CHAPTER - V PRESENTATION OF THE DATA AND ANALYSIS...

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CHAPTER - V

PRESENTATION OF THE DATA AND ANALYSIS

5.1 Introduction:

The present study is being carried out with the objectives to study

overall growth of income-tax consultancy as a profession, to discuss

various services provided by tax consultants to the assessees, the

difficulties faced by them in providing such services and the difficulties

of various types of assessees (i.e. individual, firm and company only) in

getting the services from income-tax consultants. In view of these

objectives the researcher has collected huge amount of primary data by

presenting and circulating separate questionnaire for each type of

assessees i.e. individual, firm and company. The tax authorities directly

and indirectly related with income-tax consultancy services are contacted,

the formal and informal discussions are held with them and relevant data

is elicited. The secondary data is collected by using available secondary

sources.

In this chapter an attempt is being made to present, analyze and

interpret the data under the following two main parts-

I. Income-Tax Consultants, their Services and Difficulties

II. Different types of assessees and their difficulties in getting tax

services.

This part is again divided into three sections, viz.

1. Individual Assessees

2. Partnership Firm Assessees and

3. Company

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PART-A

Income-Tax Consultants, their Services and Difficulties

In India, income-tax services are mainly provided by the

professional Chartered Accountants, who are the members of their

professional body, the Institute of Chartered Accountants of India and

abide by their professional code of conduct. Some law professionals and

those who have completed their degrees or diplomas in taxation,

accountancy or commerce also provide such services. All these services

providers provide their various types of services according to their

professionals’ rules and regulations, code of conduct, rules and

regulations provided by the Government under various taxation acts, rules

and customs followed in this regard. The professional charges vary from

case to case depending on number of services provided, volume of

transactions etc. generally per case lump sum or on percentage basis.

They mainly face their professional difficulties such as their staff,

location of office, time management etc. Difficulties on the part of clients

arise because of various tax collection departments, their official practices

and the implementation of the rules and regulations framed under the

Income-Tax Act, 1961 by them.

5.A.I General Information:

As far the income-tax consultants are concerned they differ from

each other as to their qualification, seniority in the profession, age,

strength of their staff, training to them, their social status, public

relations, office location, other infrastructural facilities provided by them,

service promptness etc., which affect their client base, quality of services

provided by them and their efficiency and difficulties in providing

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services. As such a detailed enquiry is held in this regard which revealed

following things:

5.A.I.(1) Academic and Professional Qualifications

Academic and professional qualification plays very important role

in service providing task. It mainly affects the quality and performance of

the service provided. The highly qualified and professionalized

consultants can provide maximum tax services under one roof. Naturally

the clients prefer such consultants. The academic and professional

qualifications of the studied tax consultants are as under:

Table No. 5.1

Academic and Professional Qualifications

Qualification No. of Tax Consultants Percentage

B.A 1 3.33%

B.Com., M.Com 5 16.67%

LL.B 4 13.33%

D.I.T. & S.T. (Diploma in

Income-tax & Sales Tax)

2 6.67%

G.D.C. & A. 3 10%

Chartered Accountant 15 50%

Total 30 100%

Source: Primary Data

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From table no. 5.1 it can be observed that the tax consultants

under study are of varied qualification such as B.A., B. Com., M.

Com., D.I.T.& S.T., LL.B. and Chartered Accountant. There are no

restrictions on the part of Income-Tax Department as to the

qualifications of the tax consultants but generally those who are

graduated in commerce, law and have a special knowledge of taxation

law provide these services.

There is only one tax consultant having qualification B.A., 5 tax

consultants are B. Com., M. Com., 4 tax consultants are LL.B., 2 tax

consultants are D.I.T. & S.T., 3 tax consultants are G.D.C. & A. and

15 tax consultants are chartered accountants. 50 % of the total studied

tax consultants are chartered accountants. As far qualifications of the

consultants are concerned up to 95% of them are found to be well

qualified in taxation. Graphical representation can be shown as under:

Figure. No. 5.1

In case of income-tax consultancy, people having commerce back-

ground or taxation or law back-ground can provide better service to

their clients. It is also observed that with academic qualification,

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experience in this field is also equally important. Some well-known

tax consultants in the studied area are not from commerce or taxation

background yet with experience and devotional work they are

providing better quality services to their clients.

5.A.I.(2) Office Location

Generally assessees select tax consultant whose office is near from

their house or office or business place. Company assessees may prefer

to select tax consultant whose office is in MIDC area for their

convenience.

A survey is carried to know the criteria of the assessees in selecting

a particular tax consultant in relation to office location of tax

consultant. The details in this regard are as under:

Table No. 5.2

Office Location

Office Location No. of tax consultants Percentage (%)

Prime area 10 33.33%

Central area 8 26.67%

Remote area 9 30%

MIDC area 2 6.67%

Income-Tax Office area 1 3.33%

Total 30 100%


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Figure 5.2

Office Location

Central area,

26.67%

Prime area,

33.33%

Income-Tax

Office area,

3.33%

MIDC area,

6.67%

Remote area,

30%

From the table no. 5.2 it can be observed that office places of 10

(33.33%) tax consultants are in prime area, 8 (26.67%) tax consultants

are in central area, while offices of 9 (30%) tax consultants are in

remote area. 2 (6.67%) tax consultants have selected MIDC area for

their office. One tax consultant’s office is in Income-Tax Office area.

Though the above table gives statistical data, it is observed that it is

not necessary for the assessees that the office place of tax consultant

must be in prime area or in central area. It is also observed that ‘trust

of assessees on tax consultant’ and ‘services provided by them’ are

only important things in selecting tax consultant, office place is not so

important for assessees.

5.A.I.(3) Assistants’ Strength:

Assistants or office staff of the tax consultants play vital role in tax

consultancy services. They assist tax consultants by performing

majority of clerical work required for assessees. An enquiry is made to

review the size of the income-tax consultancy firms based on their

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strength of the employees. The following table no. 5.3 shows the staff

strength of the income-tax consultants:

Table No. 5.3

Strength of the Assistants

No. of assistants No. of tax consultants Percentage (%)

No assistants 3 10%

1 to 5 21 71%

6 to 10 4 13.33%

More than 10 2 6.67%

Total 30 100%


Figure 5.3

Strength of the Assistants

From the above table no. 5.3 and Figure No. 5.3, it is observed that

3 (10%) out of total income-tax consultants have not appointed any

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assistant. These income-tax consultants are doing all the work

themselves.

21 (70%) income-tax consultants have appointed less than 5

assistants. Table no. 5.3 shows that majority of the income-tax

consultants require maximum 5 assistants. 4 (i.e. 13.33%) income-tax

consultants have appointed assistants in the range of 6 to 10. Only 2

income-tax consultants have appointed more than 10 assistants. One of

them has appointed 18 assistants. This shows that the most of the

income-tax consultants in this area are small sized and operate on a

small scale.

5.A.I.(4) Selection of Assistants / Staff

Well qualified and experienced assistant is the asset to the

tax consultancy firm. He can provide quality service efficiently to

the clients. In tax consultancy service, assistants who are from

commerce and/or law faculty are preferred to provide service

efficiently. As such every tax consultant takes maximum care in

selection of these assistants.

A survey is conducted to know the selection criteria by the

income-tax consultants in selecting the assistants. The following

table shows different criteria used for selecting the assistants.

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Table No.5.4

Selection Criteria for Assistants

Particulars No. of Tax consultants Percentage (%)

Educational qualification

(at least B.Com.)

19 63.33%

Computer education

(especially Tally)

10 33.33%

Knowledge of accounting

& auditing

6 20%

Experience 4 13.33%

Loyalty to organizations 2 6.67%


The table no. 5.4 shows that the tax consultants in selecting

their staff have given maximum 63.33% emphasis on their

educational qualifications while only 33.33% and 20% emphasis is

given to their skill oriented education i.e. computer literacy and

knowledge of accounting and auditing respectively. Much

importance has not been given to experience (13.33%) and loyalty

(6.67%) of the candidate. Majority of the consultants expect that

their assistant should be a commerce graduate.

However, the informal discussion by the researcher with the

income-tax consultants revealed that the group of friends and

relatives of tax consultants are also playing important role in the

selection of staff by the tax consultants.

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5.A.I.(5) Training to Assistants / Staff

Business environment is ever changing. It requires up to date

knowledge and information. The services rendered by tax

consultants are technical by nature. Technical service requires

constant and regular training to the staff. Assistants should up

dated with current tax matters by providing training to them.

A survey is taken to enquire the adequacy of the training

given to the staffs by the income-tax consultants in this area. The

following table shows the details relating to training given to the

assistants:

Table No.5.5

Training to Assistants

Particulars No. of tax consultants Percentage (%)

Training Provided 25 83.33%

Training Not Provided 2 6.67%

Not applicable 3 10%

Total 30 100%


It is expected that the professional service provider should render

satisfactory services to his clients. Tax consultant is a professional and

therefore his services to his clients must be satisfactory. For this

purpose, tax consultant must be with well equipped office and with

trained staff.

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Figure No.5.4

Training to Assistants

Training Not

Provided,

6.67%

Training

Provided,

83.33%

Not

applicable,

10%

The issue of training to staff is discussed with the tax consultants

interviewed by the researcher. From the table 5.5 it is noticed that out

of 30 tax consultants interviewed 25 (83.33%) tax consultants provide

training to staff and only 2 tax consultants in the selected area have

not provided training to their staff and 3 tax consultants are rendering

services to the clients without the help of assistants.

5.A.II Services Provided by Income-Tax Consultants

Income-tax consultants provide various types of services to their

clients, which mainly include book-keeping, taxation, cost accounting,

auditing etc. The quality of service provided mainly depends on the

infrastructural facility available as well as qualification of the

consultants and the number of services provided by them.

5.A.II.(1) Taxation Services

The study of different services provided by the income-tax

consultants revealed that the major services pertain to income-tax

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issues, tax planning and compliances. The following table shows the

different services and the number of income-tax consultants providing

these services.

Table No.5.6

Various Taxation Services


Income-Tax 30 100%

Value-added Tax 20 66.67%

Service Tax 16 53.33%

Central Excise 5 16.67%

Customs Duty 2 6.67%

Tax Planning 30 100%

Tax Compliances &

procedural work

30 100%

Source: Primary data

Figure No.5.5


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The table no. 5.6 shows that all the income-tax consultants

provide the services of income-tax issues, tax planning and tax

compliances and procedural work. Tax planning is the service which

tries to ensure that the tax liability is minimum. It is different from

evasion of tax. In tax planning due care is taken to get the benefit of

exemptions and deductions allowed by the Income-Tax Act, 1961.

The compliances and procedural work aims at making sure that all

necessary forms and payments are appropriately submitted.

Apart from the core areas of practice, approximately 20 (66.67%)

and 16 (53.33%) of the income-tax consultants provide the Value

Added Tax consultancy and Service Tax consultancy services to their

clients respectively. Other taxation services such as Central Excise and

Customs are not provided by most of the income-tax consultants. Only

5 (16.67%) and 2 (6.67%) of the income-tax consultants provide these

services respectively.

5.A.II.(2) Book-keeping Services

Maintaining of accounts according to the legal provisions of the

law is prime necessity in taxation. This requires specialized staff.

Many small scale businesses, individuals do not afford to employ such

staff. They take the help of their tax consultants in this regard. As such

most of the income-tax consultants provide such book-keeping

services to their clients. The following table no. 5.7 shows the details

of the book keeping services provided by the income-tax consultants:

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Table No.5.7

Book-keeping Services


Service Provider 24 80%

Service Not-

provider

6 20%

Total 30 100%

Source: Primary data

The above table shows that the 24 (80%) of the income-tax

consultants provide the services of book keeping to the clients. Only 6

(20%) of the income-tax consultants do not provide this service to

their clients.

