Top CA Firms, E&Y, Deloitte, KPMG & PWC, Hauled Up For Alleged Illegal Practice Of law

The Society of Indian Law Firms, a collective of India’s Premier Law Firms, has filed a complaint dated 18th June 2015 with the Bar Council of India claiming that the big four CA firms, E&Y, Deloitte, KPMG & PWC, are carrying on unauthorized practice of law and that this contravenes section 29 of the Advocates Act which provides that only Indian citizens who are enrolled with the State Bar Councils as advocates have the right to practice the profession of law in India.

The complaint relies on the law laid down by the Supreme Court in Madras Bar Association v Union of India where it was held that Chartered Accountants and Company Secretaries cannot be permitted to appear on behalf of a party before the National Tax Tribunal. The Court held that CAs and CSs would at best be specialists in understanding and explaining issues pertaining to accounts but are not eligible to practice law. A similar sentiment was expressed by the Madras High Court in A. K. Balaji vs. GOI. The Court expressed concern that many accountancy and management firms are employing law graduates and are rendering legal services contrary to the Act and are engaged in the unauthorised practice of law.

Support has also been drawn from the judgement of the Bombay High Court in Lawyers Collective vs. Bar Council where it was held that even “drafting documents, reviewing and providing comments on documents, conducting negotiations and advising clients on international standards and customary practice relating to the client’s transaction etc. was nothing but practising the profession of law in non litigious matters”.

The complaint has given specific instances of the alleged unauthorized practice of law by the said big four CA firms.

With specific reference to Ernst and Young, it is pointed out that E&Y has acquiesced to practicing the profession of law in the submissions made by it in a service-tax matter reported as Ernst and Young Ltd v CST [2012 (27) S.T.R 462 (Tri-Del)]. E&Y admitted that it is rendering, inter alia, “Litigation support: assistance in preparation and filing of replies to notices issued by department, attending hearings and various other litigation support services”.

The complaint also alleges that the induction of PDS Legal, a law firm, as a member / affiliate firm of E&Y Global Limited, means that “E&Y have in a surrogate manner engaged in the practice of law”. It is also claimed that “the advocates of PDS Legal attend the Partners meeting of E&Y network of firms and take part in the discussions with the members of the E&Y Network”. It is also alleged that the advocates of PDS Legal are involved in determining the business strategy to meet clients and cross-refer work to each other and that there is a “modus operandi between PDS Legal and E&Y to share remuneration etc”.

It is also alleged that PDS Legal uses the logo of E&Y and that PDS Legal and E&Y share office space, address etc.

Similar specific instances of alleged violation of the law by Deloitte, KPMG and PWC are also given in the complaint.

According to a report in the ET, the Bar Council of Delhi has issued notices to the said CA firms and directed them to respond to the allegations by 7th August 2015.

The ET also reported that each of the said CA firms has claimed that it is “committed to operate as per the highest professional standards” and that they have “not contravened any law including the Advocates Act 1961”.


12 comments on “Top CA Firms, E&Y, Deloitte, KPMG & PWC, Hauled Up For Alleged Illegal Practice Of law
  1. ASHWANI ABROL says:

    AS HON’BLE SUPREME COURT HAS DECIDED THE ISSUE OF RIGHT TO REPRESENTATION BEFORE REVENUE & OTHER AUTHORTIES DECIDING ISSUES INVOLVING LAW, IN FAVOUR OF ADVOCATES,IT IS EXPECTED FROM CENTRAL GOVT.& STATE GOVTS.& MORE SPECIFICALLY BCI THAT THE DECISION BE GOT IMPLEMENTED IMMEDIATELY.REGARDZ.

  2. BSKRAO says:

    IT IS HIGH TIME, BCI SHOULD PROTECT THE INTEREST OF ADVOCATES UNDER SECTION 6 OF ADVOCATES ACT

  3. BSKRAO says:

    Chartered Accountants conducting Tax Audit for Revenue can not appear & act again for the same interested assesse in proceedings before Revenue Authorities (Due to Conflict of Interest). If explanations from Tax Auditor required, they may be called upon by issuing summons under CPC/Evidence Act only. Because, all the procedures laid down in Civil Procedure Code followed in the course of proceedings before revenue authorities requiring only Advocates to appear on behalf of assesses.

