Censured Auditors (CAs) - ITAT again blasts Chartered Accountants
IN DDT 2432 - 08.09.2014, we carried the story of the ITAT coming down heavily on CAs. The year 2014 did not end rather well for the Chartered Accountants. In a Judgement delivered on 31 st December 2014, the ITAT had some real harsh words for the CAs to ponder over the New Year.
The Tribunal observed,
………..certifications by the chartered accountants inspire no confidence and, quite to the contrary, raise doubts about efficacy of the built in checks and balances in transfer pricing regulations.
It is somewhat fashionable to criticize the revenue authorities for their lack of objectivity or even inefficiency but what in the world can justify such a pathetic level of professional work
relied upon by even the large corporate entities. If the tax judicial system is clogged by frivolous litigation today and if the tax finality still takes decades to reach, these saviours of taxpayers are as much to be blamed for this situation as anybody else.
No purpose can be served in reporting by a chartered accountant when such reports do not even point out glaring infirmities in taxpayer's approach vis-a-vis the transfer regulation, in a comparison of budgeted profits margin with actual profit margins realized by the comparables which is stated to be ascertainment of ALP on the basis of the TNMM.
It appears that in an alarming number cases, these audit reports, rather than painting a true and fair picture of the relevant facts, tend to epitomize the art of constant hedging and manoeuvring by the professionals so as they stay within the confines of permissible professional conduct and are yet able to sidestep the inconvenient realities. Of course, it will be much worse a situation if they are actually so naive as to be oblivious of simple provisions of law, of their onerous responsibilities or of the legitimate public expectations. It is not to belittle the brilliant work being done by many a professionals but it is just to point out the dilemma of those who explore the possibilities of relying upon such audit reports and certifications, and also the inertia of those who can do something to salvage this situation and, to thus avoid an inevitable systemic rejection of the ritualistic certifications.