Arjun (A) — Hey Shrikrishna, you were explaining to me what professional scepticism is and why it is needed.
Shrikrishna (S) —And I told you many stories of how an auditor came into deep trouble for acting in good faith.
A — I feel like giving up this signing business and do only advisory work. No kitkit of disciplinary cases.
S — Do you feel, there is no risk in advisory practice? There are many cases where CAs were held guilty for giving wrong advice.
A — Don’t tell me! But we do everything for the benefit of our client only!
S — Agreed. But when he is exposed, he passes on the blame to you only. Moreover, nowadays the Regulators like revenue authorities, MCA and so on have also become very active in this regard.
A — But how would they know that we have advised?
S — Why? Many times, you give written advice or opinion; you raise invoice with that description; clients also tell the authorities to save their own skin.
A — I give my advice only orally. But client very often takes it only to suit his convenience. S — But then, when there are penalty proceedings like concealment of income, the client tries to take shelter that he was wrongly advised.
A — Yes. They say they are lay persons and everything is looked after by their CA. And quite often, they escape the penalty.
S — That is because the Tribunal often gives weightage to such a plea of client’s ignorance; and consultant’s advice. But sometimes, they rap the CAs for wrong advice.
A — Really?
S — Yes, really, one client rang his CA for advice; when he received a negative order from CIT(Appeals). The CA told him about further appeal to the Tribunal. In fact, his matters for earlier years were already before the Tribunal.
A — Then what happened?
S — Client told him that he had no money to spend on repetitive litigation. He enquired whether there was any alternative.
A — This happens quite often.
S — Actually, that client was no more with this CA and had gone to some other CA for routine work. He asked this CA only due to his old relations. The CA told him that since, on the same point, the matter was already before the Tribunal, he could wait and watch. If ITAT ’s order was in his favour, he could go for rectification for subsequent year’s orders. The issue was that of principle and not factual.
A — But rectification may get time-barred.
S — Actually, the CA meant rectification by CIT(A) of his appellate order. But the client by mistake approached the Assessing Officer for rectification.
A — But the Department never acts on our applications for rectification! They remain pending for years together unless you follow up.
S — That precisely happened here. So at a much later date, the client’s new CA filed an appeal to ITAT . It was delayed by 8 years!!
A — Oh my God! So much delay? S — In the condonation proceedings, the client’s counsel, as usual, pleaded that the client received wrong advice from his CA.
A — But I am told, nowadays the Tribunal insists on a sworn affidavit from the consultant or CA that he gave such advice.
S — Right you are. Here, the Tribunal did the same thing. This CA in good faith gave an affidavit that he had given such advice in the given circumstances at that point of time. He said that the advice was misunderstood by the client.
A — The Tribunal passed strictures not only against that CA but against the whole profession for lack of knowledge and lack of due diligence.
S — Yes, I have heard this case. It created a sensation a few months ago.
A — Your Council took serious note of this and initiated proceedings against the CA for bringing disrepute to the profession.
S — Baap re! But who complained?
A — Neither the Tribunal nor the client. In fact the client said he had nothing against the CA since the client knew the reality. The Disciplinary Directorate acted suo moto – on its own – since the ITAT order would certainly tarnish the image of the profession.
S — So far hundreds of cases of condonation might have escaped on the ground that the consultant gave wrong advice. But none of them went in this direction. Bad luck of that CA! But I heard that the Tribunal rectified its own order and deleted some para of strictures. Is it true?
A — Yes. But that may not help the CA. Let us watch how the case progresses now.
S — A good eye-opener once again!
Note:
The provisions of the Code of Ethics are equally applicable to advisory work undertaken by us professionals. The above dialogue tries to explain the same. The C.A. can also be charged under the Consumer Protection law.
