Your CA may be jailed - because of you!

NEW DELHI: Chartered accountants(CA) and tax advisors are having sleepless nights due to a clause added in the Finance Bill which can see them doing Jailhouse Rock without any criminal act.

Hidden between the lines is a clause which will allow tax authorities to book and send any advisor for rigorous imprisonment for three months which may extend up to three years, if he or she wilfully and with intent to enable any other person to evade tax makes or causes to make any false entry in the book of accounts of the assessee.

The catch is that it shall be sufficient to allege a ‘general intent’ to enable the other person to evade any tax.

Tax advisors are complaining that this means even if such an act of tax evasion is not committed then the tax authority can send the CA to jail.

They add it is tantamount to criminal punishment even without the crime being committed. The clause has been added to Section 277 of the Income-Tax Act as a subclause 277(A). This will be effective from October 1.

Says Sanjiv K Chaudhary, partner at Bharat S Raut & Co, “In this case anyone can be booked without a cause. It would mean shutting shop for us. But I am sure there will be a clarification on the same before it is implemented.�

Adds Shyamal Mukherjee, executive director at PricewaterhouseCoopers, “Its like a Pota in income-tax.� The main issue for CAs is the open ended ‘general intent’ clause.