Opening up a money-spinning career proposition for lawyers in the country, the Bar Council of India (BCI) has written to the Union ministry of finance and tax authorities such as Central Board of Direct Taxes (CBDT) that lawyers must be authorised to sign and furnish tax audit certificates/reports, which has been hitherto the bastion of chartered accountants.
“The BCI has accepted a report submitted by a two-member committee comprising S Prabakaran and Rameshchandra G Shah, and has written to tax authorities informing them that a combined reading of the Income Tax Law and the Advocates Act made it clear that such audit reports/certificates could be signed only by advocates,” Prabakaran, who is now co-chairman of the Bar Council of India, told TOI.
Noting that as of now CAs can sign and furnish tax audit reports in Form No. 3CD under Section 44AB of the Income Tax Act without actually conducting an audit, the report said that as audit meant mere verification it was not the domain of CAs alone.
“Chartered accountants are trained in accounts only and not in interpretation of tax law and procedures. In order to practice income tax law and to fill tax audit reports form 3CD, one should specialise in interpretation of tax law and procedures, besides analysing intention of the legislature, Civil Procedure Code and impact of furnishing affidavit and sworn statements in the course of IT proceedings,” the report said.
Demanding a toe-hold for lawyers in non-corporate matters, the report said that as of 2010-11 there were only 59,472 CAs involved in the collection of revenue under direct taxes. If lawyers are permitted, tax base will expand and collection of tax too would increase, owing to higher awareness and penetration.
The practice of enclosing the tax audit certificates by CAs was introduced in 1984 at the behest of the Institute of Chartered Accountants of India, the report said, adding that such certificates/reports were not in practice in any other country.
It said due to this, lawyers found it difficult to practice income tax law independently. The only legal provision which enabled CAs to practice before tax forums was Section 33 of the Advocates Act which permitted advocates and practitioners “under any other law” to appear before the forum concerned.
Relying on the 2012 judgment of the Supreme Court in the BCI Vs A K Balaji case, the report said the court had held that advocates alone were entitled to practice law in litiguous as well as non-litiguous matters.