TAX CONSULTANCY BY TAX EMPLOYEES

TAX CONSULTANCY <!--[if gte mso 10]> TAX CONSULTANCY BY TAX EMPLOYEES By Mr. Muhammad Naeem Shah, Advocate Supreme Court Section 22 of the Legal Practitioner and Bar Councils Act, 1973, empowers only advocates to practice the profession of law: which section reads as "Save as otherwise provided in this Act, no person shall be entitled to practice the profession of law unless he is an advocate." Section 26 of the Legal Practitioner and Bar Councils Act, 1973, prohibits any other person to practice in any Court or before any authority or person unless he is enrolled as an advocate under this Act. The section runs as "Subject to provision of this Act, every advocate, whose name is entered in the State roll be entitled as of right to practice throughout the territories to which this Act extends". An Advocate has a right 3f audience in Courts. A person who has obtained the requisite legal qualification is not entitled on that ground alone to right of audience in Courts, he must, further, be admitted to the Bar before he could practice. As a member of legal profession an advocate enjoys exclusive privileges. An Advocate has a right to advice clients and a right to appear for the judicial proceedings on behalf of the clients. Section 223 of the Income Tax Ordinance, 2001, besides an Advocate, allows certain other persons to appear before a Tax Authority i.e., an Advocate. Tax Practitioner, a relative duly authorized by a taxpayer, a person in the employment of the taxpayer on a whole time basis duly authorized and an officer of the scheduled bank. These persons are allowed to attend any Income Tax Authority or the Appellate Tribunal in connection with any proceedings under the Income Tax Ordinance, 2001. There is no provision of law, which allows a Tax Employee to indulge in tax practice during his employment as a public servant. It is misconduct on the part of a public servant to act as a tax consultant. Section 2(4) of Government Servants Efficiency & Discipline Rules, 1973 defines Misconduct (relevant part) a conduct prejudicial to good order of service discipline or contrary to Government Servants (Conduct Rules), 1964. The definition of Misconduct may be splitted as:-- (i) Conduct prejudicial to good order. (ii) Conduct prejudicial to service discipline. (iii) Conduct contrary to the Government Servants (conduct) Rules, 1964. Rule 16 (relevant part) of these Rules reads "No Government Servant shall, except with the previous sanction of the Government, engage in any trade or undertake any employment or work, other than his official duties. Whereas the Rule 26 (relevant part) reads "No Government Servant shall indulge in willful abuse of office". (1) At present more than 50% of tax employees from grade 5 to 16 and about 20% officers of grade 17 to 21 are involved in tax practice, 60% tax consultancy is in the hands of the tax employees. There are number of Circles wherein the same officer/official are working as an Assessing Officer/Inspector as well as Tax Consultant, in this way acting as a judge of his own cause. A tax employee is in a more convenient position than a tax practitioner because he has certain edges with him as under:- (i) Being sitting in the Circles, he has his access to the office record, which he do not hesitate to temper, change, or remove the document and thereby cause serious losses to the revenue. (ii) He is mostly in a highly convenient position to know in advance about any proceedings in a case and by sharing this knowledge with his client. He afford them unfair opportunity to fortify themselves against the ensuing proceedings. (iii) He can get undue favour from a Taxation Officer, Circle Inspector, or Circle Staff in connection with an inquiry, investigation or information in connection with the finalization of assessment of his so-called client. (iv) While finalizing the assessment in Self-Assessment cases he prefer to complete the assessments of their client on priority basis. (v) Officers of the high rank involved in tax practice get their job done by using their undue influence on their subordinates, or to approach the officer of the same tank and in: this way they reciprocate each other. (2) At present when the country is needed proper and timely collection of taxes, to meet this end the smooth and efficient functioning of tax machinery is essential. The practice of tax laws is of course an important and integral part of our tax system; any disorder may erode the whole system and weaken the efforts to revive the tax system and economy. (3) The unauthorized practice of tax laws is giving rise to number of evils, the most eminent and threatening are as under:--- (i) Firstly it results into the loss of revenue; the officials of the tax department involved in tax practice protect their cases in unfair and undue manner. By virtue of their access to the office record they can give undue benefit to their so-called clients. (ii) Secondly the unauthorized Tax Law practice harbors inherent animosity with professionalism while the genuine tax practitioners are always fettered by certain code of ethics of the forums/organizations to which they are subservient like the Bar Councils and Associations of Chartered Accountants. The take people are not accountable anywhere this leads to utter non professionalism. (iii) Thirdly unauthorised practice of Tax Law is highly instrumental in aggravation of corruption. It creates an atmosphere, which is immensely conducive for bribery, anomalies and illicit practices. (4) In view of foregoing facts it is need of the time that strict action and adamant steps should be taken to curb and eliminate this evil. Although time and again attention of the C.B.R. was drawn towards this evil, which is now going beyond the control like an epidemic but it was never seriously taken by the C.B.R. They never made any effort to curb this evil; they never drive any campaign or issued a directive. In this way C.B.R. always encouraged this menace. (5) In view of the foregoing facts C.B.R. authorities are requested to take following steps to curb this evil:‑ (i) C.B.R. should ensure that strict discipline and code of conduct be maintained in the tax departments. (ii) Directives in specific & definite terms he issued that any official implicated & found guilty of the tax consultancy would face major penalty or removal from service. (iii) The officers of the tax departments be instructed unequivocally not to entertain any unauthorized person. (iv) Secret enquiries be conducted through the FIA and the Officers/Officials found involved in tax consultancy he charged with offence of misconduct. (v) Strict disciplinary action he initiated against the employees whose names are provided by the Bars in the resolutions or through complaints and they be charged with the offence of misconduct and forthwith be transferred from concerned Circles/ Zones.