5.A.II.(3) Cost Accounting Services

Cost accounting services are not so common in this area. Generally

cost accounting services are availed by manufacturing companies

which are less in number in this area. The following table no. 5.8

shows the details of the cost accountancy service provided by the

income-tax consultants:

Table No.5.8

Cost Accounting Services


Service Provider 5 16.67%

Service Not-provider 25 83.33%

Total 30 100%


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The above table shows that only 5 (16.67%) of the income-tax

consultants provide the services of cost accountancy. Other 25

(83.33%) of the income-tax consultants do not provide this service to

their clients. Informal discussion with the income-tax consultants

revealed that this service is not generally demanded by the clients and

hence are not provided.

5.A.II (4) Audit Services

Audit is another service provided by the chartered accountants’

firms and certified auditors along with taxation services to their

clients. Under Companies Act, Trust Act and many other Acts, it is

mandatory to the business to get their accounts audited by a competent

authority. Cost audit, Tax audit, VAT audit, Financial audit etc. are

various audits required under various Acts.

Audit services are provided only by the income-tax consultants

who are chartered accountants and who are competent to conduct such

audits under the respective law (certified auditors). A study of ‘the

income-tax consultants who can conduct the audits for assessees’ is

done to understand the different types of audits conducted by them.

Table no. 5.9 reveals the different types of audits and income-tax

consultants providing these audit services to their clients:

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Table No.5.9

Audit Services


Statutory Audit 16 53.33%

Cost Audit -- --

Tax Audit 19 63.33%

VAT Audit 17 56.67%

Internal Audit 16 53.33%

Financial Audit 4 13.33%

Environmental Audit 2 6.67%

Information System

Audit

6 20%


The table no. 5.9 shows that maximum tax consultants 63.33% are

providing tax audit services to their clients while 53.33% (16), 56.67%

(17) are providing statutory audit and VAT audit services to their

clients. Only 4 out of 30 are providing, financial audit services while 6

(20%) are providing information system audit facilities to their clients.

Except 2 (6.67%) none of the consultant provides environmental audit

service to their clients. Cost audit services are not provided by the

income-tax consultants in this area.

5.A.II.(5) Consultancy Services

The income-tax consultants also provide the consultancy services

to their clients. Such consultancy services include the management

accountancy, project planning and financing, project improvement or

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turnaround studies, arrangement for the sources of finance, etc. The

following table no. 5.10 illustrates the different types of consultancy

services provided by the income-tax consultants:

Table No.5.10

Consultancy Services


Management

Accountancy/Internal Audit

16 53.33%

Project Planning & Finance 20 66.67%

Project improvement or

turnaround studies

4 13.33%

Arrangement for the sources of

finance

11 36.67%


The above table shows that most of the income-tax consultants, i.e.

20 (66.67%) provide the project planning and financing services. Other

major consultancy services include management accountancy / internal

audits and arrangement for the sources of finance that are provided by

approximately 16 (53.33%) and 11 (36.67%) of the income-tax

consultants. Only 4 (13.33%) income-tax consultants provide these

services. The services of project improvement or turnaround studies are

not provided by the most of the income-tax consultants as there is no

demand from clients for these services.

5.A.II.(6) Timely Notification of Amendments, Decisions of

Supreme Court to the Assessees

Timely intimation of amendments in Income-Tax Act and decisions of

various courts, save the time, money and efforts of the assessees. They

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can plan or arrange their financial matters according to amendments and

judgments etc. The position in this regard can be seen from the following

table no. 5.11:

Table No. 5.11

Intimation of Amendments, Decisions of Supreme Court to Clients


Intimating 27 90%

Not-intimating 3 10%

Total 30 100%


Table No. 5.11 and its graphical representation shows that the 27

(90%) of the income-tax consultants intimate the amendments, judgments

to the clients. Only 3 (10%) of the income-tax consultants do not intimate

such changes.

The informal discussion with the income-tax consultants revealed

that sometimes it is not possible to intimate all the clients regarding the

amendments, judgments. Time and technical support system and non-

availability of trained staff are the major problems in intimating the

amendments or the judgments to the clients.

5.A.III. Filing of Returns of Income

Under the tax compliance and procedural work, income tax

consultants have to file return of income of assessee on behalf of him /

her. It is a form which includes detailed information regarding income of

the assessee and the tax thereof. It is filed under section 139 of the

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Income-Tax Act, 1961. All the documentary evidences are required to

attach with it.

5.A.III.(1) Mode of Filing the Returns of Income

Previously returns of income were filed in paper form only. Now-

a-days Online Tax Accounting System has been introduced. It has

made e-filing of returns and e-payment mandatory for the assessees

who are tax audited. In case of other assessees it is on tax consultant to

select the mode for filing the return of income. A study is conducted to

know the mode of filing the return of income selected by different

income-tax consultants. The following table shows the details in this

regard:

Table No. 5.12

Modes of Filing the Return of Income


E-filing 4 13.33%

On paper 3 10%

Both 23 76.67%

Total 30 100%


From the table no.5.12 it can be observed that 4 (i.e. 13.33%)

income-tax consultants use only e-filing mode for filing the returns of

income. On the contrary 3 (i.e. 10%) income-tax consultants file the

returns of income in paper form only. 23 (i.e. 76.67%) income-tax

consultants use both the modes i.e. electronically and in paper form

for filing the returns of income.

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It is observed that income tax consultants from new generation use

e-filing mode comfortably. On the contrary senior tax consultants are

not so comfortable with such electronic devises. They need to take

help of their assistants in e-filing the returns.

There are some benefits of e-filing of returns of income and some

technical problems too. These benefits and difficulties discussed as:

5.A.III.(2) Benefits of Electronically Filing the Returns of Income

The study is conducted to know the benefits enjoyed by the

income-tax consultants in electronically filing the returns of income. It

is observed by the researcher from the total 27 income-tax consultants

who file the returns of income electronically that the most common

benefit is quick and time saving. It is possible to file return any time

and from any where. Less paper work is required.

The following table shows the details of different benefits enjoyed

by the income-tax consultants:

Table No. 5.13

Benefits of Electronically Filing the Return of Income


Quick-time saving 15 50%

Paperless-Paper saving 10 33.33%

Anytime submission 8 26.67%

Easy automation calculation 7 23.33%

Accurate 6 20%

Money saving 1 3.33%


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From the table no. 5.13 it can be seen that 50% of the tax

consultants feel that e-filing is quick and time saving. 33.33% tax

consultants consider it as paperless - paper saving mode. 26.67%

income-tax consultants feel that anytime submission is possible with it

and 23.33% income-tax consultants feel that easy automated

calculations are possible with it. 6 (i.e. 20%) tax consultants feel that

accuracy is achieved easily with e-filing. Only one tax consultant

(3.33%) feels that it is a money saving mode.

5.A.III.(3) Difficulties in Electronically Filing the Returns of

income:

The discussion by the researcher with various income-tax

consultants (4 out of 30) who opt for electronically filing the returns of

income or 23 income tax consultants who opt for either electronically

filing the returns of income or in paper form filing the returns of

income revealed that the 37% of the income-tax consultants face the

difficulties in electronically filing the return. The following table

shows the details:

Table No. 5.14

Difficulties in Electronically Filing the Returns of Income

Particulars No. of tax consultants Percentages (%)

Facing difficulties 10 37%

Not facing difficulties 17 63%

Total 27 100%


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Figure 5.6

Difficulties in Electronically Filing the Returns of Income

Not facing

difficulties ,

63%

Facing

difficulties,

37%

From the table no. 5.14 it is clear that 63 % tax consultants have no

problem in e-filing the returns. But e-filing return creates some

technical problems.

In case the return is digitally signed, on successful uploading of e-

Return, ITR-V Form would be generated which needs to be printed by

the tax-payer. This is an acknowledgement. Tax-payer has to fill-up

this ITR-V Form, duly verify and mail to Income-Tax Department,

Bangalore within prescribed time limit by ordinary post only. If

assessee fails to do so, it will deem that the return in respect of which

the Form ITR-V has been failed was never furnished.

Submission of Form ITR-V is not acknowledged by the concerned

office at Bangalore. Therefore tax consultants can not make it sure

whether Form ITR-V submitted is received by the Income-Tax

Department or not. There is also chance of miscarriage of it in transit

or misplacement in the office. This procedure makes the funky

position of income-tax consultant.

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The other difficulties faced by the income-tax consultants are

summarized as under:

- Electricity failure.

- On-line system failure / site block.

- No access to proper sites.

- Technological knowledge and updating of information.

- No access of data due to server problem.

- The uploading system does not give the list of errors. Returns of

income are accepted with errors.

- Acknowledgements are not received in time.

- Slow working on web-sites.

- No verification of e-payments through cross check.

Further it is observed that the most of the senior income-tax

consultants in this area are not updated with the computer system and

are dependent on the assistants for electronically filing the returns of

income.

5.A.IV Other Difficulties Faced by Income-Tax Consultants

5.A.IV.(1) A study is conducted to assess the overall knowledge of

accountancy and taxation matters to the clients. The study is

restricted only to the individuals, firms and the companies. It is

observed that the knowledge of the accountancy and taxation

matters is higher with companies in the area of research work

followed by firms and then individual assessees. The following

table shows relative opinion of the income-tax consultants about

the awareness / knowledge of the accountancy and taxation matters

to their clients:

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Table No. 5.15

Elementary Knowledge of Accounting and Taxation matters

to Clients

Individuals Firms Companies Knowle-

-dge

Range No. of tax

consultants

% No. of tax

consultants

% No. of tax

consultants

%

75 – 100 9 30.00 8 30.77 6 37.50

50-75 3 10.00 8 30.77 7 43.75

25-50 3 10.00 6 23.08 3 18.75

0-25 15 50.00 4 15.38 -- --

N.A. -- -- 4 -- 14 --


Note: The Income-Tax consultants having no such clients are

marked as N.A. (not applicable) in the above table.

Figure No. 5.7

Elementary Knowledge of Accounting and Taxation matters

to Clients

0

2

4

6

8

10

12

14

16

75 – 100 50-75 25-50 0-25

Individuals

Firms

Companies

The above table and the graphical representation show that

awareness / knowledge of the accountancy and taxation matters are

higher in case of the companies. 6 income-tax consultants admit

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that 75-100 % company clients have knowledge of accountancy

and taxation matters. Approximately 31% (8) income-tax

consultants believe that knowledge of the subject is adequate with

partnership firms. The percentage is further lower to 30 % in case

of individuals. 50 % Tax consultants believe that individual

assessees are unaware about accountancy and taxation matter. This

reveals the fact that the awareness / knowledge of the subject

matter are lower with individuals.

Assessees are required to be aware of some tax provisions at

least relating to their business or profession, tax obligations, due

dates regarding tax compliances etc. If they are unaware of this

basic knowledge, it creates problem for tax consultants. In such

cases tax consultants have to call / remind these assessees

frequently.

5.A.IV.(2) Further study is conducted to understand the availability of

the trained staff with the clients. Untrained staff or assessees who

are unaware of book-keeping and accountancy may make errors in

book-keeping or may use wrong methods for book-keeping, etc.

which creates problem in service providing task by tax consultants.

The following table gives the details of clients having trained

staffs:

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Table No. 5.16

Trained Staff with Assesseess

Individuals Firms Companies Range

No. of tax

consultants

% No. of tax

consultants

% No. of tax

consultants

%

75 – 100 7 23.33 13 50 14 87.5

50 – 75 4 13.33 5 19.23 1 6.25

25 – 50 -- -- -- -- -- --

0 – 25 19 63.33 8 30.77 1 6.25

Total 30 100 26 100 16 100

N.A. 4 14


Note: The income-tax consultants having no such clients are marked

as N.A. (not applicable) in the above table.

