Prof Ethics - Sec & General Flashcards
ESB
Ethical Standards Board
CA. A registered his proprietorship firm last year and started practicing in the name of “M/s A & Co.”. He is of the view that a professional need to maintain BOA only if his earnings exceed the minimum prescribed limit as per section 44AA of the IT Act, 1961. Therefore, he decided not to maintain his BOA as his earnings are below the prescribed limit given under section 44AA of the said Act.
OR
Mr. P, a CA did not maintain any BOA on the ground that his income did not exceed the limits prescribed u/s 44AA of the IT Act, 1961.
OR
Mr. P, a CA in practice runs his proprietorship firm as “M/s. P & Co”. His annual gross receipts are in excess of Rs. 50 lacs. He maintains a small pocket diary in which he writes the fees received from various clients. Based on his record, he prepares and files his IT return.
Maintenance of Books of Accounts:
As per Clause 1 of Part II of Second Schedule, a member of the Institute will be held guilty of professional misconduct if he - Contravenes any of the provisions of this act or the regulations made there under or any guidelines issued by the council.
Chapter V of the Council General Guidelines, 2008 specifies that -
a member of the Institute in practice or the firm of CAs of which he is a partner shall maintain and keep in respect of his/its professional practice, proper BOA including the following:
(i) a Cash Book
(ii) a Ledger
Thus, a CA in practice is required to maintain BOA.
In the instant case, CA. A does not maintain BOA bearing in mind the provisions of section 44AA of the Income Tax Act, 1961.
Accordingly, it does not matter whether section 44AA of the IT Act, 1961 applies or not.
Hence, Mr. A, being a practicing CA will be held guilty of professional misconduct for violation of Council General Guidelines, 2008.
