BCAS President CA Mihir Sheth’s Message for the Month of September 2022

This 15th August, India completed 75 years of its independence. Tumultuous, testing, trying or glorious – whichever way you may describe these years, it is possibly the most significant moment for all of us. Watching the Indian tricolour fluttering in the gentle breeze and listening to the enthusiastic and melodious rendering of the National Anthem left me with a lump in my throat. It also brought to my mind an incongruous thought of how – India is five thousand years old and yet seventy-five years young!

“Life can only be understood backwards, but it must be lived forwards” this wisdom expressed by Søren Kierkegaard, set me thinking. When we somersault back in time, we realise that India is a country…a civilisation like none other. We accomplished so much on so many fronts. Our in-depth and invaluable knowledge base enabled us to build, create and surpass other nations. India became the epicentre of culture and trade. Some came to learn and others to plunder and subjugate…and down the millennia and centuries, India still continued to grow.

So, it is not surprising that after being liberated from the manacles of the greed of many colonisers, we continued to excel. In the past 75 years, we have soared to great pinnacles of perfection and achieved multiple marvels of magnificence. From queuing up for foreign aid in the fifties, we have rocketed ahead to become the fifth largest…and the fastest growing economy in the world. India is also a global hub for computer software, small cars, generic drugs, garments, jewellery…Our rockets are launching satellites of the world, while our missiles have a tested range of 8,000 km. India has a very comfortable foreign exchange balance and financial systems that are robust, with credit reaching far-flung villages and a plethora of digital payment options. And these are just the tip of the iceberg of many, many achievements.

As S.S. Lewis once said, “You can’t go back and change the beginning, but you can start where you are and change the ending.” India is not content to rest on its many laurels but spurred on by its ambitions and lifted on the wings of hard work, and it is ready to fly high with the largest youth power in the world, exuding exuberance and confidence! Clearly, India has numerous milestones of success to its credit…but the best is yet to come!

“Faster, Higher, Stronger” used to be the Olympic motto…but no longer! In July 2021, the word ‘together’ was added to emphasise the unifying power of sport and the importance of solidarity. This could have been the guiding light and beacon of inspiration behind Team India’s excellent performance at the Commonwealth Games in Birmingham. The Indian contingent returned home with a rich haul of 61 medals, comprising 22 gold medals, 16 silver medals and 23 bronze medals. Ranked the fourth-best country in terms of medals, India has clearly demonstrated that it has what it takes to win. And as we congratulate every participant and person who put in umpteen hours of painstaking effort, we also wish them all the very best in raising the bar in the years ahead.

ITR filing is an annual activity which can be done in April by millions every year. But it is subject to the timely availability of new forms by the income-tax department. Year after year, the delay in releasing the forms and utilities has resulted in requests for extension of the date for filing returns and upsetting the time schedules. There is a general feeling amongst the taxpayers and professionals that the entire process of the release of forms and utilities needs to be revisited by the department. It could examine how the forms, along with the utilities (that are hard tested on the portal), can be available right on the first day of April. However, this year was definitely better.
It is believed that over 4.09 crore ITRs were filed by 28th July, 2022, with more than 36 lakh ITRs filed on 28th July, itself. The tough stand by the Central Board of Direct Taxes not to extend the deadline, coupled with the improved support on the portal, indeed paid dividends. Also, CAs across the country were pleasantly surprised by the positive message they received from the ICAI, declaring that it was not in favour of making any representation for extension of any due date. CAs should not take any pressure but instead work in peace. After all, they were not the ones who were dragging their feet on providing details or procedures. CAs need to develop the courage to tell their clients to furnish the relevant information well in time to avoid unpleasant consequences. As CAs, we should not have to burn the midnight oil to file returns for truant clients – the message is loud and clear!

The multi-directional flow of money of all colours and currencies has always been a cause of concern to governments. With white-collared criminals becoming more adept at evading attention, the government is stepping up its attempts to uncover camouflaged money channels. A few charitable trusts and institutions have for long been a devious route and front to funnel money in and out of the country. The CAG noticed serious lapses in its audit of many such organisations and trusts.

In a serious attempt to crack down on the nefarious activities of these bogus institutions, CBDT has mandated that all charitable trusts must maintain the records for 10 years from the assessment year for better tax scrutiny. Comprehensive details of incoming and outgoing global funds must be filed, and Aadhaar and PAN numbers of donors and trustees must be recorded. While there is no doubt, this initiative will seriously bottleneck and deter institutions from engaging in money laundering one must also bear in mind that there are more than 3 million charitable trusts in the country, many of them very small run by volunteers with noble purpose. It would be perhaps too cumbersome to subject them to so many compliances that they can become counterproductive to the whole purpose for which the trusts were established. Perhaps some line of demarcation or criteria to segment the trusts for varying degrees of compliance would help.

Audit results should be the barometer of the financial soundness of a company. Sometimes audits fail to red-flag discrepancies and major cracks in a company’s financial system. The ministry of corporate affairs announced that it would soon introduce a set of tough measures to tighten the framework of statutory auditors. These measures are aimed at preventing the recurrence of the abrupt collapse of companies that severely imperils the nation’s financial system. The consultation on audit reforms has been completed, and the drafting of a bill to amend the Companies Act is in the pipeline.

A few questions, though arise in my mind. How many more compliances would the professionals have to live with? Do more compliances, regulations guarantee that there will be no fraud ever in future? Are the auditors always in collusion with the management of the company that goes astray? Is the difference between the audit parameters, environment for a statutory audit and that of a CAG or Fraud investigation clearly comprehended? I believe there is definitely scope for more discussion in an open forum on this subject, or else the expectations will fail, and the audit profession will earn one more blame.