Representation to the Principal Chief Commissioner regarding not to allowing Chartered Accountants in the course of proceedings

29-CA/Law/NDM-1134                                                                 27^th November, 2015

 To,

 The Principal Chief Commissioner

 Income Tax,

Chandigarh

 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.

Dear Sir,

 Recently,
it has come to our knowledge that a proposal not allowing Chartered
Accountants/ Non- Advocates for practice of law in the course of proceedings
before revenue authorities falling in your jurisdiction is under consideration.

 In this
regard, although, comments have not been called for from the Institute of Chartered
Accountants of India New Delhi, yet being the statutory body and regulator as
well, we wish to bring the following facts for your consideration.

 The
Institute of Chartered Accountants of India, is a statutory body established by
an Act of Parliament namely ‘The Chartered Accountants Act, 1949’ for
regulating the profession of Chartered Accountants. We further, wish to inform
you that a significant majority of our 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.

 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. 

The education and training programme of the Institute to
the qualification of Chartered Accountancy is adequately designed to ensure
that our 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.
An individual who qualifies as a Chartered Accountant has to mandatorily
undergo rigorous practical training and has to keep his knowledge updated in
the matter relating to accountancy, audit, taxation and corporate laws etc. The
area of training covers accountancy, auditing, taxation, company law and other
laws. The level of knowledge prescribed in the various subjects covered by the
syllabus of the Chartered Accountancy course is ‘expert knowledge’.

That
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. The Committees comprise of
chartered accountant members of the Central Council, as well as other co-opted
members, who are experts in the field of Taxation from across the country.
Therefore, it is clear that a chartered accountant, on passing his final
examination and completing his articled training, is an expert in taxation,
accountancy, auditing, company law and other laws etc., and he is accordingly fully
qualified to practice in these fields. Chartered Accountants are thus well
trained in various laws which are applied while conducting cases before various
tribunals and other similar authorities.

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.

For application of tax legislations, the prima facie
documents are financial statements thus the government has given the task
relating to financial statements appropriately to Chartered Accountants.

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.

It is necessary to note that the
members of the Institute are thus well trained in the fields of various laws
which are applied while conducting the cases before the various tax/revenue
authorities. It is in recognition of that crucial fact the various applicable
statutes specifically permit Chartered Accountants to appear before authorities
and Tribunals constituted under those statutes. A few of such statutes are
listed below:-

(a)         
Section
288 of the Income Tax Act, 1961 read with Rule 50 of the Income Tax Rules, 1962

(b)         
Section
35-Q of the Central Excise Act, 1944

(c)         
Section
146-A of the Customs Act, 1962 read with Rule 9(a) of the Customs (Appeals)
Rules, 1982

(d)         
Section
15-V of the Securities and Exchange Board of India Act, 1992

(e)         
Section
22(C) of the Securities Contracts (Regulation) Act, 1956

(f)          
Section
17 of the Telecom Regulatory Authority of India Act, 1991

(g)         
Section
432 of the Companies Act, 2013

(h)         
Regulation
19 of the Company Law Board Regulations, 1991

(i)           
Section
35 and Section 53 S of the Competition (Amendment) Act, 2007

(j)          
Rule 61
of the Special Economic Zone Rules, 2006

(k)         
Before
the Central Electricity Regulatory Commission vide Notification
No.8/(1)/99/CERC dated 27.8.1999

(l)          
Airport
Economic Regulatory Authority of India Act; in terms of section 30, CA can
appear before Appelate Tribunal

(m)        
The
Foreign Exchange Management Act, 1999 — in terms of Sections 16 and 32 

Needless
to mention that the Institute, since its inception in the year of 1949, has
always remained at the forefront in serving the nation by establishing sound
financial prudence within the country.

Further,
the Institute has a stringent code of conduct/Ethics which are required to be
followed by its members. It is also pertinent to mention that the Chartered
Accountants Act, 1949 provides the disciplinary mechanism for making investigation
and taking disciplinary action in respect of any complaint/information of
professional/other misconduct in respect of a member and/or levy of penalty of
permanent removal of name from the register of members and/or levy of penalty
up to Rupees Five Lakhs as well depending on the gravity of offence(s).
Therefore, the Chartered Accountants are governed by the Chartered Accountants
Act, 1949 and the Chartered Accountants Regulations 1988 framed there under and
are subject to strict provisions of professional ethics and professional
conduct and any deviation there from would make them liable for disciplinary
action under the said Act. The ICAI has established a Peer Review Board to
ensure compliance with technical standards, acceptance and adherence to quality
control policies and procedures by Chartered Accountants firm in the services
being rendered by them. Such reviews certainly boost the confidence of society
at large in the quality of work of Chartered Accountants in India.

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’. The Hon’ble Supreme
Court in the case of C. Venkatachalam vs. Ajitkumar C. Shah & Ors. [6
(2011) 9 SCC 707], while considering the provisions of the Consumer
Protection Act, 1986, upheld the judgment of the Division Bench of the
Bombay High Court, whereby the Hon’ble High Court held that a party before the
District Consumer Forum/State Commission cannot be compelled to engage the
service of an advocate. The Hon’ble Supreme Court also observed that the High
Court was fully justified in observing that the authorized agents do not
practice law when they are permitted to appear before the District Forum and
the State Commission. Further, the Hon’ble Supreme Court also approved the view
taken by the High Court that many statutes, such as, Value Added Tax, Income
Tax and Competition Act also permit non-advocates to represent the parties
before the authorities and those non-advocates cannot be said to be practicing
law.

