory to have attended at least three scrutiny cases to become Registered Income Tax Practitioner?

  2. DEEPAK SINHA says:

    Sir,

    However when I visited Aykar Bhavan, the Commissioner of Income Tax Office in Mumbai, they advise me that it is compulory to attend at least three scrutiny cases to become Income Tax Practitioner. Since I have not attended any case my application was not accepted. Hence I request you to please write this practical view also.

  3. RAM LAKHAN says:

    Dear Sir,

    Is it compulsory to get I T P registeration if a person only files online returns of his clients and advices his clients regarding income tax aspects and he never wants or needs to be appeared before income tax authorities.

    In other words is there legal restriction to file online returns and giving advice to clients without having registeration of ITP or C.A.

    I would be highly obliged if you give me answer to my query.

    Ram Lakhan

  4. NIRAV MEHTA says:

    It is not worth to become ITP. Because on every mode u need signature of CA; and most part of ur income will goes to CA.

  5. M.Narayanan says:

    Registration with Commissioner is only optional. What is necessary is proof for having the qualification, which any IT authority can ask for. Registering gets a certificate as to the eligibility to appear. No one with a requisite qualification can be prevented from representing an assessee on the ground that he or she has not registered with the Commissioner.

  6. mm.hanif says:

    Very nice and good explanation sir …
    Thank’s

    Regards.
    M.M.Hanif

  7. TEJAS VORA says:

    Sir,

    Article given by you is a very good descriptive with ease understanding of every section(s) / clause(s) co-related as per applicability.

    The requirement of updation is also necessary for new Income Tax Practitioners.

    As you also aware of that CBDT has introduced Tax Return Preparer with some of fees payable to them for filing of Income Tax Return of Assesses even though for filing of IT Return they do not requires much expertise other than knowledge of showing of details of income or investment of Assesses in cells wherever applicable.

    I think than Income Tax Practitioner should also be paid with any minimum Fees decided by CBDT either side from Department or from Assessee.

    while going through Rule 50, CBDT has to also add Passing of
    Final Examination of The Institute of Charted Accountants of India, Setup by Act of Parliament.

    Thanks & Regards,

    Tejas Vora

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