Falling Standards of CAs - ITAT Tones Down
IN an order dated 20.08.2014 (2014-TIOL-629-ITAT-MUM), the ITAT came down heavily on the chartered accountants. The Tribunal observed,
Falling Standards of CAs
We are aware that the Chartered Accountancy profession commands high respect and value with one and all, because of their core expertise and knowledge. Their domain expertise and practical approach adopted by them to address the problems enable them to give near perfect advice in a given situation and hence tax payers and tax gatherers repose confidence in them. These kind of domain expertise could be achieved by a C.A due to strict training methodologies adopted by and also high level of standards maintained by the Institute of Chartered Accountants of India (ICAI), its vast and versatile curriculum, tough examination pattern, continuous updating of curriculum etc.. Most of all, the practical on-site training obtained by the students from a practicing Chartered Accountant that too during the period of study itself, makes the C.A course a unique one. The cumulative effect of these methodologies makes the students a perfect Chartered Accountant having high caliber, ability, high standards etc., and hence they are enabled to set up their own practice from day one itself. Though the Chartered Accountants are having domain expertise in accountancy and auditing areas, yet the training they undergo as well as the curriculum of C.A course makes them a best tax professional also.
Noticing that a CA might have given patently wrong advice to an assessee regarding filing of an appeal, the Tribunal observed,
...it may be showing signs of deteriorating standards with some of the Chartered Accountants in profession, which needs to be stopped on war footing by the ICAI.
...if it is presumed for a moment that all the C.A.s have concurred with the said view, then it only shows that the C.A profession is losing its grip over the Income tax matters, which is another cause of concern for ICAI. The self-study model coupled with ‘on-site articled clerk training' embedded in the Chartered Accountancy course aims to achieve high quality education and training through undergoing practical training, inculcating the habit of thinking, self-introspection, application of mind, analytical ability etc. and they enable the C.A students to have strong grip over the subjects and also to attain expertise in them. The commendable feature of the C.A course is that, as stated earlier, the C.A students are trained by the practicing Chartered Accountants during their articled clerk training program. Thus, the methodology adopted by the ICAI enabled the C.A. students to become a thorough professional with versatile knowledge and innovative mind. We notice that, in the recent past, the methodology of self-study is given a go-by by some of the C.A students and they have started depending more and more on the Commercial Coaching Centers, who undertake coaching of various subjects in the class room model. We notice that the ICAI does not appear to have taken steps to contain mushrooming growth of such coaching institutes, which indulge in manufacturing of Chartered Accountants through class room model, which may ultimately have undesirable effect on the quality of Chartered Accountants, since the habit of thinking, introspection, application of mind is replaced by spoon feeding, which kind of teaching discourages independent thinking. There should not be any controversy on the fact that the Chartered Accountants, till date, have occupied pioneer position vis-à-vis their counterparts in other parts of the World. They also contribute a lot to the building, sustenance and growth of our National economy. Any compromise on the quality of Chartered Accountants would not only affect our Country very badly, but is also expected to endanger the pioneer position enjoyed by the Indian C.A fraternity vis-à-vis their counter parts in other parts of the world. In our view, the ICAI should seriously take note of these alarming practices slowly emerging in our Country and should take appropriate corrective steps, lest the confidence reposed in C.A.s by the public should get diluted.
The CAs were obviously not happy.The Institute of Chartered Accountants of India (ICAI) filed a miscellaneous application with the submissions that some of the observations made by the Tribunal in its order dated 20th August, 2014 has resulted in a mistake apparent from record and hence the same needs rectification u/s 254(2) of the Act.
The Counsel for ICAI submitted that the Tribunal has made certain observations about the Chartered Accountancy (C.A.) profession, the conduct of some of the students pursuing the C.A courses and also about ICAI in the impugned order. The observations made by the Tribunal in paragraphs 9 to 9.6 were not warranted and were not necessary or required to dispose of the grounds urged by the above said appellant before the Tribunal. The Counsel placed reliance on some of the decisions rendered by the Supreme Court to submit that the observations which are not relevant to the issues under consideration should be avoided by the Courts. Accordingly, he submitted that the observations made by the Tribunal has given unintended results affecting the reputation of ICAI.
This application came up before the same Bench which made the unwelcome observations about CAs. The Tribunal disposed of the Rectification petition last week.
Is ICAI competent to file this application? When it was pointed out that the ICAI was not a party to the appeal and accordingly when it was questioned about the competency of the ICAI to file this miscellaneous application, the Counsel submitted that the Tribunal has inherent powers to rectify its own orders and since these observations have been made without hearing the ICAI, the Tribunal may rectify the order by using its inherent power.
Can the Tribunal make observations not relevant to the issues under consideration? The Tribunal agreed that the observations made by the Tribunal about the C.A profession and conduct of the students pursuing the C.A courses, were not necessary to adjudicate the issues that were urged before the Tribunal, but the Tribunal observed,
In our view, the Income tax Appellate Tribunal, being a part of Government of India, should not shut its eyes when it is noticed that certain developments occurring in the Country may affect the Country as a whole, more particularly when the reputation of particular profession, from whom the Tribunal is getting assistance in the dispensation of justice, is at stake. Accordingly, we sincerely believe that it is the bounden duty of not only the Tribunal, but also the duty of one and all to point out and discuss about such kind of developments, when it is noticed that the same may affect the public at large. There cannot be any controversy that the interest of our Country is Supreme and no citizen can or should compromise on the same. We may clarify here that the observations were made by the Tribunal in the impugned order in that context only and it was not the intention of the Tribunal to target any particular person or the ICAI. Accordingly, none of the observations made in the order was intended to criticize should be construed as criticizing the functioning of the ICAI. In fact, the Tribunal has only applauded the strict standards followed by ICAI in imparting the education and training.
However, as the observations made have not conveyed the message as intended by the Tribunal and as it was submitted that the said observations have given room for misinterpretation and resultant controversies, by exercising its inherent powers, the Tribunal, modified the disputed paragraph as
"9.6 However, if it is considered for a moment that the above said C.A. firm has really given such advice to the assessee herein and accordingly it has furnished the letter and affidavit, then it is a cause of concern to one and all. We have already noticed that the self study model coupled with 'on-site articled clerk training' embedded in the Chartered Accountancy course aims to achieve high quality education and training. The articled clerk training conceptualized in the C.A education inculcate the habit of thinking, self introspection, application of mind, analytical ability etc and they enable the C.A students to have strong grip over the subjects and help achieving expertise in the domain fields. The commendable feature of the C.A Course is that, as stated earlier, the C.A students are given training by practicing Chartered Accountants during their articled clerk training program. Thus the methodology adopted by the ICAI enables the C.A. students to become thorough professionals with versatile knowledge and innovative mind. The practical training given by the practicing Chartered Accountants during the articled clerk period, in our view, is the fulcrum centre of the study module of the C.A course and the students pursuing the C.A course should and must utilize the opportunities provided to them or encountered by them during the articled clerk training period to the maximum possible extent. In the recent past, a number of Coaching institutes have been established to give coaching to the students pursuing C.A course. While the self study model and articled clerk training may be supplemented with the coaching given by such institutes, any compromise on the practical training intended during articled clerk period or mere obtaining a C.A degree without practical training would not make the students full fledged chartered accountants and the same would go against the self study model conceptualized by ICAI and there should not be any doubt that it may have undesired results, which may affect the Country as a whole."
The Tribunal dismissed the miscellaneous application filed by the ICAI, but they really got what they wanted - the offending para was modified. Was it really necessary?