SYED MAHABOOB PEER
Brief: Mere qualifying by just passing any accountancy
examination recognized in this behalf by the Board [Vide Clause
(v) of Section 288(2) of the Income Tax Act, 1961]; or acquiring such educational
qualifications as the Board may prescribe for this purpose [Vide
Clause (vi) of Section 288(2) of the Income Tax Act, 1961] will entitle the candidate to undertake the
profession of Income Come Tax Practitioner.
The Rule 50 of the Income Tax Rules, 1962 sets out the Accountancy Examinations which were recognized in this behalf by the
Board. And, the Rule 51 of the Income Tax Rules, 1962 sets out the educational qualifications as the Board may prescribed for this purpose, which
includes the Degree in Commerce or Law from Any Indian University incorporated by any law for the time being in
force.
Thus, fulfilling the requirement of Clauses (v) and (vi) Section
288(2) of the Income Tax Act, 1961 [read with Rule
50 or Rule 51 respectively] would suffice for carrying on
with the profession of representing any Income Tax Assessees as the Authorized Representative or
Practicing of Income Tax, and for
Registration/Enlistment as an Authorized Income Tax Practitioner fulfilling the
condition laid under the Rule 54 of the Income
Tax Rules, 1962 is
enough.
(i) Introduction:
Our mother INDIA has ever increasing population and accordingly we are fortunate enough to
have a good number of educated/graduates in different fields and faculties, but
unfortunately, in spite of having the best policies of our country, many of our graduates have to resort for the
“brain-drain”, and those who could not resort for the “brain-drain” for one
reason or the other, are to look for the assistance from the Government by way
of a suitable employment but same is in vain, as any Government could not
provide the same to all of its citizens in its service.
However, those
educated/graduates having confidence in their intelligence/ knowledge/
educational capacities are straight-away aspiring to take up different
professions, such as management consultants, financial consultants, lawyers,
chartered accountants, and income tax practitioners, etc.
The Profession of “Income Tax Practitioner (ITP)” is a specialized one that allows carrying on with the
Profession with the least & most reasonable qualifications. To
be and become a Registered Income Tax Practitioner, apart from Section
288(2)(vi) of the Income Tax Act,
1961, certain positive
& assured Rules of the Income Tax Rules, 1962 [particularly the Rules 12A, 49(a),
50 or 51, 53, 54 and partly the Rule 55] are applicable in connection with
Registration as Authorized Income Tax Practitioners.
The Learned Jurisdictional CITs are failing to interpret
properly the Rule 55 of the Income Tax Rules, 1962 and that has lead to hardship of the First/New
Generation Candidature/Income Tax Practitioners.
(ii) Main Body:
The Rule 54 is clearly indicating to accompany the application by documentary
evidence pertaining to eligibility for
income-tax practice under respective
Clause of Sub-section
(2) of Section 288 of the Income Tax Act, 1961 only, and that the condition of prior
attending/practicing is inapplicable to the applicants under the categories of the Clauses (v) or (vi) of Section 288(2) of the Act, as
it has no other/further prerequisite of prior attending/ practicing before IT
Authorities, except that of
passing the Accountancy Examination or acquiring a Degree in Commerce or Law.
The regrettable thing is that the Jurisdictional CITs competent to Enlist/Register those
applicants (who have submitted their Applications in Form No.39) are taking
shelter of the Rule 55 for rejecting those applications (of prospective Income
Tax Practitioners) with a pretext that the applicant has not been practicing
before income tax authorities for not less than one year on the date of the
application. All this
is due to inability either to make proper application of mind or to interpret
properly by them are by their immediate subordinates, who guide the Jurisdictional
CITs.
The drafting of the Section 288(2) under Income Tax Act, 1961 has been clearly shown the categories &
their prerequisites in it, but while drafting the Rule 55 under Income Tax Rules, 1962 they might have felt it unnecessary for
repeating the same sequence or might not have thought of the need of repeating
or reproducing the same format of applicable portion of Section
288(2) in the contents of Rule 55, and would have shortened it or merely
briefed it, which is mostly causing confusion to the officials, that has lead
to hardship to those applicants who desire to enlist their names in the
“Register of Authorized Income Tax Practitioners”, or aspire to take up the
profession of Income Tax Practitioners.
