Vijay V. Meghani vs. ACIT (MA By ICAI) (ITAT Mumbai)

In Vijay V Meghani vs. DCIT, the ITAT Mumbai had passed severe strictures and lamented the alleged fall in standards in the CA profession. The Tribunal pointed out several factors which, according to it, show “signs of deteriorating standards” amongst Chartered Accountants. The Tribunal also expressed the fear that the CA profession is “losing its grip over the Income tax matters”. The ITAT advised the ICAI to tackle the issues on a war footing so as to bring back the high standards, confidence, quality, prestige, reputation etc. enjoyed by the C.A. profession.

In response to the said order, the Council of the ICAI issued a statement that the comments made by the ITAT on the profession and functions of the ICAI are not warranted. It is also stated that the “sweeping observations” made by ITAT about the Institute and the profession of Chartered Accountancy in a matter relating to a particular tax payer, are out of context.

The ICAI filed a Miscellaneous Application u/s 254(2) before the Tribunal to seek expunging the aforesaid remarks made by the ITAT against the CA profession.

By an order dated 4th September 2015, the ITAT modified its earlier order by stating as follows:

(i) The observations made by the Tribunal about the C.A profession and conduct of the students pursuing the C.A courses, as submitted by Ld A.R, were not necessary to adjudicate the issues that were urged before the Tribunal by the appellant Shri Vijay V Meghani. However, in our view, the Income tax Appellate Tribunal, being a part of Government of India, should not shut its eyes when it is noticed that certain developments occurring in the Country may affect the Country as a whole, more particularly when the reputation of particular profession, from whom the Tribunal is getting assistance in the dispensation of justice, is at stake. Accordingly, we sincerely believe that it is the bounden duty of not only the Tribunal, but also the duty of one and all to point out and discuss about such kind of developments, when it is noticed that the same may affect the public at large. There cannot be any controversy that the interest of our Country is Supreme and no citizen can or should compromise on the same. We may clarify here that the observations were made by the Tribunal in the impugned order in that context only and it was not the intention of the Tribunal to target any particular person or the ICAI. Accordingly, none of the observations made in the order was intended to criticize should be construed as criticizing the functioning of the ICAI. In fact, the Tribunal has only applauded the strict standards followed by ICAI in imparting the education and training.

(ii) It may be noticed that the paragraph 9.6 of the order, which is considered by the ICAI to be offensive, starts with the expression “However, if it is considered for a moment…..” Thus, it can be noticed that the Tribunal has considered a hypothetical situation and made further observations about the possible consequences, if the said hypothetical situation had been a reality. Hence, it would not be correct to interpret that the Tribunal has commented upon that the standards of C.A profession or the ICAI. The observations made by the Tribunal in the later part of paragraph 9.6 was intended to highlight or reiterate the importance of the articled clerk training and the self study model conceived by the ICAI and the same was intended only to give a wake-up call to the students pursuing C.A profession.

(iii) However, it appears that the observations made in paragraph 9.6 have not conveyed the message as intended by the Tribunal. According to Ld Counsel, the said observations have given room for misinterpretation and resultant controversies. Accordingly, by exercising the inherent powers of the Tribunal, we modify the paragraph 9.6 of the order as under:-

“9.6 However, if it is considered for a moment that the above said C.A. firm has really given such advice to the assessee herein and accordingly it has furnished the letter and affidavit, then it is a cause of concern to one and all. We have already noticed that the self study model coupled with “on-site articled clerk training” embedded in the Chartered Accountancy course aims to achieve high quality education and training. The articled clerk training conceptualized in the C.A education inculcate the habit of thinking, self introspection, application of mind, analytical ability etc and they enable the C.A students to have strong grip over the subjects and help achieving expertise in the domain fields. The commendable feature of the C.A Course is that, as stated earlier, the C.A students are given training by practicing Chartered Accountants during their articled clerk training program. Thus the methodology adopted by the ICAI enables the C.A. students to become thorough professionals with versatile knowledge and innovative mind. The practical training given by the practicing Chartered Accountants during the articled clerk period, in our view, is the fulcrum centre of the study module of the C.A course and the students pursuing the C.A course should and must utilize the opportunities provided to them or encountered by them during the articled clerk training period to the maximum possible extent. In the recent past, a number of Coaching institutes have been established to give coaching to the students pursuing C.A course. While the self study model and articled clerk training may be supplemented with the coaching given by such institutes, any compromise on the practical training intended during articled clerk period or mere obtaining a C.A degree without practical training would not make the students full fledged chartered accountants and the same would go against the self study model conceptualized by ICAI and there should not be any doubt that it may have undesired results, which may affect the Country as a whole.”

(iv) In the result, the miscellaneous application filed by the ICAI is dismissed.