BCI seeks changes in tax audit reports

The Bar Council of India (BCI) has written to the Union Finance Ministry and tax authorities like Central Board of Direct Taxes, stating that lawyers must be authorised to sign and furnish tax audit certificates/reports, till now the 'bastion' of Chartered Accountants.
"BCI has accepted a report submitted by a two-member committee comprising S Prabakaran and Rameshchandra G Shah and has written to tax authorities, informing them that a combined reading of the Income Tax Law and Advocates Act made it clear that such audit reports/certificates could be signed only by advocates," Prabakaran, the current co-chairman of BCI said.
Noting that CAs as of now can sign and furnish tax audit reports under Section 44AB form No.3CD without actually conducting audit, the report said that since audit meant mere verification, it was not the domain of CAs alone.

"CAs are trained in accounts only and not in interpretation of tax law and procedures. To practice Income Tax law and to fill tax audit report form no.3CD, one should specialise in interpretation of tax law and procedures, besides analysing intention of the legislature, Civil Procedure Code and impact of furnishing affidavit and sworn statements in the course of IT proceedings," the report said.
Rejecting the impression that lawyers can only deal in non-corporate matters, the report said that as of 2010-11, there were only 59,472 CAs involved in revenue collection under direct taxes from assessees.
If lawyers are permitted, tax base would expand and tax collection too would increase, owing to higher awareness and penetration, it said.

The practise of enclosing tax audit certificates by CAs was introduced in 1984 at the behest of the Institute of Chartered Accountants of India (ICAI), the report said, adding such certificates/reports was not in practise in any other country.
The BCI report said due to the mandatory CA certificates, lawyers found it difficult to independently practice income tax law. The only legal provision which enabled CAs practise before tax forums was Section 33 of the Advocates Act, permitting advocates and practitioners "under any other law" to appear before the forum concerned.
Relying on the 2012 judgment of the Supreme Court in the BCI vs A K Balaji, the report said the court had held that advocates alone are entitled to practice law in litigious as well as non-litigious matters.