The Rule 55 of the Income Tax Rules, 1962 pertains with the tasks of (1) Enlistment of
eligible Applicant, who has submitted the Application in “Form No. 39”, as an “Authorized Income Tax Practitioner” in the “Register of Authorized Income Tax
Practitioners” maintained by the
Commissioner of Income Tax in “Form No. 38”, and (2) Issue the “Certificate of Registration” in “Form No. 40”, enabling the Applicant to act as an Authorized “Income Tax
Practitioner (ITP)” and to represent his clients (i.e., Income
Tax Assessees) before anyIncome Tax Authority or the Appellate Tribunal in connection with any proceeding under the
Income Tax Act, as an “Authorized Representative (AR)” as laid under Section 288
of the Income Tax Act, 1961.
The Rule 55 of the Income Tax Rules, 1962 has a legal-hitch, which might have been
occurred at the time of its drafting it clumsy/klutzy in haste (trying to make
it in a short & brief form), so as to cover Specially the Clause (vii), apart from the Clauses (v) and (vi) of the Section
288(2) of the Income Tax
Act, 1961, and thus, the Rule 55 of the Income Tax Rules, 1962 is “inconsistent” with the Clauses (v) and (vi) of Sub-section (2) of Section 288 of the Income Tax Act, 1961. Hence, the Jurisdictional
CITs and/or their
immediate subordinate officers misinterpret it, and stand to insist that the “applicants under
Clause (v) and Clause (vi) must have been practicing before income tax
authorities for not less than one year on the date of the application” and this impose other than the basic
prerequisite of just passing any accountancy examination recognized in
this behalf by the Board [per Clause (v) of Section 288(2) of
the Income Tax Act, 1961] or acquiring such educational qualifications as the
Board may prescribe for this purpose [per Clause (vi) of
Section 288(2) of the Income Tax Act, 1961] is ultra virus.
Here, let us have a
look at the present statute laid under Section 288 of the Income Tax Act, 1961,
which reads as follows (as available in latest/recent book of any Income Tax
Act, 1961):
“Appearance by authorized representative:
Section 288 (1) Any assessee who is
entitled or required to attend before any income tax authority or the Appellate
Tribunal in connection with any proceeding under this Act otherwise than when
required under section 131 to attend personally for examination on oath or
affirmation, may, subject to the other provisions of this section, attend by an
authorized representative.
(2) For the purposes of
this section, “authorized representative” means a person authorized by the
assessee in writing to appear on his behalf, being—
(i) a
person related to the assessee in any manner, or a person regularly employed by
the assessee; or
(ii)
any officer of a Scheduled Bank with which the assessee maintains a current
account or has other regular
dealings; or
(iii)
any legal practitioner who is entitled to practise in any civil court in India;
or
(iv) an
accountant; or
(v)
any person who has passed any accountancy examination recognised in this behalf
by the Board; or
(vi)
any person who has acquired such educational qualifications as the Board may
prescribe for this purpose; or
[(via) any person who, before the
coming into force of this Act in the Union territory of Dadra and Nagar Haveli,
Goa, Daman and Diu, or Pondicherry, attended before an income-tax
authority in the said territory
on behalf of any assessee otherwise than in the capacity of an employee or
relative of that assessee;] or
(vii)
any other person who, immediately before the commencement of this Act, was an
income-tax practitioner within the meaning of clause (iv) of sub-section (2) of section 61 of the Indian Income-tax Act,
1922 (11 of 1922), and was actually practising as such.”
From the above, it is visible that the Clauses (via) & (vii) of the Section 288(2) of the Income Tax Act, 1961 are alone
insisting prior/earlier attending/ practicing, but for the rest of the categories there is not even an iota
of such prerequisite of prior/earlier attending/ practicing.