Figure No. 5.8

The table no. 5.16 and figure no. 5.8 shows that 14 (ie.87.5%)

income-tax consultants believe that their 75 to 100 % corporate clients

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have trained staff. 50% of the income-tax consultants believe that

their 75 to 100 % clients–partnership firms have trained staff.

However, 7 income-tax consultants believe that their 75 to 100%

individual clients have trained staff. On the contrary 19 (63.33 %)

income tax consultants believe that their individual assessees do not

have trained staff.

4 tax consultants have no partnership firm client and 14 tax

consultants have no company clients.

The informal discussion with the income-tax consultants revealed

that cost involved in appointing the trained staff is high and hence

most of the individual assessees do not have the trained staff with

them. On the contrary majority of the companies appoint the trained

staff.

5.A.IV.(3) Correctness of the accounting records maintained by the

clients is highly determined by the knowledge and experience of the

staff of the clients. The informal discussion with the income-tax

consultants revealed that generally corporate assessees appoint trained

staff to record transactions undertaken. But the cost involved in

appointing trained staff is high and is not affordable to individual

assessees and hence the accounting records maintained by them may

not be fully correct. It is a cumbersome work for tax consultants to

find out errors and make the books of accounts correct and proper.

The following table shows the relative opinion of the income-

tax consultants regarding the correctness of the accounting records

maintained by their clients:

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Table No.5.17

Details of Correctness of the Accounting Records

Maintained by the Clients

Individuals Firms Companies Range

No. of tax

consultants

% No. of tax

consultants

% No. of tax

consultants

%

75 – 100 12 40 15 57.70 14 87.5

50 – 75 8 26.67 1 3.85 1 6.25

25 – 50 3 10 4 15.38 -- --

0 – 25 7 23.33 6 23.07 1 6.25

N.A. 4 14

Total 30 100 26 100 16 100


Note: The income-tax consultants having no such clients are marked as

N.A. (not applicable) in the above table

The table no. 5.17 shows that 14 (i.e. 87.5 %) income-tax

consultants believe that the accounting records maintained by their

75-100% corporate clients are correct. 15 (i.e. 57.70 %) income-tax

consultants believe that the accounting records maintained by their

75-100% partnership firm clients, are correct. In case of individual

clients, however, only 40% of the income-tax consultants are

confident of their accounting records.

Table No. 5.17 shows only the most of the corporate clients

have the trained staff and accordingly, the accounting records

maintained by these clients are most correct.

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PART - B

Different Types of Assessees and Their Difficulties in Getting Tax

Consultancy Services.

As discussed earlier there are seven types of ‘person’. Every

person can become an assessee if he comes under the situation as

mentioned in the definition of assessee. The present study deal with only

three assessees i.e. individual, firm and company. The data collected and

analyzed is grouped under three headings:

I. Individual Assessees

II. Partnership Firm Assessees

III. Company Assessees

5.B.I INDIVIDUAL ASSESSEES

An ‘individual’ means a natural person i.e. human being.

Individual includes a male, female, minor child and insane. The details of

information collected from individual assessees are discussed as under:

5.B.I.(i) Sources of Income

Any economic activity which earns a surplus is a source of income.

The term ‘income’ is discussed earlier. For study purpose all the

income activities can be classified as under:

1. Classification of Income Activities

Under Income-Tax Act all types of income of an assessee is

taxable. As considered to be the income of an individual, there is

variety of economic activities that lead to income which mainly

includes business, profession, employment and vocation. The

95

following table no.5.18 shows the sources of income of individual

assessees under study.

Table No.5.18

Sources of Income

Particulars No. of Individuals Percentage (%)

Business 112 37.33%

Profession 96 32.00%

Employment 71 23.67%

Vocation 21 7.00%

Total 300 100%


Above table shows that out of randomly selected 300

assessees 112 individuals are doing business, the activities mainly

include any trade, commerce or manufacture or any adventure or

concern in the nature of trade, commerce or manufacture.

Percentage of individual assessees engaged in doing business in

selected area, is 37.33%. 96 (32%) individuals are professionals

like doctors, lawyers, auditors, engineers, etc. and are engaged in

the field of professions. 71 (i.e. 23.67%) individuals are employees

serving in government, semi-government and non government

organizations. 21 Individuals are engaged in vocational activities

like, brokerage, insurance agency, music, dancing etc. Percentage

of individual assessees engaged in vocational activities is 7%.

96

Figure No. 5.9

The study of the table no. 5.18 and graphical representation

shows that out of total sample surveyed, majority individual

assessees 208 (69.33%) are dependent on either business or

profession for their income, while rest 30.67 % are dependent

either employment or vocation for their income source analysis

shows highest 112 (37.33%) have shown business income as their

source of income while 96 (32%) showed profession as their

income source. 71 (23.67%) have shown employment and 21 (7%)

shown vocation as their income source.

It’s a good sign for economic development that numbers of

individuals are engaged in business or profession.

2. Income Heads under which Income of Individual

Assessee is Taxable

Under the Income-Tax Act, 1961, the taxable total income is

computed and assessed under five heads viz.

97

• Income from salary

• Income from house property

• Profits and gains from business or profession

• Capital gains

• Income from other sources

Income of an assessee is assessed under that income head which

is his main source of income head when he or she earns income

under more than one head. Accordingly he or she will have to file

his or her return of income in Form 'Saral D' for salary income

while Form No. ITR-4 for profits and gains from business. Income

from remaining heads are computed and assessed under appropriate

heads of income.

Table No.5.19

Income Heads wise Taxability of Assessees

Sr. No. Main Source of Income No. of Individuals

1 Income from salary 71

2 Income from house property 7

3 Profits and gains from business or

profession

208

4 Capital gain 5

5 Income from other sources 9


It is observed that the individual assessees falling under

category ‘Income from Salary’ or profits and gains from business

and profession have other sources of income such as income from

house property, income from other sources and capital gains.

98

The above table shows that 208 (69.33%) assessees’ main

source of income is ‘profit and gain from business and profession’.

71 (23.67%) assessees’ main source of income is ‘salary income’.

Very few i.e. 9, 7 and 5 persons earn income through ‘income from

other sources’, ‘income from house property’ and ‘capital gain’

respectively.

As majority of individuals are engaged in doing business or

profession, their main source of income is ‘profit and gain from

business and profession’. Individuals who are employees earn

income under the head ‘Income from Salary’.

‘Income from other sources’ includes income which is not

exempt from income-tax under the Act and which does not fall

under any other head e.g. interest on bank deposits, dividend

received, winning from lottery etc.

3. Income Range

Every person whose total income exceeds the maximum amount

not liable to the income-tax, shall be taxed under the Income-Tax

Act at the rate or rates prescribed under the Finance Act relevant to

the assessment year, considering his residential status. Such

maximum amount not liable to tax changes every year according to

the provisions in finance bill of each year. This maximum amount

not liable to tax is different for women, men and senior citizens.

Presently the tax rates for A.Y. 2009-10 are as follows:

99

---------------------------------------------------------------------------------

Income Range Slab Rates

---------------------------------------------------------------------------------

Income from NIL to Rs.1,50,000/- NIL

Rs. 1,50,000/- to Rs. 3,00,000/- , 10%

Rs. 3,00,000/- to Rs. 5,00,000/- and 20%

more than Rs. 5,00,000/- 30%

----------------------------------------------------------------------------------

For each slab, percentage of tax is different. Tax is calculated at

the rate applicable to income range of assessee. The following table

No. 5.20 shows income range of the individual assessees under

study.

Table No. 5.20

Income Range

Income Range (Rs.) No. of Individuals Percentage (%)

Less than Rs. 3 lakhs 163 54.33

Rs. 3 lakhs to 5 lakhs 83 27.67

More than Rs. 5 lakhs 54 18.00


100

Figure 5.10

Above table no. 5.20 and its graphical representation shows that

163 (i.e. 54.33%) individual assessees examined fall under the first

income group i.e. who earns income above Rs.1,50,000/- but below

Rs. 3,00,000/-. 83 (i.e. 27.67%) individual assessees are earning

income more than Rs. 3,00,000/- but below Rs. 5,00,000/-.

Remaining 54 (18%) individuals earn income more than Rs.

5,00,000/- .

5.B.I.(ii) Qualification and Services Availed from Tax Consultant

1. Qualifications of Tax Consultants

In the early stage of the tax consultancy profession any person

having basic knowledge of taxation, can start tax consultancy

profession. Now-a-days frequent changes in tax laws, amendments

to it and the competition in the profession have lead to acquire

minimum competency in it. As such only graduates from

commerce, law faculty, D.I.T. & S.T, G.D.C. & A. diploma holders

and mostly Chartered Accountants are in the profession. The

101

choice of highly qualified tax consultants automatically leads to

quality and efficient services to the assessees, as such now a days

generally chartered accountants are preferred by the assessees. In

the selected area there are some senior tax consultants who are not

chartered accountants still their services are preferred by the

assessees considering their experience in this field. The following

table shows academic qualification of the tax consultants from

whom services are availed by the assessees under the study.

Table No. 5.21

Qualifications of Tax Consultants


Chartered Accountant 202 67.33

G.D.C.&A. 6 2.00

D.I.T.&S.T. 13 4.34

LLB 42 14.00

B.Com., M.Com 37 12.33

Total 300 100%


Table No. 5.21, shows that 202 (67.33%) individual assessees

have chosen their tax consultant having qualification of chartered

accountant, 6 (2%) individuals have selected persons having

G.D.C&A. qualification, 13 (4.34%) have preferred tax consultants

having the degree of D.I.T. & S.T. 42 (14%) individual assessees

have selected law graduates as their tax consultants and remaining

102

37 (i.e. 12.33%) individual assessees have selected B.Com.,

M.Com. degree holders as their tax consultants.

Majority of the individual assessees have selected C.A.s as their

tax consultants as they can provide maximum tax services at single

window. The degree of chartered accountant from Institute of

Chartered Accountants of India is itself a landmark in this

profession.

This can be presented graphically as under.

Figure No. 5.11

2. Services Availed

The services that can be demanded by the individual assessees

from their tax consultants can be divided in to two i.e. i) Taxation

services and Non-tax (allied) services, which are as follows.

103

Table No. 5.22

Availing of Different Types of Services

Taxation Services No. of Individuals Percentage (%)

Taxation Services 300 100

Allied Services 91 30.33


Individual assessees avail only taxation services from tax

consultants. Small traders, professionals, vocational etc. generally

avail both types of services i.e. tax services for all types of taxes

and non-tax services like book-keeping, various types of audits,

consultancy services regarding profit maximization, cost control

etc.

a. Taxation Services

Each and every assessee tries to minimize his/her tax burden by

proper tax planning, as such they demand tax planning services

from their tax consultants. The tax planning tries to ensure that the

tax liability borne is (within the frame-work of law of course)

minimum. Other service provided by tax consultants is the tax

compliance and procedural work which aims at making sure that all

necessary forms and payments are appropriately submitted. This

service saves the client from lot of headache and helps to make the

whole ‘deal’ more attractive to the client.

The individual assessees avail mostly income-tax consultancy

services from income-tax consultants but some assessees may avail

104

consultancy services for other taxes too. These taxes include VAT,

Service tax, Central Excise, Customs duty etc.

The following table shows the number of individual assessees

availing different services provided by the tax consultants.

Table No.5.23

Taxation Services Availed


Tax issues

Income-Tax 300 100

Value added Tax 40 13.33

Service Tax 11 3.37

Central Excise 3 1

Custom Duty 3 1

Tax Planning 282 94

Tax Compliances &

procedural work

296 98.67


Above table shows that all (100%) individual assessees avail the

services of income-tax issues, 282 (94%) individual assessees avail

tax planning service and 296 individual assessees avail the service

of tax compliances and procedural work from income-tax

consultants. Apart from the core areas of income-tax consultancy

services, approximately 13.33% and 3.67% of the individual

assessees avail the Value Added Tax consultancy and Service Tax

consultancy services respectively. VAT is paid on inter-state sale

or purchase of goods and Service Tax is paid on services provided,

105

covered under the Finance Act. Other taxation services of Central

Excise and Customs are availed by 3 (1%) individual assessees.

