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To clear uncertainty among tax professionals &citizens, WP's in HC will be withdrawn to this Court

To clear uncertainty among tax professionals and citizens, writ petitions in the High Court will be withdrawn to this Court: SC


The Institute of Chartered Accountants of India & Ors. v. Shaji Poulose & Ors.





Transfer Petition (Civil) No(S). 2849-2859/2019 with Transfer Petition (Civil) No(S). 727-728/2020

Decided on December 09, 2020.

Counsel for Petitioners: Shri Arvind Dattar

Counsel for Respondents: Shri R. Basant and other counsel


A three-judge bench of the Supreme Court consisting of Justice Ashok Bhushan, Justice R. Subhash Reddy and Justice M.R. Shah decided the current case.


The transfer petitions were filed by the Institute of Chartered Accountants of India under Article 139-A(1) of the Constitution of India read with Order XL Rule 1 of the Supreme Court Rules, 2013 for transfer of several writ petitions pending in the Kerala High Court, Madras High Court and Calcutta High Court. In these writ petitions, the petitioners have challenged validity of Chapter VI of Guidelines No.1-CA(7)/02/2008 dated 08.08.2008 issued by the Council of petitioner Institute on the ground that the same is violative of Article 19(1)(g) of the Constitution of India as it specified that a member of the Institute in practice shall be deemed to be guilty of professional misconduct, if he accepts in a financial year, more than specified number of tax audit assignments under Section 44AB of the Income Tax Act, 1961.


The learned senior Counsel for the Petitioners submits that in order to avoid multiplicity of proceedings, conflict of decisions and also settle the law comprehensively, which is a question of law of general public importance, the Institute of Chartered Accountants of India has filed the present transfer petitions for transfer of all the aforesaid writ petitions to this Court for final and conclusive determination of the issues involved.


The learned senior Counsels for the respondents have submitted that there is no good reason for transfer of the writ petitions pending in the different High Courts. It was submitted that the only reason for transfer of the writ petitions is convenience of the petitioners, whereas the constitutional protection and right availed by the writ petitioners under Article 226 of the Constitution will be taken away, if the transfer is allowed; it was further submitted that it is necessary to transfer all petitions be transferred to one High Court instead of transferring petitions to this Court, and that in several writ petitions, various interim orders are operating in favour of the writ petitioners, which may be allowed to continue. The Counsel relied on the judgment of this Court in Institute of Chartered Accountants of India v. Southern Petrochemical Industries Corporation Limited and another, (2007) 15 SCC 649.


The Court heard the learned counsel for the parties and have perused the records.


The Court stated:

The said Section 44AB had been enacted to prevent evasion of taxes, plug loopholes enabling tax avoidance and also facilitate tax administration, which would ensure that the economic system does not result in concentration of wealth to the common detriment. The said section therefore fulfilled the directive principles laid down under Article 39(c) of the Constitution of India. (Para 8)


The Court observed:

The fact that this Court on 03.04.1991 had dismissed the Transfer Petition Nos.614-615 of 1990 observing that the concerned High Courts may dispose of the writ petition on early date cannot be treated any kind of bar in transferring the writ petition in the present batch of cases. At the time when the earlier transfer petition was dismissed, conflicting judgments on subject in issue by different High Courts had not come. As noted above, with respect to the cap on the number of audits, there are conflicting judgments of different High Courts taking different views on the similar guidelines. Further, this Court’s judgment in Institute of Chartered Accountants of India versus Southern Petrochemical Industries Corporation Limited and another (supra), transferring the writ petition to one High Court i.e. Calcutta High Court does not preclude the consideration of prayer of the petitioner for transferring the writ petitions to this Court in present matter.


The Court held:

The guidelines which are impugned in the High Court and consequent disciplinary proceedings initiated against various chartered accountants throughout the country is an issue of public importance affecting Chartered Accountants as well as the citizens who have to obtain compulsory tax audits. We are satisfied that to settle the law and to clear the uncertainty among tax professionals and citizens, it is appropriate that this Court may transfer the writ petition, to authoritatively pronounce the law on the subject. (Para 16)


The Court allowed the Transfer Petitions.



Jhanavi M

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