Here, now let us have a look at the present statute laid under Rule 55 of the Income Tax Rules, 1962, which reads as
follows (as available in latest/recent book of any Income Tax Rules, 1962):
“Certificate of Registration:
Rule 55: If the [Chief Commissioner or
Commissioner] is satisfied that the applicant fulfils the requirements of
clause (v) or clause (vi) *[or clause (via)] or clause (vii) of sub-section (2) of section
288 and has been practicing before income tax authorities for not less than one
year on the date of the application, the [Chief Commissioner or Commissioner]
shall enter the name of the applicant in the register and issue him a
certificate of registration in Form No.40”.
The words shown in bold form above in both the Section
288(2) of the Act and Rule 55 of
the Rules are inserted by the IT (Fourth Amdt.) Rules, 1979, w.e.f.
21-7-1979 only, and thus to
arrive at the original statute, so as to understand the original position/
ruling, you need to keep aside, for the time being, the later on
added/inserted/amendment of words, [such as, clause
(via)]. Then, prior to
21-7-1979 the original ruling positions would naturally be different, as
follows:
If anybody, by applying proper mind, tries to understand clearly
& impartially about the ruling/order of Rule 55 in regard to Section 288(2), it conveys its meaning as follows:
“If the Commissioner is satisfied that the Applicant fulfills
the requirements of –
Clause (v) of sub-section (2) of Section 288
of the Income Tax Act, 1961;
OR
Clause (vi) of sub-section (2) of Section 288
of the Income Tax Act, 1961;
OR
Clause (vii) of sub-section (2) of Section 288
of the Income Tax Act, 1961 and has been practicing before the income tax
authorities for not less than one year on the date of application, the [Chief Commissioner or Commissioner] shall
enter the name of the applicant in the register and issue him a certificate of
registration in Form No.40”.
From the above shown original & un-amended ruling “practicing before the
income tax authorities for not less than one year on the date of application” is appropriately
matching with the statutes
laid under Clause (vii) of sub-section (2) of Section 288 of
the Income Tax Act, 1961. Similarly, the present statute laid under sub-section
(2) of Section 288 of the Income Tax Act, 1961 only Clauses (via) and (vii) will attract that
condition.
Further, whereas the Section 288(2) of the Income Tax Act,
1961 is enumerating about
the Eligibility of Eight [8] Individual
Categories, the Rule 55 under the Income Tax Rules, 1962 mandates only Four (4) Categories [Clauses (v), (vi)
& (via) and (vii) only].
For an easy interpretation or thoroughly
understanding the
ruling, we could further classify the Four (4) Categories of Clauses (v), (vi) & (via) and (vii) into Two
(2) Groups – (A) Acquired Educational Qualification, & (B)
Previously Attended/Practiced, and each of such groups is covering two
Categories/Clauses of Sub-section (2) of Section 288 of the Income Tax Act, for the purpose of Enlistment under the “Register of Income Tax
Practitioners” & issue of the “Certificate of
Registration” to that effect, as
follows: -
A. Under the Clauses (v) & (vi) there is a prerequisite of passing the
Accountancy Examination / acquiring Educational Qualification respectively, as
follows:
(v): Any person who has
passed any accountancy examination recognized in this behalf by the Board;
(vi): Any person who has acquired
such educational qualifications as the Board may prescribe for this purpose;
B. Under the Clause (via) there is a prerequisite of prior attending & under the Clause (vii) there is a prerequisite of earlier practicing, as follows:
(via):
Any person who, before the coming into force of this Act in the UnionTerritory
of Dadra and Nagar Haveli, Goa, Daman and Diu, or Pondicherry, attended
before an income tax authority in the said territory on behalf of any
assessee otherwise than in the capacity of an employee or relative of that
assessee; or
(vii):
Any other person who, immediately before the commencement of this Act, was
an income tax practitioner within the meaning of clause (iv) of
sub-section (2) of section 61 of the Indian Income Tax Act, 1922 [11 of 1922],
and was actually practicing as such.