Central Excise Duty is paid on manufacturing of goods and

Custom Duty is paid on import and export of goods. Only 1% of

the individual assessees avail these services.

b. Allied Services

Along with taxation services, assessees avail services like

book-keeping services, cost accounting services, internal audit,

management consultancy and financial consultancy services etc.

from tax consultants. For study purpose these services are grouped

under the heading ‘allied services’. Table No. 5.24 provides the

data in this regard.

Table No. 5.24

Allied Services Availed

No. of Individuals

Services Availed

services

(%) Not availed

services

(%)

Book-keeping 21 7% 279 93%

Cost Accountancy 3 1% 297 99%

Audit 14 4.67% 286 95.33%

Consultancy services 53 17.67% 247 82.33%


106

Figure No. 5.12

Allied Services Availed

The above table 5.24 and figure no. 5.12 depicts that only 21 i.e. 7

% individual assessees avail book-keeping services while 279 i.e. 93%

individual assessees are maintaining required books of accounts

themselves. Only 1% individual assessees avail cost accountancy

services. 286 i.e. 95.33% assessees get their accounts audited from

their tax consultants. 82.33 % assessees avail consultancy services too.

The audit and consultancy services are varied in nature. The following

data clears the picture in this regard.

� Audit

Audit is a systematic examination of books of accounts and records

carried on in order to ascertain whether the financial statements give

true and fair view of the financial position as at the year end and of the

financial results for that year. Tax audit is mandatory for the assessees

having business turnover in excess of Rs.40,00,000/- (for A.Y.2011-

12 Rs.60,00,000/- ) or gross receipts from profession in excess of Rs.

10,00,000/- (for A.Y. 2011-12 Rs.12,00,000/-). VAT audits are

107

mandatory in cases of sales in excess of Rs. 40,00,000/-. The

following table explains the different types of audits conducted by the

individual assessees.

Table No. 5.25

Auditing Services Availed


Cost Audit --- ---

Tax Audit 1 0.33

VAT Audit --- ---

Internal Audit 8 2.67

Financial Audit 2 0.67

Environmental Audit --- ---

Information System Audit 3 1

Total 14 4.67


The above table shows that out of 14 (4.67%) assessees availed audit

services, 8 (2.67%) assessees availed internal audit service, 3 (1%)

information system audit, 2 (0.67%) financial audit and 1 (0.33%) tax

audit services respectively from their tax consultant. Generally

manufacturing companies requires ‘cost audit’. None of the individual

assessees availed cost audit service.

� Consultancy Services

Individual assessees also avail the consultancy services from their

tax consultants. Such consultancy includes management accountancy,

project planning and financing, project improvement or turnaround

studies, arrangement for the sources of finance, etc. The following table

illustrates the different types of consultancy services availed by the

individual assessees.

108

Table No. 5.26

Consultancy Services Availed


Management Accountancy 4 1.33%



turnaround studies

5 1.67%

Arrangement for the sources of

finance

27 9%

Total 53 17.67%


The above table shows that out of total 53 assessees availing

consultancy services maximum 27 (9%) assessees availed financial

services, 17 (5.67%) project planning services, 5 (1.67%) project

improvement services and 4 (1.33%) management accountancy

services.

3.Behavior of Staff

General behavior of staff of the income-tax consultants is

polite with the clients. They are courteous and helpful to clients.

They avoid behave rudely with them. The details in this regard are

as follows:

109

Table No. 5.27

Behavior of staff


Polite 144 48%

Co-operative / Helpful 143 47.67%

Non-cooperative 10 3.33%

Irresponsible 2 0.67%

Rude 1 0.33%

Total 300 100%


From the table no. 5.27 it can be observed that 144 (48%)

individual assessees stated that behavior of the staff of the tax

consultants is polite, 143 (47.67%) individual assessees stated that

its co-operative while 10 (3.33%) individuals stated that staff of tax

consultants are non-cooperative. 2 (.67%) individual assessees

complained that they are irresponsible and 1 (0.33%) individual

assessee complained that they are rude.

4. Timely Notification of amendments, decisions of Supreme

court etc. by Income-Tax consultants

Every year budget proposals in the form of finance bill are

presented to Parliament for consideration and approval. When the

bill is passed by the Parliament and the President of India gives his

/ her consent, it becomes Finance Act of the Financial Year. The

respective provisions of Income-Tax Act are also change with

changes in the Finance Act of the year.

110

Some tax cases are also decided by the Supreme Court during

the financial year. The decisions given by the Supreme Court in tax

matters become a law.

All the amendments / changes made in tax laws as above are

important matters for assessees for tax planning. Therefore timely

supply of such information to assessees by the tax consultants is

necessary. The following table gives the details of supply of such

information:

Table No. 5.28

Intimation Relating to Amendments, Decisions of Supreme

Courts from Income-Tax Consultants


Intimated 272 90.67%

Not-intimated 28 9.33%

Total 300 100%


The table no. 5.28 shows that the 90.67% of assessees get

timely information as to the amendments, judgments etc. from their

tax consultants. Only 9.33% of assessees do not get such intimation

from their consultants.

5.B.I.iii. Tax Awareness:

In taxation matters tax awareness plays very important role.

Assessee has to make provision to minimize tax burden in time

(within the framework of law). At the same time assessee should

know tax compliance and procedural work because failure to

111

comply with the statutory provisions of the Act attracts some kind

of penalties.

1. Sources of Tax Information

The respective provisions of the Income-Tax Act, 1961 are

changed every year with the changes made in Finance Act.

Frequent changes are also made intermittently in the provisions of

Income-Tax Act due to decisions given by Supreme Court. These

changes have bearing upon assessees' tax liability and his / her

other obligations under the Act. Therefore it is important for

assessees to have up-to-date knowledge of all the changes made in

the Act.

Assessees may get such information through 3 different

sources, viz.

• Tax consultants

• Friends and relatives

• Media i.e. newspapers, magazines, television, internet etc.

It is possible that assessees may get the information through

more than one mode. Following table shows the position in this

regard.

Table No. 5.29

Modes of Tax Information


Tax Consultants 266 88.67

Friends and relatives 83 27.67

Media 238 79.33

112


The assessees generally use multiple sources for getting tax

information. They consult their tax consultants. Media also

provides such information through news, advertisement in

newspapers, articles in ‘taxation and commerce’ journals,

advertisement and discussions on television channels etc. The

friends, relatives also provide such information to each other. The

table no. 5.29 shows that maximum assessees 266 (88.67%) got the

information from tax consultants and also 238 (79.33%) from

media. Only 83 (27.67%) assessees got the information through

friends and relatives. Majority of them used multiple sources for

the purpose.

2. Awareness of Tax Provisions

For minimizing tax burden and taking benefit of the changing

provisions, clauses of Income-Tax Act, the assessee must be aware

about it. Generally the provisions regarding incomes exempted

from tax, clubbing of income, various deductions allowed from

income, tax rates, change in minimum taxable income etc.,

assessee must know for his benefit. Assessees’ awareness in this

regard can be seen from following table:

113

Table No. 5.30

Awareness of Tax Provisions

No. of Individuals Particulars

Knowing

Provisions

% not-knowing

Provisions

%

Awareness of changes in

Finance Act

275 91.67 25 8.33

Items exempt from tax 75 25 225 75

Computation of taxable

income

196 65.33 104 34.67

Clubbing of income 54 18 246 82

Deduction under chapter

VI-A

199 66.33 101 33.67

Charging procedure of

Income-Tax

232 77.33 68 22.67

Rates of taxation 235 78.33 65 21.67


According to data collected, table no. 5.30 shows that 275

(91.67%) individual assessees know that Income-Tax Act

undergoes changes every year with the changes in Finance Act.

Remaining 25 (8.33%) assessees are unaware of changes in

Finance Act and impact of it on their tax liability.

75 (25%) individual assessees know various items exempt from

tax under section 10. In this category some assessees are advocates

and some are professors of commerce faculty. 225 (75%)

individual assessees are ignorant about it.

114

Assessees have tendency to minimize their tax liability. If they

can reduce their tax liability, even by Re. 1/-, they try to minimize.

For that purpose they are interested in knowing the computation of

taxable income. They try to verify whether the tax consultants have

computed their taxable income properly or not. Above table no.

5.30 indicates that 196 (65.33%) individual assessees are aware of

computation of taxable income and 104(34.67%) assessees are

unaware.

Sections from 60 to 65 of the Income-Tax Act, 1961 are the

sections dealing with the provisions of clubbing of income of

another person with the income of assessee. If there is a case of

transfer of income of the property without the transfer of asset to

another person receiving the income, the income of transferee is

clubbed with the income of the transferor. Only 54 (18%)

individual assessees know these provisions of clubbing of income.

Other 246 (82%) assessees are unaware of these provisions. On the

contrary, they are under wrong impression and ask the question,"

Why should I pay tax on income of other person?" However under

the following cases clubbing of income provisions of the Act are

attracted:

i. Transfer of income where there is no transfer of asset

ii. Revocable transfer of asset

iii. Remuneration of spouse from a concern in which the other

spouse has substantial interest

iv. Income of asset transferred to the spouse

v. Income from asset transferred to son's wife

vi. Income of a minor child etc.

115

These are some examples where income of another person is to

be clubbed with the total income of assessees.

The aggregate of income computed under each head after giving

effect to the provisions of clubbing of income and set off of losses

is known as "gross total income". In computing the total income of

an assessee certain deductions from Gross Total Income are

permissible (under chapter VI-A) under sections 80 C to 80 U of

Income-Tax Act, 1961. The table no. 5.30 shows 199 (66.33%)

individual assessees know these deductions and 101 (33.67%) are

unaware of these provisions.

Without the authority of law, tax can not be levied and collected

in India. Section 4 of Income-Tax Act gives such authority to levy

and collect income-tax. It is a charging section. Where any Central

Act enacts that income-tax shall be charged for any assessment

year at any rate or rates, income-tax at that rate or those rates shall

be charged for that year, in accordance with and subject to the

provisions (including provisions for the levy of additional income-

tax) of this Act, in respect of the total income of the previous year

of every person. The base for levy of tax in any assessment is

normally the income of previous year. However, in some cases,

income-tax may be charged in respect of the income of a period

other than the previous year. Though the income of the previous

year is assessed in the relevant assessment year and tax is levied,

the tax is deducted at source or paid in advance wherever it is

deductible or payable.

As the table no. 5.30 shows that 232 (77.33%) individual

assessees are aware of charging of income-tax and other 68

(22.67%) assessees don't.

116

On total income, tax is calculated according to the rates

prescribed under the relevant Finance Act. Rates of income-tax are

different for female assessees and senior citizen. According to

above table, it is clear that 235 (78.33%) individual assessees know

these rates of income-tax and 65 (21.67%) assessees have no

knowledge of these rates of income-tax.

It is observed that some assessees try to know each and every

provision relating to calculation of their income and all the details

about calculations made by tax consultants, on the other hand some

assessees blindly signs the returns of income filled by the tax

consultants.

3. Discussion of Annual Budget

Annual Budget presented in the Parliament contains various tax

proposals. Some of the proposals may be relating to the individual

assessees. It is expected that the assessee should study these

proposals. It helps them in tax planning. Generally they alone are

unable to understand these provisions. In this matter tax

consultants guide them properly and explain provisions in detail, if

assessees discuss with them.

