The present Rule 55 of the Income Tax Rules, 1962, contain a condition that the Applicant “has been practicing before the Income Tax Authorities for not less than one year on the date of application” which has been originally a suffix to the Clause (vii) in a metamorphose form. This has been creating the main hurdle being encountered by the first generation applicants aspiring to be Authorized Income Tax Practitioners. The Income Tax Authorities often either fails to understand the specific applicability & main purpose of application of this condition, or the authorities shall simply misinterpret the law as per their fancy or need. This has become a main hazard in enrollment of aspirants as Income Tax Practitioners (ITPs) on one side, and on the other laying burden on Government Exchequer in training & introducing the Tax Return Preparers (TRPs).
An in-depth study of Rule 54(1) and Rule 55 will definitely help to construe that the condition “has been practicing before the Income Tax Authorities for not less than one year on the date of application” laid under ill-drafted Rule 55 is pertaining to the Clauses (via) and (vii) only, but not to the Clauses (v) and (vi).
The Sub-rule (1) of Rule 54 read as “Any person who wishes to have his name entered as an Authorized Income Tax Practitioner in the Register shall apply to the Commissioner within whose area of jurisdiction he has been practicing. The Application shall be made in Form No.39 and shall be accompanied by documentary evidence regarding his eligibility for income tax practice under clause (v) or clause (vi) or clause (via) or clause (vii) of Subsection (2) of Section 288.” There are just 2 directions laid as statutes in Rule 54(1) as follows: –
(1) The Application in Form No.39 is to be submitted to the Jurisdictional Commissioner where the applicant is practicing [Please note here, the expression is just ”practicing” but does not refers length or period of practicing like “practicing since a year or practicing atleast for the past one year”], and
(2) The documentary evidence about eligibility should be as per a clause in which the applicant hails from or the applicant belongs to.
Therefore, to understand clearly about the exact clause-wise eligibility & the essential prerequisites for which documentary evidence/s required, we need to peruse & find out the clause-wise eligibility for income tax practice or eligibility to become a Registered Income Tax Practitioner specifically mentioned under each clause of Subsection (2) of Section 288 of the Income Tax Act, 1961 carefully, i.e., clause (v) or clause (vi) or clause (via) or clause (vii).
The Rule 55 read as “If the Commissioner is satisfied that the applicant fulfils the requirements of clause (v) or clause (vi) [or clause (via)] or clause (vii) of Subsection (2) of Section 288 and has been practicing before income tax authorities for not less than one year on the date of the application, the Commissioner shall enter the name of the applicant in the register and issue him a certificate of registration in Form No.40.” In the above matter, the words “of Subsection (2) of Section 288” is causing confusion, which are, logically, a common suffix to all the four clauses mentioned in the statute. Thus, for a layman’s reading it has to be read likely as “If the Commissioner is satisfied that the applicant fulfils the requirements of clause (v) of Subsection (2) of Section 288 or clause (vi) of Subsection (2) of Section 288 [or clause (via) of Subsection (2) of Section 288] or clause (vii) of Subsection (2) of Section 288 and has been practicing before income tax authorities for not less than one year on the date of the application, the Commissioner shall enter the name of the applicant in the register and issue him a certificate of registration in Form No.40.” Now, the reading of this matter clearly conveys that the condition “and has been practicing before income tax authorities for not less than one year on the date of the application” is applicable only to the clause (vii) of Subsection (2) of Section 288, since it is a suffix to the clause (vii) only, and is matching with statute laid under the clause (vii) of Subsection (2) of Section 288.
Even, otherwise, to avoid the prevalent confusion, if the words “of Subsection (2) of Section 288” are removed from the present Rule 55 so as to read the Rule 55 as “If the Commissioner is satisfied that the applicant fulfils the requirements of clause (v) or clause (vi) [or clause (via)] or clause (vii) and has been practicing before income tax authorities for not less than one year on the date of the application, the Commissioner shall enter the name of the applicant in the register and issue him a certificate of registration in Form No.40” then the Rule 55 administers correctly and regulates appropriately in its coverage of the four clauses of Subsection (2) of Section 288 of the Act.
Further, if the condition “and has been practicing before income tax authorities for not less than one year on the date of the application” is applicable to all the four clause of Subsection (2) of Section 288, the drafting of Rule 55 ought to be in a different form. When the four clauses have been already specifically mentioned in Rule 54, there is little need for repeating all the four clauses again. Thus, if the un-necessarily repeating & again mentioning of “clause (v) or clause (vi) [or clause (via)] or clause (vii)” in Rule 55 are removed/avoided from the present Rule 55 (when these have been already specifically mentioned in Rule 54), so as to read the Rule 55 as “If the Commissioner is satisfied that the applicant fulfils the requirements and has been practicing before income tax authorities for not less than one year on the date of the application, the Commissioner shall enter the name of the applicant in the register and issue him a certificate of registration in Form No.40”, then the Rule 55 not only administers correctly, but also be appropriate in its application equally to all the four clauses of Subsection (2) of Section 288 of the Act.
Therefore, the presence of four clauses in present Rule 55, if attempted to understand with logical sense, paves way to clear reasoning and to emphasizingly construe that the condition is exclusively for the clause (vii) of Subsection (2) of Section 288 of the Act only.
To conclude, if the subjected condition of “has been practicing before income tax authorities for not less than one year on the date of the application” is really applicable to all the four Clauses, the drafting of Rule 55 might have been likely to read as “If the Commissioner is satisfied that the applicant fulfils the requirements and has been practicing before income tax authorities for not less than one year on the date of the application, the Commissioner shall enter the name of the applicant in the register and issue him a certificate of registration in Form No.40” only. Therefore, the Rule 55 of Income Tax Rules, 1962 is, undoubtedly, ill-drafted.
– – – – – Syeda Khaderbi, M.A., M.Com., Income Tax Practitioner
Kindly read the section as well as the rules. In the main section there is no reference to AUTHORISED Income Tax Practitioner. Secondly,a person who wants to appear as a representative needs only those qualifications that are prescribed. The Rule Registers a person as an already practicing one and any person who can practice as per the qualifications prescribed need not register himself but can represent as “Authorised Representative” . There is no necessity as ITP. This term is not in the main act and the Rule can not bring in a term. Section 295(1)(n) also speaks of a “person other than” with regard to section 288(5) which speaks of barring a person. No one need to entertain an impression, in case he is not a legal practitioner or a CA, that he has to be registered as an ITP. This provision is comparable to registering the marriage of Hindu couple. When a person who is not an advocate or CA should always carry the proof of the academic qualification in case he is not an employee etc., so that he can prove his eligibility to appear as “AUTHORISED REPRESENTATIVE”
M.NARAYANAN, Retired Additional Commissioner ofd Income Tax, CHENNAI