Whereas the Rule 55 is to cover all the above Four (4) Clauses, the above
Clause-wise text & explanations could allow any layman to identify or
understand easily that there is not even an iota of such a prerequisite of
prior attending OR earlier practicing for the Registration/Enlistment of the ITPs
under the Two (2) Clauses (v) & (vi) of Section 288(2) of the Income Tax Act, 1961. Thus, it could easily be opined
that the later part of the Rule 55, which read as: “and has been practising before income-tax
authorities for not less than one year on the date of the application” is exclusively relating to the Two (2)
Clauses, i.e., (via) & (vii) of Sub-section (2) of Section 288 of the Income Tax Act, 1961
only & as far as the remaining Two (2) Clauses, i.e., (v) & (vi) of Sub-section (2) of Section 288 of the
Income Tax Act, 1961 are
concerned, it must be ignored as it will be neither consistent with nor
fit by the Section 288(2)(v) or (vi) of the Income
Tax Act, 1961, because the right given in this respect by the
Act cannot be diluted by Rule 55 nor it can be restricted by Rule 55.
Finding out the exact answers to the following two questions,
(after a keen & clear understanding) One could be able to easily &
properly interpret the Rule 55:
Which one is the first & foremost in LAW,
whether ACT or Rules?
Answer : An “Act” is passed by the Parliament as a law of the Government with a
specific purpose or the objective to be achieved.
The “Rules” are instructions
that tell you what you are allowed to do and what you are not allowed to do as
per “Act”
Whereas an “Act” is a law passed by the
Parliament and the “Rules” are framed to
instruct as to what to do or what not to do in implementation of the provisions
of the Act, the “Act” is the first &
foremost in LAW or the Act itself is LAW.
Which is important in LAW, whether ACT or
Rule?
Answer: The “Rules” are instructions that tell you what you are allowed to do and
what you are not allowed to do as per “Act” and that the rules prescribe procedures and cannot go beyond
the provisions of Act. Thus, “Act” is important in “LAW” or the Act itself is LAW.
Even, a look at the following format of Form No.39 [meant for Application for Registration as an
Authorized Income Tax Practitioner] with special care for the asterisk (*) marked, would also stands for justifying the
view that there is no need of proving earlier practice before the Income Tax
Authorities in the cases of candidates under Clauses (v) and (vi) of
Sub-section (2) of Section 288 of the Income Tax Act,
1961. The format of Form No.39 [made prior to the IT (Fourth
Amdt.) Rules, 1979, w.e.f. 21-7-1979 only] contains
only the special “3 sections”
marked with (*) pertains to only clauses
(v), (vi) and (vii) of sub-section (2) of section 288, which followed with another
mark of (*) indicating to delete the
inappropriate words,
i.e., to delete inapplicable two (of the three) sections, by retaining only one
applicable section, and whereas the applicant’s suitable section pertains to
only clause
(vi) of sub-section (2) of section 288, i,e., acquirement of desired Degree, there is no scope at all for insistence of
earlier practice.
Format:
FORM
NO.39
[See
rule 54]
Form of Application
for Registration as Authorized Income Tax Practitioner
To
The Chief Commissioner
or Commissioner of Income Tax,
…………………………..
I hereby apply for
registration as an unauthorized income tax practitioner under Clause
(v)/(vi)/(vii) of Section 288(2) of the Income Tax Act, 1961.
The following
particulars are furnished herewith:
1.
Name in Full [Block Letters]:
2.
Father’s Name:
3.
Permanent residential address:
4.
Present residential address:
5.
Professional address(es) in India:
6.
Principle place of profession in India:
7.
If partner in a firm, names of the firms and other partners:
*I Certify that I have passed the Accountancy Examination of ….