Table No. 5.31

Discussion of Annual Budget

Particulars No. of

Individuals

Percentage

Discussion with Tax consultants 90 30%

No discussion with tax consultants 210 70%

Total 300 100%


117

Above table no. 5.31 shows that 90(30%) individual

assessees discuss the annual budget provisions with the tax

consultants before hand. And 210 (70%) individuals don't hold

such discussions regarding provisions of annual budget with tax

consultant, but they explained that whenever they do so, their tax

consultants help them in understanding such provisions. But they

do not explain until assessees ask.

In personal interview it is observed that majority of

individuals (out of 70% who don’t hold discussions regarding

annual budget provisions) believe that it is very difficult task to

understand such provisions and so that they have entrusted this

work to their tax consultant.

5.B.I.iv Filing of Return of Income

As per the Income-Tax Act, 1961, an individual if his total

income or total income of any other person in respect of which he

is assessable under the Income-Tax Act, during the previous year

exceeds the maximum amount not liable to income-tax, have to

furnish a return of his income or the income of such other person. It

is mandatory. The details in this regard are as under:

1. First Return of Income:

Though the Income-Tax Act provisions compile the person

whose income is taxable to file his return of income, it is observed

that the first return of income is generally filed by assessees to

claim refund of Tax Deducted at Source (TDS), to carry forward

loss, to provide copy of return of income to the financial

institutions or banks etc. Very few individuals file return of income

118

voluntarily on their own accrual. Table no.5.31 shows the position

in this regard:

Table No. 5.32

First Return of Income


Regular provision 275 91.67

Refund claim 22 7.33

Voluntary 3 1.00


The table no. 5.32 shows that, 275 (91.67%) individual

assessees filed their first return of income for fulfillment of regular

provisions of Income-Tax Act, 1961. It means their income

exceeds the maximum limit of income which is not liable to tax or

they have losses to carry forward or they have to provide copy of

return of income to the financial institutions or banks etc. 22

(7.33%) individual assessees have filed their first return of income

for refund purpose. It means their amounts are deducted at sources

for tax but they are not liable to pay tax. So to get back these

amounts they have filed returns. 3 (1%) individual assessees have

filed returns voluntarily without any reason.

2. Preparation for Filing of Returns of Income

In case of individual assessees, the return of income must be

filed in a prescribed form or by specified computer readable media

and verified in the prescribed manner, on or before 31st July of the

assessment year. Each and every assessee starts preparation as to

119

completing of accounts, getting necessary certificates, collection of

documents to be attached to the returns etc. The preparation period

varies according to the assessee. Early preparation avoids many

difficulties and inconvenience at the point of filing up of returns.

The assessees studied shows following position in this regard.

Table No. 5.33

Preparation for Filing of Returns of Income


1 month before due date 241 80.33

1 week before due date 40 13.33

2-3 days before due date 14 4.67

After due date 5 1.67

Total 300 100


The table no. 5.33 table indicates that 241 (80.33%) individual

assessees are punctual in filing of returns of their income. They

start preparation 1 month before due date. They fulfill all tax

obligations, collect required documents and approach to their tax

consultants for further process. As they get sufficient time for

compliance the percentage of mistakes in returns of income filed

by them is lesser.

40 individuals do prepare for filing the return within 1 week just

before due date i.e. 31st July of the assessment year. This time

period is still sufficient for salaried individuals or individual

assessees requiring less documents to attach with return of income.

120

14 (i.e. 4.67%) individual assessees start preparatory work just

2-3 days before 31st July of the assessment year. As the period for

preparation is very short and the chances of mistakes in their

returns of income are more.

5 individual assessees wake up after 31st July. They are

penalized. However, as per sec.271F, the Assessing Officer may

waive the penalty on proving reasonable grounds for delay in filing

the return of income. Interest u/s 234A/B/C is however, mandatory

and can not be waived.

3. Time Lag for Filing of Returns after Documentation

Tax consultants demand required documents to file the return of

income of the assessee. When assessee provides such required

documents the tax consultants start preparing his return, for the

purpose some time lag is required to him. The minimum time lag in

filling the return is the sign of efficient service. The time lag taken

by the tax consultants after receiving documents in filling up

returns in the cases under study are:

Table No. 5.34

Time Lag for Filing of Returns after Documentation


Within 1 day 17 5.67

Within a week 208 69.33

Within a month 71 23.67

More than a month 4 1.33

Total 300 100


121

The table no.5.34 shows that after providing all the required

information and documents to tax consultants, in case of 17 (i.e.

5.67%) individuals, their tax consultants have filed returns of

income within one day. In case of 208 (69.33%) individuals, within

a week, in case of 71 (23.67%) individuals, within a month and in

case of 4(1.33%) individuals they required the time period of more

than one month.

4. Belated Returns of Income

Generally, 31st July of each assessment year is treated as last

date of filing of return of income for individual assessees under the

law. Returns filed after due date are called as ‘Belated Returns’.

The position in this regard is as follows:

Table No. 5.35

Belated Returns of Income


Filed return in time 295 98.33

Belated return 5 1.67


Table no. 5.35 depicts that out of total cases surveyed 295

(98.33%) individual assessees have filed return of income in time

i.e. on or before 31st July. Only 5 (1.67%) assessees are late in this

regard.

122

5. Penalization for Delay

According to sec.271F of Income Tax Act, if a person who is

required to furnish a return of his income, as required u/s 139(1)

or by the provisions to that sub-section, fails to furnish such

return of income before the end of the relevant assessment year,

the Assessing Officer may direct such person shall pay, by way

of penalty. 5 individuals have failed to file returns before due

date. Details of penalty levied to them are as under:

Table No. 5.36

Penalization for Delay


Fined for late submission 5 100

Not fined for late --- ---


Above table no. 5.36 indicates that 5 individuals who failed to

file return on or before due date are penalized. It means all the

individuals who are late in filing return of income are penalized.

6. Responsibility for Delay

For delay of filing return either assessees or tax consultants

remain responsible. On the part of assessee such delay arises due to

non-submission of documents in time, non- payment of advance

tax etc. while reasons arise on the part of tax consultants are work

pressure, omission etc. Some other reasons of offices remaining

closed on due date or other uncontrollable reasons arise.

123

Table No. 5.37

Responsibility for Delay


Assessee himself 2 40

Income-Tax consultant 2 40

Other reasons 1 20

Total 5 100


Figure No. 5.13

Responsibility for Delay

Out of 5 individual assessees who have filed belated returns of

income, 2 individuals considered themselves responsible for such

delay. 2 individuals (40%) hold tax consultants responsible for

such delay. Only 1(20%) individual assessee considered some

technical matters responsible for late filing of return of income.

124

7. Period of Filing Returns of Income

A survey is conducted as to how many years the assessees are

filing tax returns continuously year after year. The assessees

surveyed are of various age groups and they are filing return of

income from number of years. The position in this regard is:

Table No. 5.38

Continuity in Filing of Returns of Income


0-5 years 78 26%

5-10 years 69 23%

10-15 years 66 22%

15-20 years 48 16%

more than 20 years 39 13%


The above table no. 5.38 shows that out of total cases studied

78(26%) assessees started filing their returns of income since 5

years, while 69 (23%) assessees are filing since 10 years, 66 (22%)

assessees are filing the returns since 15 years, while 48(16%)

assessees are filing the return since 20 years. Only 39(13%)

individual assessees are filing the returns of income since more

than 20 years.

From table no. 5.38, it is also observed that the number of

individual assessees are increasing consistently.

125

5.B.I.v. Change of Income-Tax Consultant

1. Change of Income-Tax Consultant

Generally amount of income earned by one is very personal

thing for him. So assessees try to keep their earnings confidential.

For the same they select their tax consultant very carefully and

hardly change tax consultant. But due to some reasons assessees

may change their tax consultants. Following table no. 5.39 gives

information in this regard.

Table No. 5.39

Change of Income-Tax Consultant

Particulars No of Individuals Percentage (%)

Changed tax consultant 10 3.33%

Not changed tax consultant 290 96.67%

Total 300 100%


Above table shows that only 10 i.e. 3.33% assessees have

changed their tax consultant.

2. Reasons for Changing Tax Consultant

As discussed above, assessees are very particular about their tax

consultant. But due to some reasons it happens that they have to

change their tax consultants. These reasons and the details are

discussed as under.

126

Table No. 5.40

Reasons for Changing Tax Consultant


Change in office place of tax

consultant

3 30%

Change in office place of assessees 2 20%

High charges 2 20%

Dissatisfaction 1 10%

Death of tax consultant 1 10%

Conflicts with consultant 1 10%

Any other reason --- ---


Out of 10 assessees who changed their tax consultant, 3

assessees have changed their tax consultant due to change in office

place of tax consultant and 2 assessees have changed due to change

in their own office place. It is observed that in the situation when

really it is very difficult to go to tax consultants’ office, then only

assessees tend to change their tax consultant. 2 assessees have

given the reason for change in their tax consultants as high fees

charged by them. One assessee has changed his tax consultant due

to dissatisfaction. Due to death of tax consultant one assessee has

to change his tax consultant. And one assessee has to change his

tax consultant due to conflict between him. The reason for conflict

is not disclosed.

127

3. Period of Filing Returns of Income with Serving Tax

Consultant

A survey is conducted as to how many years the assessee is

availing the services continuously from the same tax consultant.

The data is as follows:

Table No. 5.41

Continuous Availing the Services from the Same Tax Consultant


0-5 years 83 27.67%

5-10 years 71 23.67%

10-15 years 65 21.67%

15-20 years 46 15.33%

more than 20 years 35 11.66%


Figure 5.14

Continuous Availing the Services from the Same Tax Consultant

128

Table 5.41 and figure no. 5.14 shows that 83 (27.67%)

individual assessees have filing returns of income from same tax

consultants since 5 years. 71 (23.67%) individual assessees are

filing returns of income with same tax consultants since last 10

years while 65 individuals since 15 years. 46 individuals have

filing the returns of income with the same tax consultant since 20

years and 35 individuals since more than 20 years.

5.B.I.vi. Scrutiny of Returns of Income by Income-Tax Department

If the low income than reasonable income is shown in the

return of income by assessee or to confirm the genuineness of

source of huge investments made in the business by assessee,

Income-Tax Department may call that assessee for scrutiny. With

this Department randomly selects some cases for scrutiny. The

details in this regard are as under:

Table No. 5.42

Scrutiny

Particulars No of Individuals Percentage (%)

Scrutinized --- ---

Not Scrutinized 300 100 %

Total 300 100 %


129

As per norms laid down by the Income-Tax Department for

selection of scrutiny cases, no single case out of 300 individual

assessees examined is selected for scrutiny.

5.B.I.vii. Fees Charged

Tax consultant renders services to the clients. He computes his

taxable income and quantifies the amount of tax payable by him.

The expectations of the clients from the tax consultants are also

reasonable. They expect that the tax consultant should render

services on time to avoid last minute services, the paper work done

by him should be accurate. On the ground of this they decide the

reasonability of the fees charged by the tax consultant.

Factual data collected through questionnaire reveals the picture

as under:

Table No. 5.43

Fees Charged


Reasonable 287 95.67%

Higher 7 2.30%

Lower 6 2.00%

Total 300 100%


Above table no. 5.43 indicates the impression of assessees

regarding fees charged by income-tax consultants. 287 (95.67%)

individual assessees feel that the fees charged by income-tax

130

consultants are reasonable. But 7 (2.30%) individuals are

complaining that fees are higher. Contrary 6 individuals i.e. 2%

individuals are saying such fees are lower. Obviously they have no

problems. But problem may arise to them who are saying that these

fees are higher. In personal discussion, it is another point comes

ahead that such assessees are not ready to change their consultant

though they have complaint regarding fees charged by them.

5.B.I.viii. Satisfaction of Individual Assessees

A survey is conducted as to measure the satisfaction level of

the assessee about the services rendered by tax consultant to him.

