Back What price truth if it does not hiss?
D. Murali
It reads thus: "277A: If any person (hereafter in this section referred to as the first person) wilfully and with intent to enable any other person (hereafter in this section referred to as the second person) to evade any tax or interest or penalty chargeable and imposable under this Act, makes or causes to be made any entry or statement which is false and which the first person either knows to be false or does not believe to be true, in any books of account or other document relevant to or useful in any proceedings against the first person or the second person, under this Act, the first person shall be punishable with rigorous imprisonment for a term which shall not be less than three months but which may extend to three years and with fine." Explanation elaborates: "It shall be sufficient in any charge under this section to allege a general intent to enable the second person to evade any tax, penalty or interest, without specifying any particular instance or sum of tax, penalty or interest which has been or would have been evaded by such second person."
That's something confusing to all third persons, but in short, what it means is that it is easier now to jail a CA, accounts assistant, kanakku pillai or munshi for writing false books for another. Naturally, the Institute of Chartered Accountants of India (ICAI) is aghast, though it took more than two weeks to send a letter to the FM: "Sir, We take this opportunity to compliment you for presenting the Union Budget for the year 2004-05 which addresses the need of the common people of the country, particularly focussing on the rural population. The proposal to levy an education cess of 2 per cent is a landmark step and would prove to be the greatest investment that the country has made in uplifting the Human Resource, which is the greatest asset possessed by the country. We appreciate that a number of provisions have been proposed for widening the tax base as well as for simplification and rationalisation of the existing tax provisions." First, tell him all good things, before broaching the tricky issue. On the `explanation' to Section 277A, this is what the ICAI says: "Innocent mistakes by the assessee or any other person connected with the tax proceedings of the assessee can thus be brought to book without proving any guilt, which is the essence of any criminal jurisprudence. There is also a likelihood of this provision being misused against the innocent persons. It is also possible that an unscrupulous tax evader when caught may put the blame on the professionals who are handling his accounts."
With the prospect of becoming a sacrificial lamb anytime, accounting seems to become a high-risk job.
The ICAI appreciates that the objective behind Section 277A "appears to be, to further strengthen the hands of revenue authorities in bringing to offenders to book." Also, it concedes: "No doubt, our country has suffered on account of tax evasion and any measure to curb such malpractices are welcome." But, the Institute suggests the use of Section 278 (which provides that if a person abets or induces in any manner another person to make and deliver an account or a statement or a declaration relating to any income chargeable to tax, which is false and which he either knows to be false or does not believe to be true) because it "adequately meets the requirement of prosecuting the offenders on establishment of guilt."
The letter argues that guilt has to be proved beyond any doubt, rather than banking upon "mere intent"; also, that economic offences call for levy of financial penalties. Therefore, the law-in-process "travels well beyond the criminal law" and it would have "serious ramifications on assessees, their employees, their associates, tax consultants, advocates, chartered accountants, etc."
The latest issue of The Bombay Chartered Accountant Journal (BCAJ) too carries an editorial touching upon the issue. It asks: "By the same token, can an assessee or his representative contend that a tax official is corrupt and harassing and needs to be punished without specifying any particular instance?" BCAJ is categorical: "We believe that an explanation of the type proposed in the Bill would not find place in any civilised society."
From the angle of `first person' it hurts, though every `second person' should be happy that there is this `first person' to pass the blame on to. However, any third person would wonder why there is so much hullabaloo to keep records true. Perhaps, books have, in general, become too unreliable.
As in a parable of Ramakrishna, where a snake, stoned to no end by villagers because it was too calm to bite anyone, was well advised by a hermit to hiss to keep attackers at bay, we now have the tax law hissing. And it's already shaking up the profession. So, do you think Gandhiji would be happier this time around when his birthday is celebrated?
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