(a true copy of the certificate enclosed)
*I Certify that I have acquired the educational qualification of
…. (a true copy of the certificate enclosed)
*I Certify that I was an income tax practitioner within the
meaning of clause (iv) of sub-section (2) of section 61 of the Indian Income
Tax Act, 1922, and was actually practicing immediately before 1st April, 1962, as such and some of the cases in
which I appeared in that capacity are as below:
Name and Address of Assessee
|
Assessment Year
|
Designation of the Income Tax
Authority
Before whom appeared
|
|
|
|
I certify that I have
been practicing as an income tax practitioner since ……….. and that I have not
so far made any application for registration as an authorized income tax
practitioner to any other Chief Commissioner or Commissioner of Income Tax.
____________
Signature
Verification
I,……………………. do declare
that what is stated in the above application is true to the best of my
knowledge and belief.
Date:
____________
Signature
*Delete inappropriate words
————————————————
Further, I request your benevolence to have a look at the
following Format of Form No.38, a Register of Income Tax Practitioners to be maintained by the Chief Commissioner or
Commissioner of Income Tax:
Format
Form No.38
[See
Rule 53]
Register of Income Tax Practitioners maintained by the
Chief Commissioner or
Commissioner of Income Tax . . . . . .
Sl. No
|
Name in full
|
Residential
Address
|
Profes-sional
Address
|
If Pracitis-ing in Partner- ship
Names of Firm and other Partners
|
Qualifi-cation
|
Date of Entry in Register
|
Chief Commis-sioner or
Commis-sioner’s Signature
|
Punishment under Section 288(5)
(b), if any.
|
Remarks
|
(1)
|
(2)
|
(3)
|
(4)
|
(5)
|
(6)
|
(7)
|
(8)
|
(9)
|
(10)
|
The above format will enable to understand that mainly
there are columns for Qualification & Date of Entry in Register, but there are no columns for Date of
commencement of the Practice, and/or the List of Cases in which the applicant has
appeared/attended/practiced prior to date of Entry in Register. Thus, there is no scope at all
for insistence of earlier practice.
From the above two formats produced, any layman could easily
identify or understand that for the Two (2) Clauses (v) & (vi) of Sub-section (2) of Section 288 of the
Income Tax Act, 1961, there is not even an iota of such a prerequisite of
prior attending OR earlier practicing for the Registration/Enlistment of the ITPs
under Clause
(vi) of Sub-section (2) of Section 288 of the Income Tax Act, 1961.
Thus, imposing other than those prescribed in Act is ultra virus, and that the right given in this respect by
the Act either be diluted by Rule 55 or it can be restricted by Rule 55. The Learned CIT has further
failed to understand that the Rule 55 of the Income Tax Rules, 1962 is inconsistent with the Section 288(2)(vi) of the Income Tax Act, 1961. I submit that the Learned CIT has further
failed to justify the rest of the Rules of the Income Tax Rules, 1962 [particularly the Rules 12A, 49(a),
50/51 & 54] in concentrating or
focusing on the Rule 55.
(iii) Conclusion:
Further, the Prime Duty & Basic Responsibility of the IT
Official is to clearly understand, properly interpret & correctly implement
the provisions of IT Law with proper application of mind, and see that none to
transgress or trespass the same. Similarly, the ITPs are to
safeguard the interest of IT Law, with special care to IT Assessees (of course
pertaining to his/her clientele) by watching proper implementation of the
provisions of IT Law. In this way, both the IT Officials & ITPs
are to render, more or less, one & the same service. In fact,
the ITPs are an additional & freely available “think-tank” for the IT Dept. But, when the
matter pertains to Entry of the Name in the Register of ITPs, the Officials are
either turning hostile or wasting valuable time by intentionally imposing
additional conditions ignoring the fact that the right given
in this respect by the Act cannot be diluted by Rules nor it can be restricted
by Rules.
Thus, to overcome this
type of trauma, there is an urgent & dire need to bring in suitable
amendment in Rule 55 of the Income Tax Rules, 1962, as a permanent cure for
ever or atleast the CBDT must issue a notification/circular in this regard to
enlighten the Jurisdictional CITs.
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