The picture in this regard is as follows:

Table No. 5.44

Satisfaction of Individual Assessees


Fully satisfied 251 83.67%

Partly satisfied 48 16.00%

Not satisfied 1 0.33%

Total 300 100%


131

Figure 5.15

Satisfaction of Individual Assessees

251 (83.67%) individuals are fully satisfied with the services

provided by their tax consultants. 48 (16%) individuals are partly

satisfied and 1(0.33%) is not satisfied with the service provided by his tax

consultant.

5.B.II. PARTNERSHIP FIRM ASSESSEES

5.B.II.i. Introduction:

Partnership is a relation between persons who have agreed to share

the profits of the business carried on by all or any of them acting for all.

This is one of the important forms used in India for carrying on business

activities.

This is a separate entity assessed under Income-Tax Act, 1961.

Separate deductions, exemptions are allowed while computing the taxable

income of the firm. The income of the firm even if it is of Re. 1/-, is taxed

at the flat rate of 30%.

For the registration of the firm under the Income-Tax Act, 1961, a

copy of Partnership-Deed evidencing the number of partners, profit

sharing ratio etc. are required to be submitted to the Income-Tax Office

having jurisdiction over the case. In case there is change in number of

132

partners or in the profit sharing ratio the same are required to inform to

the Income-Tax Office by filing the amended copy of Partnership-Deed.

5.B.II.ii. Registration and Sources of Income

1. Registration of Firms

Indian Partnership Act, 1932 provides registration facilities to the

firm. Partners register their partnership under the Act to take the

benefits of recognition of separate entity thereby they can sue the

partners or third parties and can act as an artificial person in all its

economic activities. The position in this regard is as follows:

Table No. 5.45

Registration of Firms

Particulars No. of firms Percentage (%)

Registered 50 100%

Un-registered --- ---

Total 50 100%


Table No. 5.45 shows that all the firms surveyed are registered

under the Indian Partnership Act, 1932 and are getting full benefits of

registration. Unregistered firms cannot sue the partners or third parties

against any mischief but others can do so against firm. The consequences

of non-registration of firm are separately mentioned in the Partnership

Act, 1932. No partnership firm can bear such type of risk.

2. Liability to ‘Tax Audit’

Though all the partnership firms are assessed under the Income-

Tax Act and have to pay income-tax accordingly, some of them have to

carry out their tax audit for deciding their tax liability.

133

Under section 44AB of Income-Tax Act, 1961 the partnership

firms having business turnover in excess of Rs.40,00,000/- (for

A.Y.2011-12 Rs.60,00,000/- ) or gross receipts from profession in

excess of Rs. 10,00,000/- ( for A.Y. 2011-12 Rs.12,00,000/-) are

liable for compulsory tax audit. The remaining partnership firms are

not liable for tax audit. The position of the partnership firms surveyed

in this regard is as follows:

Table No. 5.46

Liability to Tax Audit


Liable to Tax Audit 22 44%

Not liable to Tax Audit 28 56%

Total 50 100%


Figure No. 5.16

Liability to Tax Audit

134

The above table and figure shows that 22 (44%) partnership

firms are liable for tax audit u/s 44AB as their yearly business

turnover is more than Rs. 40,00,000/- and 28 partnership firm

assessees, whose minimurnover is below Rs. 40,00,000/- are not liable

for tax audit u/s. 44AB of Income Tax Act, 1961.

3. Sources of Income:

As a business entity, the partnership firms earn profit by carrying

on their business activities as well as profit on sale / purchase of their

assets or renting their assets. Under Income-Tax Act, 1961 the taxable

total income of the partnership firm is computed and assessed under

four heads, viz.


• Capital gains



Following table shows the different sources of income and under

which the partnership firms surveyed are charged to income-tax.

Table No. 5.47

Sources of Income

Particulars No. of Firms Percentage (%)

Income from house

property

--- ---

Profits and gains from

business or profession

50 100%

Capital gain 6 12%

Income from other

sources

8 16%


135

Table No.5.47 shows that, all the 50 (100%) Partnership Firm

assessees are having the business income as main source of income. 6

(12%) partnership firms have source of income by way of capital gains

besides the business income and 8 (16%) partnership firms have source of

income by way of income from other sources apart from business income.

None of the firm showed income from house property as its source of

income.

4. Net Profit Range

A study is carried to see as to what is the range of the net profit

earned by the partnership firm in the year of study. The position in this

regard is as follows:

Table No. 5.48

Net Profit Range

Net Profit Range No. of Firms Percentage (%)

Less than Rs. 10,00,000/- 28 56%

Rs. 10,00,000/- to 50,00,000/- 21 42%

More than Rs. 50,00,000/- 1 2%


136

Figure No. 5.17

Net Profit Range

Table no. 5.48 shows that 28 (i.e. 56%) Partnership firm assessees

examined fall under the first income group i.e. who earns net profit

less than Rs.10,00,000/-. 21 (i.e. 42%) Partnership firm assessees are

earning net profit more than Rs. 10,00,000/- but below Rs. 50,00,000/-

and remaining one Partnership firm earns net profit more than Rs.

50,00,000/- .This means that maximum partnership firms (98%) are

earning on an average yearly below Rs. 50,00,000/- as their net profit.

5. Book Profit Range

In case of charging of income-tax not the net profit range but book

profit range is considered. The income-tax is only charged on book

profit of the partnership firm. Book profit includes only income under

the head ‘Profits or gains from business or profession’. It is calculated

by adjusting net profit as increasing by the salary / remuneration paid

to the partners and interest on capital paid to them etc. and deducting

income chargeable to tax under the heads ‘income from house

property’, ‘capital gains’ and ‘income from other sources’ etc., if

137

credited to ‘profit and loss account’. The data in this respect is as

follows:

Table No.5.49

Book Profit Range

Book Profit Range No. of Firms Percentage (%)

Less than Rs. 10,00,000/- 26 52%

Rs. 10,00,000/- to 50,00,000/- 23 46%

More than Rs. 50,00,000/- 1 2%


From the survey, it is noticed that 26 (52%) partnership firms are in

book profit range of below Rs.10,00,000/-, 23(46%) are in range of

Rs.10,00,000/- to Rs. 50,00,000/- and only one firm is in the range of

more than Rs. 50,00,000/-.

It means firms in the studied area are of small size and earn taxable

profit less than Rs. 50,00,000/-.

5.B.II.iii. Qualification and Services Availed From Tax

Consultants

1. Qualification of Tax Consultants

Choice of tax consultant is of much important in case of

partnership firms as they not only require income-tax services but also

many other services such as financial planning and management,

project planning and management, audit, consultancy services etc.

from their tax consultant. As such they prefer those tax consultants,

who provide all the services under one shelter.

The income-tax consultancy services are provided by the firms of

chartered accountants, advocates, commerce and taxation graduates

138

and by certified auditors such as G.D.C. & A. qualified persons. A

survey is carried out as to choice of their tax consultants and their

qualification. The position in this regard is as follows:

Table No. 5.50

Qualification of Tax Consultants

Qualification of Tax Consultants No. of Firms Percentage (%)


G.D.C.&A. 2 4%

D.I.T.&S.T. 6 12%

LLB 7 14%

B.Com., M.Com 3 6%

Total 50 100%


Figure 5.18

Qualification of Tax Consultants

139

Table No. 5.50 shows that 32 (64%) partnership firm assessees

have chosen their tax consultant having qualification of Chartered

Accountant, 2 (4%) partnership firms have selected persons having

G.D.C&A. qualification as their tax consultants, 6 (12%) partnership

firm assessees have preferred tax consultants having the degree of

D.I.T. & S.T., 7(14%) partnership firm assessees have selected law

graduates as their tax consultants and remaining 3 (i.e. 6%)

partnership firm assessees have selected B. Com., M. Com., degree-

holders as their tax consultants. Majority of the partnership firms opt

for Chartered Accountants’ firm because such firms provide with

usual tax services, accounting and auditing and allied services under

one roof on specified basis.

The audit u/s 44AB of Income-Tax Act, 1961 is required to be

done by chartered accountants and therefore the partnership firms

liable to get accounts audited u/s 44AB have selected chartered

accountants as their tax consultants.

2. Services Availed

In the study area, generally the business activities like

manufacturing on small scale, wholesale trade, any other medium size

business etc. is carried out by organizing partnership firms. Such

partnership firms cannot afford to appoint specialized staff for various

services such as legal matters, accounting, auditing, taxation,

management consultancy etc. as such they avail such services from

specialized professional firms by paying certain fees as professional

charges to them. Again these partnership firms have to fulfill their

taxation obligations under various State-Central Acts. For the purpose

they take tax consultancy and other services from such professionals.

The services availed by the partnership firms are of two types:

140


Those services which are concerned with various types of taxes

imposed by central or state government under various taxation Acts

are known as taxation services. These taxes mainly include Income-

Tax, Value Added Tax, Service tax, Central excise, Custom duty, etc.

The following table shows the taxation services availed by the

partnership firm assessees from their tax consultants.

Table No. 5.51

Taxation Services

Particulars No. of Firms Percentage (%)

Income-Tax 50 100%

Value added Tax 22 44%

Service Tax 6 12%

Central Excise 4 8%

Custom Duty --- ---


Tax Compliances &

procedural work

50 100%


The above table no. 5.51 shows that all partnership firm assessees

avail the services of income-tax issues, tax planning and tax

compliances and procedural work from income-tax consultants. Tax

planning is the service which tries to ensure that the tax liability is

minimum. The compliances and procedural work aims at making sure

that all necessary forms and payments are appropriately submitted.

Apart from the core areas of income-tax consultancy services, 22 (44

%) and 6 (12 %) of the partnership firm assessees avail the Value

141

Added Tax consultancy and Service Tax consultancy services

respectively. VAT is paid on inter-state sale or purchase of goods and

‘Service Tax’ is paid on services provided covered under the Finance

Act. Central Excise Duty is paid on manufacturing of goods and

Custom Duty is paid on import and export of goods. Central Excise

service is availed by 4 partnership firm assessees.

b. Allied Services:

Many partnership firms that engaged in trading, manufacturing on

small scale or medium scale do not afford to employ expert staff for

the non-tax services such as book-keeping, costing, audit and many

managerial services. As such for these services they depend upon their

tax consultants. The tax consultants with their taxation services,

provides such non-tax services too. The main non-tax services

provided by tax consultants are as under:

• Book-keeping and Cost Accounting Services

Book-keeping is an art of recording the business transactions.

Some partnership firm assessees who are ignorant of book-keeping or

who don't want to take any risk of any tax matter, leave their

responsibility of book-keeping to tax consultants. Most of the income-

tax consultants provide such book keeping services to their clients.

Cost accounting relates to the collection, classification,

ascertainment of cost and its accounting and control relating to the

various elements of cost. The following table shows the details of the

book keeping services and cost accounting services availed by the

partnership firm assessees:

142

Table No. 5.52

Book-keeping and Cost Accounting Services

Book-keeping Cost Accounting Particulars

No. of Firms (%) No. of Firms (%)

Availing Services 5 10% --- ---

Non-availing

services

45 90% 50 100%

Total 50 100% 50 100%


Generally all the medium and large size partnership firms appoint

staff for maintaining financial account. Only few small size firms do

not maintain their own staff for the purpose.

The above table no. 5.52 shows that the only 5 (i.e. 10%) of the

partnership firm assessees avail the services of book keeping and 45

(i.e. 90%) partnership firm assessees are maintaining required books

of accounts themselves. In case of cost accounting records they are

mandatory only in the case of certain type of manufacturing business.

But none of the firm under survey is maintained cost accounting

record and availed these services from their tax consultants.

• Audit Services

Audit is a systematic examination of books of accounts and

records, in order to ascertain whether the financial statements give

true and fair view of the financial position as at the year end and of

the financial results for that year. VAT audits and service tax audit

are mandatory in cases of sales in excess of Rs. 40,00,000/-. Tax

audit is mandatory for the assessees having business turnover in

143

excess of Rs.60,00,000/- or gross receipts from profession in excess

of Rs. 12,00,000/-. The following table shows various types of audit

services availed by the firms.

