A S SARMA Vs. UNION OF INDIA

JUDGEMENT

(1.) These writ petitions are for the issue of an appropriate writ declaring that the restricted connotation of an accountant as chartered accountant in the Explanation to section 44AB of the Income-tax Act, 1961, is unconstitutional and declaring that the petitioners are also eligible to audit the accounts for the purpose of section 44AB of the Income-tax Act, 1961.

(2.) The petitioner in W.P. No. 16961 of 1984 is an income-tax practitioner and petitioners Nos. 1 and 2 in W. P. No. 930 of 1985 are income-tax practitioners and the 3rd petitioner is an advocate. The averments in support of the writ petition may be briefly stated : The petitioners are income-tax practitioners and an advocate who have been practising in tax matters arising under direct tax statutes. The income-tax practitioners are members of the Institute of Income-tax Practitioners. Though the Companies Act provides that the audit of the companies should be done by chartered accountants, an income-tax practitioner or an advocate can file the return and represent the company in the proceedings before the assessing authority and appeals. Section 44AB provides that in respect of a business having turnover exceeding 40 lakhs rupees and profession income the gross receipts exceed ten lakhs rupees the accounts should be audited by chartered accountants and this provision adversely affects the practice of income-tax practitioners and advocates.

(3.) Learned counsel for the petitioners, Sri. S. R. Ashok, contended that section 44AB of the Income-tax Act, 1961, confining the audit to chartered accountants alone results in invidious discrimination and is violative of article 14 of the Constitution and the elimination of the income-tax practitioners and advocates from doing audit work infringes the fundamental right guaranteed under articles 19(1)(g) of the Constitution. Learned standing counsel for the Revenue contended that the impugned provision is founded upon reasonable classification having nexus with the object of checking evasion and the avoidance of the petitioners regarding audit is a reasonable restriction saved under articles 19(6) of the Constitution.