After the presentation of the new Budget on 1st February, 2017 by the Finance Minister of India, Shri Arun Jaitley. Every CA professional is discussing the Penalty proposed by him on the Chartered Accountants u/s 271J of the Finance Bill,2017. Here's the extract from the notes of the Finance Bill, 2017:
"Clause 86 of the Bill seeks to insert a new Section 271J in the Income-tax Act relating to penalty for furnishing incorrect information in reports or certificates.
It is proposed to provide that if an accountant or a merchant banker or a registered valuer furnishes incorrect information in a report or certificate under any provisions of the Act or the rules made thereunder, the Assessing Officer or the Commissioner (Appeals), without prejudice to the provisions of the Income-tax Act, may direct him to pay, by way of penalty, a sum of ten thousand rupees for each such report or certificate. It is also proposed to define the expressions of "accountant", "merchant banker" and "registered valuer".
Clause 87 of the Bill seeks to amend Section 273B in the Income-tax Act relating to the penalty not to be imposed in certain cases.
It is proposed that penalty shall not be imposable in respect of the proposed section 271J also if the person proves that there was reasonable cause for the failure referred to in the said section.
This amendment is consequential in nature.
This amendment will take effect from 1st April, 2017."
Some Chartered accountants are against this section. Their point of view is that ICAI's code of conduct is strong enough to handle the erring members. The imposition of this penalty will give undue power to the officers of the Income tax department. This will lead to harassment of CAs. The officers will misuse this power and will create unnecessary problems for the CAs. Therefore, CAs should protest this section.
While some CAs think that imposition of penalty is not completely wrong and there's nothing scary about it. If a CA proves the genuineness of the documents or reports certified by him/her and is sure about the correctness of the information furnished, then the Income Tax department can't impose any penalty u/s 271J. Further, according to Section 273B, penalty shall not be imposable if the person proves that there was reasonable cause for the failure (if any). So, why to go against it? And, protesting can create an impression that CAs support such wrong things. Apart from this, the power may be shifted from CAs to other professionals in case of protest.
I personally believe that there's nothing wrong in this provision. The Income tax department can't exercise any wrong power in case the genuineness is proved. In fact, this will surely improve reporting and no one will certify the reports or other documents in a negligible manner.
CHARTERED ACCOUNTANTS ARE ALREADY KNOWN FOR MAINTAINING HIGH STANDARDS, MORALS AND VALUES IN THEIR PROFESSIONAL WORK.
WE ARE CHARTERED ACCOUNTANTS AND WE SHOULD NOT BE SCARED OF ANYONE. IF WE ARE RIGHT, THEN NO ONE CAN HARM US.
This is my personal opinion. Opinion may differ from person to person.
The author can also be reached at email@example.com