When this issue reaches you, the 30th September deadline for furnishing returns of corporate tax payers as well as those whose accounts are required to be audited will have passed. Either the due date will have been extended, forcing my colleagues to continue working strenuously or they would have heaved a sigh of relief, having toiled day and night to discharge an obligation which is primarily cast on the taxpayer. I have been in this profession for more than three decades and I must say with the deepest anguish that the position has not changed materially. Our profession continues to shoulder the burden of those whom it serves, with those served hardly realising it. Over the years, the onus, responsibility and obligations have increased, while the reward, remuneration and respect has not.
It is a topic that has been dealt with in earlier editorials and yet seeing the palpable tension that my colleagues are bearing, I felt that it is appropriate that the issue is brought to the fore once again. It is really troubling to see our professional brothers hoping for the extension announcement. It is almost as if, a farmer with a parched throat is looking heavenward for those providential droplets of rain.
Ensuring that the accounts are audited, the particulars of tax audit are verified, and the income tax return is filed before the due date is the responsibility of the businessman auditee. The reason for seeking extension of the due date is that the ITR forms were notified late. However, if one looks at the various representations being made before the government authorities, these have been made by professionals in their individual capacity and institutions of professionals, including our very own ICAI. I do not see a trade or tax-payers association involved in this exercise. When these representations have not borne fruit, the judiciary is being looked at as the saviour. Even here, out of the eight writ petitions/public interest litigations filed before various High Courts, 5 have been filed by individuals and 3 have been filed by professional bodies. Trade associations/business bodies are conspicuous by their absence.
Over the years, our profession has not been able to distinguish between the role and responsibilities of the client, and we Chartered Accountants as auditors or tax consultants. It is true that audit report states that preparation of financial statements and compilation of particulars required for tax audit are the responsibility of the auditee; but this is more in letter than in spirit. In the recent past, the complexities of law, the compliance requirements, have increased manifold. The auditor plays a significant role in compiling the details and in finalising the accounts, particularly in case of non-corporate assessees. To ensure proper compliance, he has to remain involved, while as an auditor he has to remain independent. Wearing these two hats is making a diligent professional either lose his hair or turning them grey!
The attitude of the government is also difficult to fathom. Various forms and procedures are prescribed/notified by the government authorities, taking their own sweet time to do so. I am not for asking for extension of time, but in fairness it must be pointed out that if the CBDT takes more than a year after the Finance Bill for the relevant year is passed, to notify the relevant forms and update its software, it is unfair to expect the tax payer to comply with the regulations within a period of two months. The Delhi High Court, while rejecting the petition for extending the due date, has already advised the government to come out with the prescription on the first day of the assessment year. Assuming that the government authorities have their own compulsions and limitations, one really does not understand as to why the due date should be so sacrosanct and cast in stone. It was interesting to read the observations of the Hon’ble judges of the Punjab and Haryana High Court who asked the respondents as to whether tax payers would run away from the tax net if the due date was extended. Having said that, it is really not appropriate that we expect the judiciary to intervene in what is essentially a policy matter.
It is time that our profession does some serious introspection. We must make our clients aware of the responsibilities, and the line between the responsibilities of the auditee and that of the auditor must be redrawn. As far as documentation is concerned, we must really put our house in order. If we have communicated with our clients defining our role and responsibility, we must keep appropriate evidence of such communications. This will help us to defend ourselves, should fingers be pointed at us. If for a variety of reasons we are not in a position to discharge the onus that is being cast on us, we must explain this both to the government authorities, as well as to our clients. We must point out to the government that considering the increased cost of compliance, there is a very good case for raising the threshold limit of tax audit. If one takes the cost inflation index as the basis, the limit for business should be around Rs.3 crore while for that of a profession should be Rs.80 lakh. If these realistic limits are introduced, possibly the clients will be able to afford the cost of compliance.
We must interact with our clients so that they are made aware of the complexities of the compliance requirements. This will enable either the clients themselves or their trade associations to make proper representations before the government to ensure that while the objective of the government in calling for information is met, the taxpayers are not unduly inconvenienced. In this regard, the tax payer must be at the forefront, while we should be acting as catalysts. To illustrate, in case of assessees whose total income exceeds Rs. 25 lakh, they are required to submit details of their assets. One of these particulars is in regard to life insurance policies. The instructions in the form state that the premium paid till date is to be treated as the cost. For long-term policies with variable premium, it is virtually impossible for an assessee to have this data on hand. Instead of the premium, the sum assured along with the annual premium could also serve the purpose of the Department.
I am aware that what I am suggesting cannot be achieved at one go. It is a continuous process. One only hopes that the process begins in right earnest. As we bid adieu to Ganesha, the God of learning, one hopes that wisdom dawns on all concerned and the prayers of my colleagues are answered.