Table No. 5.53

Audit Services

Services availing Services not availing Particulars

No. of

Firms

(%) No. of

Firms

(%)

Cost Audit --- --- 50 100%

Tax Audit 22 44% 28 56%

VAT Audit 22 44% 28 56%

Internal Audit --- --- 50 100%

Financial Audit --- --- 50 100%

Environmental Audit --- --- 50 100%

Information System Audit --- --- 50 100%


The above table no. 5.53 shows that approximately 44%

partnership firm assessees avail the services of Tax audit and VAT

Audit. As other types of audits are not mandatory none of the firm

have availed other audit services or carried on the audit on their

accord.

• Management and Consultancy Services

Partnership firm assessees also avail the consultancy services from

their tax consultants. Such consultancy includes management

accountancy, project planning and financing, project improvement or

turn around studies, arrangement for the sources of finance, etc. The

144

following table illustrates the different types of consultancy services

availed by the partnership firm assessees.

Table No. 5.54

Management and Consultancy Services

Particulars No. of firms Percentage

Management Accountancy 2 4%

Project Planning & Finance 9 18%

Project improvement or turnaround

studies

1 2%

Arrangement for the sources of finance 13 26%


The above table no. 5.54 shows that 2(4%) partnership firm

assessees avail the services of Management Accountancy, 9(18%)

partnership firms avail the services of project planning, 13(26%)

partnership firms avail the services of arrangement for the sources of

finance. Only one partnership firm in the selected area avails the

project improvement service.

3.Timely Notification of Amendments, Decisions of Supreme Court

etc. by Income-Tax Consultants

The respective provisions of Income-Tax Act, 1961are changed as

per provisions of the Finance Act of the year. Even the income

provisions of the Income-Tax Act are amended by Amendments Act

and Ordinance. Some tax cases are decided by High Courts and

Supreme Court. The decision given by Supreme Court in such cases,

becomes the law.

145


important matters for assessees for tax planning. Therefore timely

supply of such information to assessees by the tax consultants become

necessary. The following table no. 5.55 gives the details of supply of

such information.

Table No. 5.55

Intimation of the Amendments, Decisions of Supreme Court etc. by

Income-Tax Consultants


Timely informed 45 90%

Not informed 5 10%

Total 50 100%


The above table no. 5.55 shows that the approximately 90% of the

partnership firm assessees are informed by their income-tax

consultants regarding amendments, judgments, etc. Only 10% of the

partnership firms are not intimated such changes by their tax

consultants.

The informal discussion with the partnership firm assessees

revealed that many times such information is not received from the tax

consultant as it is not possible to them to intimate all the assessees

regarding the amendments, judgments etc. due to time and technical

support system and non-availability of trained staff with them.

4. Receipt of Compliance Reminders from Income-Tax

Consultants

146

Generally partnership firm assessees receive reminders regarding

compliance of tax matters from time to time from their tax consultants.

Such reminders make aware about it. Timely reminding saves delay in

compliance as well as financial penalty fined by it. The following

table shows the performance in this regard:

Table No. 5.56

Compliance reminders by Income-Tax consultants


Reminded 45 90%

Not Reminded 5 10%

Total 50 100%


The above table no. 5.56 shows that the approximately 90% of the

partnership firm assessees receive reminders regarding tax compliance

from their tax consultants which make to comply all the necessities in

time and save from penalization. Only 10% of the partnership firm

assessees do not receive such reminder.

5. Behavior of Staff

General behavior of staff of the income-tax consultants is polite

with the clients. They are courteous and helpful to clients. They avoid

behave rudely with them. The details in this regard are as follows:

147

Table No. 5.57

Behavior of Staff


Polite 24 48

Co-operative, Helpful 19 38

Non-cooperative 2 4

Irresponsible 3 6

Rude 2 4

Total 50 100


From the table no. 5.57 it can be observed that 24 (48%)

partnership firm assessees stated that behavior of the staff of the tax

consultants is polite, 19 (38%) partnership firm assessees stated that its

co-operative while 2 (4%) partnership firms stated that staff of tax

consultants are non-cooperative. 3 (6%) partnership firm assessees

complained that they are irresponsible and 2 (4%) individual assessees

complained as they are rude.

5.B.II.iv. Tax Awareness

4. Modes of Tax Information

Tax rates and obligations of the partnership firms regarding

taxation change from time to time according to financial budget as

well as changes in Income-Tax Act in each year. Partnership firms

always require information about it. Each and every tax-payer tries

to collect information in this regard. A survey is conducted from

which they got information of such kind. The main sources which

are available to the partnership firms for the purpose are: getting

148

such information from tax consultants, publications in journals,

advertisements and business friends etc. The data in this regard is

as under:

Table No. 5.58


Sources of information No. of firms Percentage

Tax Consultants 45 90%

Friends and relatives 5 10%

Media 47 94%


Figure 5.19


This table no. 5.58 and the graphical representation show the

number of assessees getting tax information through these three

modes. 45 (i.e.90 %) of partnership firm assessees get the

information of taxation through tax consultants, 5 (10%)

partnership firm assessees get information through friends and

149

relatives and 47 (94%) of partnership firm assessees get the

information through media. The data in the above table makes it

clear that tax consultants and media plays a vital role in providing

information on tax matters to the partnership firm assessees.


The assessee should have up to date knowledge of applicable

tax provisions. They should be aware of such provisions which

affect their tax liability. It helps them in tax planning and early

compliance. The following table shows the awareness of

partnership firm assessees in this regard:

Table No. 5.59


No. of Partnership Firms Particulars

Knowing % Not

Knowing

%

Awareness of changes

in Finance Act

46 92% 4 8%

Items exempt from tax

u/s 10

9 18% 41 82%

Computation of taxable

income

23 46% 27 54%

Deduction under

chapter VI-A

45 90% 5 10%

Rates of taxation 31 62% 19 38%


According to data collected, above table no. 5.59 shows that 46

(92%) partnership firm assessees know that Income-Tax Act

150

undergoes changes every year with the changes in Finance Act.

Remaining 4 (8%) assessees are unaware of changes in Finance

Act and impact of it on their tax liability.

9 (18%) partnership firm assessees know various items exempt

from tax under section 10 while 41 (82%) partnership firm

assessees are unaware of such items.

23 (46%) partnership firm assessees are aware of computation

of taxable income and 27(54%) assessees are unaware about it.


effect to the provisions of clubbing of income and set off of losses

is known as ‘gross total income’. In computing the total income of

an assessee certain deductions from gross total income are

permissible under sections 80 C to 80 U of Income-Tax Act, 1961.

Table No. 5.59 shows that 45 (90%) partnership firm assessees

know these deductions and 5 (10%) are unaware of these

provisions.

On total income, tax is calculated according to the rates

prescribed under the relevant Finance Act. According to above

table, it is clear that 31 (62%) partnership firm assessees know

these rates of income-tax and 19 (38%) assessees have no

knowledge of these rates of income-tax.

In informal discussion it is observed that assessees provide all

required documents to tax consultants and get relaxed. They don’t

try to get knowledge about income-tax and its provisions in the

Act.

151


Annual Budget presented in the Parliament contains various tax

proposals. Some of the proposals may be relating to the partnership

firm assessees. It is expected that the partners of the firm should

study these proposals and plan to minimize the tax burden.

Table No. 5.60



Discussion with Tax consultants 5 10%

No discussion with tax consultants 45 90%

Total 50 100%


Above table no. 5.60 shows that 5(10%) partnership firm

assessees discuss the annual budget provisions with the tax

consultants before hand. And 45 (90%) partnership firms don't hold

such discussions.

But in personal interviews with the assessees majority of (45

i.e. 90%) representative partners of the partnership firms revealed

that they don't hold discussions regarding provisions of annual

budget with tax consultant, but they explained that whenever they

do so, their tax consultants help them in understanding such

provisions. It is further added that tax consultants do not explain

tax provisions until they ask.

152

5.B.II.v. Filing Returns of Income

1. First Filing Returns of Income

When and why the firm came under taxation bracket firstly

is of much importance in case of assessee himself. The first return

of income of the firm can be filed to claim the loss and to claim the

refund of tax deducted at source. It is also filed when the firm has

taxable income. Once the person becomes assessee and files the

return of income, he has to file return of income every year

regularly. The table below shows the position in this regard.

Table No. 5.61

Filing Returns of Income

Reasons No. of firms Percentage (%)

Due to taxable income 40 80%

Refund claim 7 17%

Voluntary 3 6%

Notice from Income-

Tax Department

--- ---

Total 50 100%


According to this table, 40 (80%) partnership firm assessees

fall under first category. They have filed their first return of income

to comply with the provisions of section 139 of Income Tax Act. In

case, where the tax has been deducted at source from the income of

a person not liable to pay tax, such assessee is required to file a

claim of refund. Such claim must be submitted in Form No.30

153

along with his return of income. 7 (17%) partnership firm assessees

have filed their 1st return of income for this purpose.

Irrespective of the first two cases the returns are also filed by

the assessee for the proposal of bank loan or any other such

requirement. 3 (6%) partnership firm assessees have filed returns of

income voluntarily for the purpose. None of the firm has received

the notice for filing of tax returns from Income-Tax Department.

2. Preparation for Filing of Returns of Income

In case of partnership firm assessees, the return of income

must be filed in a prescribed form (Form No. 5) or specified

computer readable media and verified in the prescribed manner, on

or before 31st July of the assessment year. After consulting

taxation matters with tax consultants, the assessees supplies the

required documents to tax consultants. Timely submission of such

documents to the tax consultants is the necessity in avoidance of

the delay in filing the return of income. The position in this regard

is as follows.

Table No. 5.62

Preparation for Filing of Returns of Income


1 month before due date 42 84%

1 week before due date 5 10%

2-3 days before due date 3 6%

After due date --- ---

Total 50 100%


154

Table no. 5.62 indicates that 42 (84%) partnership firm

assessees out of total 50 partnership firm assessees are punctual in

filing of returns of income. They start preparation 1 month before

due date. They fulfill all tax obligations, collect required

documents and approach to their tax consultants for further

process. It means 84% partnership firms take due care in filing the

returns of income before due date. They start preparatory work one

month before due date. As they get sufficient time for compliance

the percentage of mistakes in returns of income filed by them is

lower.

5 (10%) partnership firms out of 50(10%) partnership firms

examined, do prepare for filing the return within 1 week just before

due date i.e. 31st July of the assessment year. This time period is

still sufficient for partnership firms requiring fewer documents.

3 (i.e. 6%) partnership firm assessees start preparatory work

just 2-3 days before 31st July of the assessment year. As the period

for preparation is very short and therefore the chances of mistakes

in their returns of income are more.

Though the period for preparatory work varies from assessee

to assessee, it is found that all the partnership firms examined have

filed their returns of income before due date.

3. Time Lag for Filing Returns after Documentation

After receipt of documents from the assessees the tax

consultants prepare the income-tax returns in due form and files it

with the Income-Tax Office. The performance of tax consultants in

this regard is as under.

155

Table No. 5.63

Time Lag for Filing Returns after Documentation


Within 1 day 3 6%

Within a week 31 62%

Within a month 16 32%

More than a month --- ---

Total 50 100%


After submission of all the required information and

documents to tax consultants, in case of 3 (i.e. 6%) partnership

firms, tax consultants have filed the returns of income within one

day, In case of 31 (62%) partnership firms, within a week, in case

of 16 (32%) partnership firms, within a month. No tax consultant is

found requiring period of more than one month for submission.