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. The Hon’ble Supreme Court in R.D.
Nagpal v. Vijay Dutt [(2011) 12 SCC 498] considered the provisions
of the Consumer Protection Act, 1986. Rule 14(3) of the Consumer
Protection Rules, 1987 allowed the parties or their agents to appear before the
National Commission, and the expression ‘agent’ as defined in Section 2(b) of
the said Act means a person duly authorised by a party to present any
complaint, appeal or reply on its behalf before the National Commission. The Supreme
Court held that given the wide definition of the expression ‘agent’, there was
no reason, if the Commission were otherwise satisfied that a person was
authorised on behalf of the appellant, to refuse to allow him to represent it
and to cross examine the complainant. The provisions of Section 33 of the
Advocates Act of 1961 came up for consideration and it was held as follows:-

6.          
The
learned counsel appearing on behalf of the respondents has relied upon Section
33 of the Advocates Act, 1961. Section 33 makes it clear that advocates alone
will be entitled to practice before any court or before any authority, etc.
“except as otherwise provided in this Act or in any other law for the time
being in force”. The Consumer Protection Act read with the Rules would be “a
law for the time being in force”.

Recently, the Lucknow Bench of the Hon’ble High Court of
Judicature at Allahabad, in case No. 7116 of 2014, Tax Lawyers Association,
Lucknow Throu General Secry. & Anr. vs. State of U.P. Thru Prin. Secy. Tax
& Registration, has passed an Order dated 06.08.2014 directing, inter alia,
that any person, who is not a registered Advocate, shall not be permitted to
appear before the Authority under the U.P. VAT Act. Further, the Hon’ble Bench
of the Chief Justice of Lucknow Bench of the Allahabad High Court, after
hearing the arguments in detail on 20th August, 2014, modified the above Order
dated 6th August, 2014 vacating the stay and consequently, Chartered
Accountants continue to be permitted to appear before the authorities under the
VAT Act in the State of U.P. The Division Bench of the Hon’ble Chief Justice’s
Court, in its Order dated 20.08.2014, observed that Section 29 of the Advocates
Act, 1961 speaks of there being only one class of persons entitled to practice
the profession of law, namely, advocates. Section 33 of the said Act
contemplates that only a person who is enrolled as an advocate under the Act
will be entitled to practice in any court or before any authority or person. The
entitlement to practice under Section 33 of the Advocates Act, 1961 is
obviously an entitlement to practice the profession of law but what is more
important is that Section 33 recognises that any other provision of law and for
that matter, the Act itself may authorize a person who is not enrolled as an
advocate under it to practice in any court or before any authority or person.
Consequently, there is no question of the ultra vires doctrine being attracted
for the simple reason that Section 33 of the Act of 1961 contemplates that any
other law may authorize a person who is not enrolled as an advocate under the
Act to practice before any court, authority or person.

It is stated that the above matter is pending before the
Lucknow Bench of the Hon’ble High Court of Judicature at Allahabad for final
hearing.

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. 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. Thus, the Income Tax Appellate
Tribunal is constituted under the provisions of The Income Tax Act, 1961.
Section 288 of the Income Tax Act, 1961 provides for appearance by ‘authorised
representatives’ before any Income-tax Authority or the Income-tax Appellate
Tribunal.

Moreover,
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. 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. As stated above, the Institute spares no efforts in keeping pace with
the accounting practices prevalent and those evolving throughout the World. A
person who qualifies as a Chartered Accountant is to undergo rigorous practical
training spanning three years and has to keep his knowledge updated in the
matters relating to accountancy and the applicable laws. In any event, it is
entirely for the framers of the various enactments viz. Income Tax Act, 1961,
the Companies Act, 2013 etc. to lay down who should be eligible to appear
before the Tribunals and authorities constituted under each of these respective
enactments. The Income Tax Act and the provisions contained therein as to who
can appear in proceedings under those enactments are special provisions of law
which would necessarily prevail over the general provisions contained in the
Advocates Act.

Each legislation enacted by
Parliament or by a State Legislature is an independent code by itself.
Parliament and the State Legislature duly take into consideration the various
issues involved and incorporate the requirements into the respective
legislations. Therefore, to re-write such provisions so as to provide that the
appearance by other professionals is for a limited purpose only is totally
unwarranted.

That 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
Constitution of India itself has recognized the importance of the specialized
fields of such legislations and has expressly provided for the creation of
specialized tribunals which take care of such specialized fields of law.
Parliament in its wisdom, while enacting aforesaid legislations have considered
all the relevant issues before incorporating the provisions relating to
authorized representatives These legislations specifically allowed
professionals other than advocates to be authorized representatives. This
clearly amplifies the point that the legislature is fully conscious of the
requirements of the particular specialized legislation. The purpose of
establishing various Tribunals is to decide issue on a particular subject by experts
in that field and in that direction, specialized Tribunals have been created by
the various statutes. If the Chartered Accountants, who for reasons of rigorous
practical training and examinations, have acquired expertise in accounting and
taxation laws, were not to be allowed to appear before such specialized
authorities/Tribunals, the very purpose of establishment of such Tribunals
would get defeated. Besides, such restrictions will limit the choice afforded
to the affected persons by the statutes to choose their representative.