The Bar Council of India has urged the Centre to allow only advocates to appear before income-tax authorities at all levels, including the appellate tribunal for arguments on assessment, penalty, etc.
At present chartered accountants, company secretaries and management professionals, who are engaged in practice of Law and Taxation, appear before IT authorities taking advantage of Section 33 of the Advocates Act, which permits advocates and other practitioners to appear before the forum concerned.
Supreme Court judgment
Armed with the Supreme Court judgment in the case of BCI vs A.K. Balaji, holding that advocates alone were entitled to practise law in both litigious and non-litigious matters, the BCI appointed a panel comprising Co-Chairman S. Prabakaran and member Rameshchandra Shan to look into the matter.
The panel, after examining the provisions of the Advocates Act, the Income Tax Act and the Chartered Accountants law, opined that the Legislature had provided a special class of persons to practise law under the Advocates Act.
“When the Institute of Chartered Accountants of India claims that it is its prerogative to tax audit that too with the limitation to financial accounts, why can’t legal practitioners claim that it is their prerogative to practise Income Tax law with the backing of the Supreme Court verdict and the mandate of the Advocates Act?” it asked.
The panel pointed out that practice of Income tax law involved preparation and submission of IT returns and appearance before authorities in assessment proceedings. With the introduction of Tax Audit Certificate in 1984 under Section 44AB of the IT Act and with the requirement of a mandatory certificate from Chartered Accountants, legal practitioners found it difficult to practise IT law independently, it noted.
‘Loophole’ in law
So the BCI has sent a communication to the Central Board of Direct Taxes, New Delhi, and the Income-Tax Appellate Tribunal, Bangalore, to take steps to delete the words “or in any other law" from Section 33 of the Advocates Act. The CBDT should authorise lawyers to sign and furnish tax audit certificates/reports, the BCI said.
“The person conducting audit should have specialised in that subject. Hence the word ‘audit’ is not the domain of chartered accountants … When legal practitioners are the only class of persons entitled to practise law, there is no justification for prohibiting advocates from issuing certificates or reports under the IT Act.”