    Legal profession in India governed by Advocates Act and the disciplinary rules and regulations, code of conduct and professional ethics framed & practiced from time to time. There is also a hierarchy of disciplinary authorities such as the State Bar Council, Bar Council of India, Supreme Court, etc. These authorities can exercise their disciplinary authority/control only over the Advocates who are on the Rolls maintained under the Advocates Act. Any person who is not subject to disciplinary control of the above said authorities if allowed to practice the profession of law, he/she would go scot-free and would not be subject to the supervision and the disciplinary jurisdiction of the above said authorities. Professional misconduct in the course of appearance for Pleading & Acting (Practice of Law) before the Revenue Authorities purely covered under Advocates Act read with Bar Council of India Rules in India. I.e, only Bar Council in India issued license to enrolled Advocates (Legal Practitioners) to practice law in India & take action for professional negligence in the course of Pleading & Acting. Chartered Accountants neither licensed to practice law to enable his/her professional body to take action for professional misconduct against the directions of Income-Tax Deptt. U/s 288(5)(a) nor the Income-Tax Deptt. could disqualify him/her for professional negligence. This incurable virus in the statute book of Income-Tax Act, require deletion of appearance clause for Accountant Section 288(2)(iv) of Income-Tax Act.

  4. BSKRAO says:

    Indian legislature provided special class of persons called Advocates in Advocates Act, 1961 to practice all Indian laws. Section 29 of Advocates Act, specifies that Advocates alone are entitled to practice the profession of Law & Section 33 of Advocates Act specifies that Advocates alone entitled to practice the profession of law before any Court or before any authority or person. Bar Council of India Vs A.K.Balaji [SLP(Civil)No(s)17150-17154/2012] Dt.4.7.2012 (SC) & A.K.Balaji Vs Govt. of India (2012) 35 KLR 290 21.02.2012 (HC) it was clearly held by Apex Court & Madras HC that Advocates alone are entitled to practice the Profession of Law both in litigious & non-litigious matters. Five member constitution bench of Supreme Court of India in Madras Bar Association Vs Union of India bearing No.150 of 2006 Dt.25.09.2014, it was ultimately held that Chartered Accountants & Company Secretaries to represent a party to an appeal before NTT, unconstitutional and unsustainable in law. Practice of Income-Tax law involves preparation & filing of Income-Tax Returns and Acting & Pleading before Revenue Authorities on behalf of assesses. Chartered Accountants are practicing Income-Tax law in the guise of appearance clause U/s 288 of Income-Tax Act. Chartered Accountants are not issued license to practice any Indian laws or Income-Tax law in particular either in the statute book of Indian Income-Tax Act or in Chartered Accountants Act & hence they are not accountable to Income-Tax Deptt. or outside agencies. The above verdict of Supreme Court is declared law of land, binding on all throughout the territory of India under Article 141 of Indian Constitution and contravention liable for action under Article 129 read with Article 142(2) of Indian Constitution.

  5. S Srinivas says:

    Legal education was abysmal till National law schools came. To quote an instance hardly 3 or 4 lawyers out of 24000 qualified in judl officers exam held recently in Karnataka. Most cd not get beyond 10 marks as per news report. If this is true, how qualified our lawyers is a matter of concern. Tax matters they better leave for others.

  6. Gyan Saha says:

    Dear Editor, Thanks for the infor. This racket has been going on years. The Bar Council of India has been keeping quiet about the nefarious practice. It must be stopped. G R Saha

  7. IT IS HIGHTIME ON THE PART OF THE BCI TO TAKE CARE AND TAKCLE THIS KIND OF ISSUES IN THE BEST INTEREST OF NATION AND LEGAL PROFESSIONALS.
    RESPECTED BASHINJI[SILF] HAS RIGHTLY PUT ON THE ISSUE, AS TO ARME THE HAND OF BCI TO TAKE RESPONSIBILTY IN GLORIFED MANNER.

  8. Rajesh Bhardwaj says:

    Section 288 of Income tax Act Explanation allows CAs to appear on behalf of their clients and as income tax has much to do with accountancy they do a good job in explaining the matter to authorities. I particularly remember Shri VP Vijh CA Jullundur and Shri SN Agarwal,CA Indore who prepared cases very well. There will be many others as even to become a CA is a tough task with few succeeding every year.

  9. Prakash says:

    Same is the case with lawyers. I have seen some lawyers putting their clients into shit advising nonsense on taxation matters, as they are not in line with the amendments and other notifications. So even the practice of lawyers should be checked and there should be some regulations to stop such practices.

  10. Jothi Ramalingam says:

    Some chartered accountant are signing the financial statements and audit reports without seeing whether there existed such books of accounts are not? They even take over accounts jobs also, which is prevented by law. Since the income-tax department is not making scruitiny of books of accounts, it has become an advantage to the Chartered accountants. This is spoiling the profession of genuine chartered accountants. A mass survey in this regard will reveal the fact.

    • Rakesh Singh says:

      this is completely incorrect to say that income-tax department is not making scruitiny of books of accounts

  11. SANKARANARAYANAN says:

    ADVOCATES ARE MORE EAGER TO PROVIDE SERVICES TO COPORATES

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