Law: Income Tax Act, 1961

Section: 44

Income Tax---Chartered Accountants---Professional misconduct---Audit---Notification of Council, that member deemed guilty of professional misconduct if he accepts more than specified number of tax audits per year ---Invalid--¬Notification prescribing minimum fees to be charged for audit ---Invalid--¬Constitution of India, Arts.14 & 19---Indian Chartered Accountants Act, 1949, S.22; Sched.II, Part II---Indian Income Tax Act, 1961, S.44-AB--¬[Arun Grover v. Institute of Chartered Accountants of India (1998) 93 Comp. Cas. 618 (MP) dissented from]. The notification dated January 13, 1989 (see (1989) 176 ITR (St.) 323), issued by the Council of the Institute of Chartered Accountants of India states that a member of the Institute in practice shall be deemed to be guilty of professional misconduct if he accepts in a financial year more than the specified number of tax audit assignments under section 44-AB of the Income Tax Act, 1961. The specified number is stated as 30 audits in a financial year whether in respect of corporate or non-corporate assessees. There is no nexus between the purpose of the Act and the notification issued which deems professional misconduct. Accepting a legitimate professional engagement by a professional can never be considered unprofessional and be made a misconduct. Only a chartered accountant is capable of issuing a certificate that is required under the Income-tax Act. Under the Companies Act, 1956 also, only a chartered accountant is empowered to issue a certificate. Admittedly, years of hard work and knowledge are required to qualify as a member of the Institute. That being so, once a person acquires the said qualification, he would be free to engage himself in the profession without any kind of restriction. The classification adopted it self is quite wrong and artificial. If it is the function to restrict the volume of work so as to achieve purity and quality of work, the classification should be in accordance with purity and quality work and not in accordance with the number of audits. A single audit work itself could be so voluminous that it may occupy a major portion of a chartered accountants time. On the other hand, there may…

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