Only Enrolled Advocates licenced to practice law? CAs Object
THE subject of a recent letter written by the Institute of Chartered Accountants of India to the Principal Chief Commissioner of Income Tax, Chandigarh, is this:
Sub: Only enrolled Advocates are licensed to practice Law in India- Not to allow Chartered Accountants/ Non- Advocates for practice of law in the course of proceedings before revenue authorities falling under the jurisdiction of Principal Commissioner of Income Tax and Commission of Income Tax, Amritsar, Jammu etc.
It seems it has come to the knowledge of the Chartered Accountants that a proposal not allowing Chartered Accountants/ Non- Advocates for practice of law in the course of proceedings before revenue authorities falling in the jurisdiction of this Chief Commissioner is under consideration.
Though comments have not been called from the ICAI, they have suo moto submitted certain facts for the consideration of the Chief Commissioner.
1. The Institute of Chartered Accountants of India, is a statutory body established by an Act of Parliament; a significant majority of the membership is in the practice with a good deal of specialisation in the traditional areas of direct/ indirect taxes and in emergent specialism inter alia, in financial services, information technology, insurance sector, joint ventures, mutual funds, exchange risk management, risk and assurance services, environment / energy/quality audits, investment counselling, corporate structuring and foreign collaborations etc.
2. The Institute of Chartered Accountants of India is also engaged in the Nation building by contributing to Central and various State Governments and other regulators viz, the Ministry of Corporate Affairs, Trade Policy division of the Ministry of Commerce and Industry, Central Board of Direct Taxes, Reserve Bank of India, Insurance Regulatory and Development Authority, Comptroller and Auditor General of India, Securities Exchange Board of India etc. to name a few, on the relevant matter of importance to the profession and having bearing to the public interest.
3. The education and training programme of the Institute to the qualification of Chartered Accountancy is adequately designed to ensure that the members have in depth knowledge/ experience of accounting, taxation, financing and audit etc. The Institute spares no efforts in keeping pace with the current accounting and auditing practices prevalent throughout the world.
4. Taxation including Indirect Taxes is one of the core-competence areas of Chartered Accountants. In India, Chartered Accountants have expertise in accounting, auditing and taxation, since these subjects are dealt with in great depth in the CA curriculum. Further, Taxation constitutes a significant area of practice of CAs. It is due to this reason the Institute has three separate dedicated committees on taxation, namely, Direct Taxes Committee, Indirect Taxes Committee and Committee on International Taxation. These committees are amongst the most important committees of the Institute and they act as a liaison between the Revenue and the tax payers.
5. The provisions of Income Tax Act involve computation and analysis of profit and loss account which directly relates to accounting procedure or the recording, presentation or certification of financial facts or data. Chartered Accountants being an expert in understanding and analyzing the financial statements are thus the right person for explaining the related facts in case of dispute.
6. The matters before the Tax Authorities involve issues and questions mainly relating to accountancy and require knowledge and expertise in accounting matters. This is why many of the leading and most successful tax advocates are also qualified Chartered Accountants. The appearance of Chartered Accountants before tax authorities and tribunals has always been considered to be an integral part of the practice of a Chartered Accountancy ever since 1940s, when the Income Tax Appellate Tribunal was first set up and when Chartered Accountants began appearing before it.
7. The term ‘practice of profession of law' has not been defined under the Advocates Act, 1961. The appearance before the Authorities established under the Income-Tax Act does not amount to ‘practice of profession of law'.
8. A perusal of Section 33 of the Advocates Act, 1961 shows that it specifically contemplates and provides that the other statute in question may specifically permit persons other than Advocates to appear before Courts and Tribunals functioning under that statute. Such provisions are to be found in all Central as well as State Acts dealing with various direct and indirect taxes such as Income Tax, Excise Duty, Value Added tax, etc.
9. The Statute only confers on lawyers the exclusive right to practice law. With the passage of time there are a lot of functions which are overlapping with the practice of law and such overlapping functions cannot confer the right on lawyers under the Advocates Act. Any such interpretation will stultify the growth and evolution of society and the rules of effective and expeditious dispute resolution. It is, therefore, of vital importance to note that Section 33 of the Advocates Act, 1961 itself specifically contemplates and provides that the other statute in question may specifically permit persons other than Advocates to appear before Courts and Tribunals functioning under that statute.
10. The matters before the various tax/revenue authorities involving mainly issues and questions relating to Accountancy and require knowledge and expertise in accounting matters. Indeed, even if an advocate appears in such matters, he cannot present his case in the most effective manner without a good knowledge of accountancy. This is why many of the leading and most successful tax advocates are also qualified Chartered Accountants.
11. Law is a dynamic subject and the growth of trade and commerce and the requirements of revenues of Governments have resulted in the emergence of specialized legislations like the Income-tax Act, the Central Excise Act, 1944 and the Customs Act, 1956 and other various State-Level VAT Legislations.
The Institute concludes,
In the above backdrop we are of the view that it would not be appropriate to consider any such proposal which restrains the Chartered Accountants from appearing before the revenue authorities in India particularly when various Central/State legislations including the Income Tax Act, 1961 expressly provide and authorise the Chartered Accountants to appear and represent the cases before the authorities under the Income Tax Act, 1961.
But what is the Customs Act, 1956? In its rather exhaustive representation to the Principal Chief Commissioner, the Institute mentions ‘the Customs Act, 1956'. Perhaps what they mean is the ‘Customs Act, 1962.'. A small negligible mistake, no doubt, but when one is arguing about one's professional excellence, shouldn't one get the name of an important legislation correct?
The Institute says, “This is why many of the leading and most successful tax advocates are also qualified Chartered Accountants." But is the converse true?
There are brilliant lawyers and brilliant chartered accountants and of course there is the other end where you find most lawyers and chartered accountants. As far as the client is concerned, winning the case is the ultimate goal; whether through a lawyer or through a chartered accountant, is immaterial for him.
In any case, the Principal Chief Commissioner cannot decide as to whether a chartered accountant or lawyer should appear before him - only the law can decide that. And what is the law? (Maybe you need a lawyer to find out that.)A similar issue is pending before the Lucknow Bench of the Allahabad High Court.
Where there is a will, there is a law;
Where there is a law, there is a loophole;
Where there is a loophole, you need a lawyer to find it.
Please also see
Only Advocates to appear before VAT Authorities - DDT 2414 11.08.2014
CAs can continue to appear before VAT authorities - so can Cost and Works Accountants and Company Secretaries - DDT 2430 04.09.2014