4. Penalty Levied (for late filing of returns)

The assessee may be penalized under Income-Tax Act for

many reasons. One of the major reasons for such penalty is late

filing of returns. Other main reasons for the penalty are:

i) Non-Payment or Short-Payment of Self-assessment tax {u/s

221(1)}

ii) Non-maintenance of required record {u/s 271(A)}

iii) Failure to deduct tax at source and pay tax collected at source

{u/s 272 A (2)}

156

iv) Failure to furnish a return of income u/s 139 (1) before the end of

the relevant Assessment Year {u/s 271 (F)}

v) Failure in making the payment of tax, interest or demand {u/s

221(i)}

vi) Failure to quote P.A.N. and T.A.N.in any document {u/s 272 B

(2)}

To save from the levy of penalty, assessees have to file their

return of income before due date and comply all the provisions of

Income-Tax Act. Table below shows the position in this regard.

Table No. 5.64

Penalty Levied (for late filing of returns)

Late filing of returns Other reasons Particulars

No. of firms % No. of firms %

Penalized --- --- 1 2%

Not penalized 50 100% 49 98%

Total 50 100% 50 100%


Table no. 5.64 shows that out of 50 partnership firms in the

selected area randomly selected for the study, no single firm is

found which faced the penalty for late filing of return of income

while only one (2%) assessee has penalized short payment of self

assessment tax.

157

5.B.II.vi. Change of Income-Tax consultant

1. Regularity in Filing Returns of Income

A survey is conducted as to from how many years they are

filing the income-tax returns regularly. The position in this regard

is as under:

Table No. 5.65

Regularity in Filing Returns of Income


0-5 years 15 30%

5-10 years 9 18%

10-15 years 5 10%

15-20 years 8 16%

more than 20 years 13 26%

Total 50 100%


The above table no. 5.65 shows that 15(30%) partnership

firm assessees are filing the returns of income since 5 years, while

9 (18%) partnership firm assessees are filing it since 10 years, 5

(10%) partnership firm assessees are filing return of income since

15 years and 8 (16%) partnership firm assessees since 20 years. 13

(26%) partnership firm assessees are filing the returns of income

since more than 20 years.

158

2. Change of Income-Tax Consultant

The tax consultant can be changed by the assessee because

of variety of reasons including inconvenience, fees charged by tax

consultant, death of tax consultant etc. In case of the surveyed

cases only 4 partnership firm assessees are found, who have

changed their tax consultant for the following reasons.

Table No. 5.66

Reasons for Change of Income-Tax Consultant


Change in office place of tax

consultant

1 10%

Change in office place of

assessees

1 10%

High charges 1 10%

Dissatisfaction --- ---

Death of tax consultant 1 10%

Conflicts with consultant --- ---



Total 50 partnership firm assessees are examined, out of

them 4 (8%) partnership firms have changed their tax consultants

(only once). Out of 4, 1 partnership firm assessee has changed the

tax consultant due to inconvenience due to change in office place

of tax consultant, 1 partnership firm assessee has changed the tax

consultant due to change in place of its own office, 1 partnership

firm assessee has changed tax consultant due to the death of the tax

159

consultant and 1 partnership firm has changed the tax consultant

because of higher fees/charges.

5.B.II.vii. Misplacement of Documents by Tax Consultants

The documents submitted to the tax consultant may be

misplaced in his office. The misplacement of the documents can

create problems for the assessee and equally to the tax consultant.

In case of the survey taken in this regard no single case of tax

consultant found in which there is misplacement of documents

submitted to him / her.

5.B.II.viii. Non-disclosure of Secret Information

It is expected that the professional must observe ethical

standards of not disclose the secret information of the assessee to

others, may be his friend, relative or foe. Observation of such

standard enhances the client confidence in him. The survey is taken

as to what is the confidence level in this regard of the assessees.

The data in this respect is as follows:

Table No.5.67

Non-disclosure of Secret Information


Disclosure of information by

tax consultants

--- ---

Non-disclosure of information

by tax consultants

50 100%

Total 50 100%


160

In personal interviews with partners of partnership firms in

selected area, it is confirmed that no single tax consultant has

discussed the financial matters of assessees with others. Tax

consultancy profession survives on the trust of assessees. Therefore

tax consultants strictly follow their professional ethics.

5.B.II.ix. Sincerity & Integrity of the Tax Consultant

Sincerity & integrity of the tax consultant creates the confidence

in the mind of assessee. This is one of the reasons of having long

term association of assessee with the tax consultant. The survey is

conducted in this regard and it is noticed that all the assessees have

full faith in the sincerity and integrity of their tax consultants. They

are cock-sure that all their tax matters are timely handled by their

tax consultants.

5.B.II.x. Scrutiny of the Returns by Income-Tax Department

Income-Tax Department selects regularly some returns as per

the norms fixed by them for scrutiny. The norms for the selection

of cases for scrutiny are as under -

i) Non-disclosure of bank interest income.

ii) showing income below 5% of trade receipts.

iii) If the assessee is a contractor and has shown his income below 8%

of his contract receipts.

In such cases, partnership firms are selected for scrutiny.

They are selected randomly under (CASS) Computer Assisted

Scrutiny System. Details in this regard are shown in table no. 5.68:

161

Table No. 5.68

Selection for Scrutiny


Scrutinized 1 2%

Non-scrutinized 49 98%

Total 50 100%


In the surveyed cases only one partnership firm assessee

faced scrutiny process. In personal interview with the partners of

the partnership firm of which is selected for scrutiny, it is revealed

that the tax consultant appeared and attended the hearings of the

case and successfully handled the matter.

5.B.II.xi. Fees charged

Tax consultant renders services to the clients. He computes

the taxable income and quantifies the amount of tax payable by the

firm. The expectations of the clients from the tax consultants are

also reasonable. They expect that the tax consultant should render

services in time to avoid last minute service and the paper work

done by him should be accurate. The client expects without any

reasonable basis that the tax liability should be minimum and fees

charged by him for the services rendered should also be minimum

as per his terms.

The factual data collected in this regard is as under.

162

Table No. 5.69

Fees Charged

Fees charged No. of Firms Percentage (%)

Reasonable 40 80%

Higher 3 6%

Lower 2 4%

Total 50 100%


In a discussion with the assessees, it is noticed that 40 (80%)

of the partnership firm assessees are satisfied with the fees charged

by the tax consultants while only 3 (6%) partnership firms presume

the fees are higher as compare to others. 2 (4%) disclosed that the

fees charged are lower than the others.

5.B.II.xii. Satisfaction of the Firm Assessees

Satisfaction of the clients should be the guiding principle of

the tax consultant and he should give satisfactory services to

clients.

Table No. 5.70

Satisfaction of the Firm Assessees

Satisfaction level No. of firms Percentage (%)

Fully satisfied 40 80%

Partly satisfied 8 16%

Not satisfied 2 4%

Total 50 100%


163

Table no. 5.70 shows that out of partnership firm assessees

examined, 40 (80%) are fully satisfied with the services rendered

by their tax consultants while 8 (16%) partnership firms are partly

satisfied. Only 2 (4%) partnership firms disclosed dissatisfaction in

this regard.

164

5.B.III. COMPANY ASSESSEES

5.B.III.i. Introduction

The Companies Act, 1956 states that a ‘company’ means a

company formed and registered under this Act or an existing company

which is formed and registered under any of the previous company

laws.

As per section 2 (17) of the Income-Tax Act, 1961, company

means:

i) Any Indian Company, or

ii) Any body corporate incorporated by or under the laws of a country

outside India, or

iii) Any institution, association a body which was assessed as a

company for any assessment year under the Income-Tax Act,1952

or was assessed under this Act as a company for any assessment

year commencing on or before 1.4.1970, or

iv) Any institution, association or body whether incorporated or not

and whether Indian or Non-Indian, which is declared by a general

or special order of Central Board of Direct Taxes to be a company.

In common practice, it is a voluntary association of persons

formed for the purpose of doing business, having a distinct name

and limited liability. Registration of a company is compulsory

under the Companies Act, 1956 if it is engaged in banking business

with more than ten persons and more than twenty persons in case

of companies engaged in any other activities

165

The Company form of organization is preferred to collect

maximum required capital and to reap the fruits of managerial

skill in running the business on large scale.

I. Sources of Income

1. Income Head under which Income Is Taxable

The sources of income of a company are of various types but

for the purpose of charging the income under the Income-Tax Act,

1961, the taxable total income of a company is computed and

assessed under four heads, viz.



• Capital gains


The income sources under which the income of the companies

surveyed can be seen from the following table:

Table No. 5.71

Income Heads under which Income of Company Is Taxable

Particulars No. of Companies Percentage

Income from house property 1 3.33%

Profits and gains from

business or profession

30 100%

Capital gain 2 6.67%

Income from other sources 25 83.33%


166

Figure 5.20

Income Heads under which Income of Company Is Taxable

While discussing with the Directors and / or Managers of

companies, it is observed that the Companies have "Profits and

gains from business or profession" is the main source of income

and they have other sources of income such as income from house

property, income from other sources and capital gains etc.

As per table No. 5.71, all the 30 (100%) Company assessees

are having the business income as the main source of income. 1

(3.33%) company has source of income by way of income from

house property, 2 (6.67%) companies have capital gain and 25

(83.33%) companies have income from other sources apart from

the business income as main source of income.

2. Net Profit Range

Net profit earned by the company with certain adjustments is

charged for the purpose of income-tax. The tax liability of a

167

company changes directly with the change in net profit. Following

table shows the net profit range of the companies surveyed.

Table No. 5.72

Net Profit Range

Range No. of Companies Percentage

Less than Rs. 10,00,000/- 19 63.33%

Rs. 10,00,000/- to 50,00,000/- 8 26.67%

More than Rs. 50,00,000/- 3 10%

Total 30 100%


Table no. 5.72 shows that 19 (i.e.63.33 %) Company assessees

out of total 30 assessees examined fall under the first income group

i.e. who earn net profit less than Rs.10,00,000/-. 8 (i.e.26.67%)

Company assessees are earning net profit more than Rs.

10,00,000/- but below Rs. 50,00,000/- and remaining 3(i.e.10%)

Companies earn net profit more than Rs. 50,00,000/- .

3. Book Profit Range (for Minimum Alternative Tax)

Under section 115 JB(1) of the Income-Tax Act there is a

specific provision that the tax payable by a company can not be

less than 10% (10% for A.Y. 2009-10 and 15% for A.Y. 2010-11)

of Book profit of the company. It is also known as MAT

(Minimum Alternative Tax)

Book profit is arrived at after making specified adjustments

to the net profit as shown in the Profit and Loss Account so

prepared. To arrive at Book Profit, the net profit is required to

increase by the amounts charged to Profit and Loss Account such

168

as taxes paid, provisions, transfers to any revenue, amounts by way

of provisions, dividend paid or proposed, depreciation and

decreased by the amounts withdrawn from reserves, deferred taxes,

sick units’ losses, etc.

The book profit range of the company assessees surveyed is as

follows:

Table No. 5.73

Book Profit Range

Particulars No. of Companies Percentage

Less than Rs. 10,00,000/- 21 70%

Rs.10,00,000/- to Rs.50,00,000/- 7 23.33%

More than Rs. 50,00,000/- 2 6.67%


It can be observed from the above table that though there are 19

companies whose net profit is below Rs. 10,00,000/-, 21 (i.e.70%)

company assessees fall under the first income group i.e. who earn

net profit less than Rs.10,00,000/-. 7(i.e.23.33%) company

assessees are earning net profit more than Rs. 10,00,000/- but

below Rs. 50,00,000/- and remaining 2(i.e.6.67%) companies earn

net profit more than Rs. 50,00,000/- .

II. Qualification and Services Availed from Tax Consultants

1. Qualification of Income-Tax consultants

Company is taxed as a separate entity under the Income-Tax

Act, 1961. For handling of taxation matters companies generally

prefer specified service providers such as chartered accountants or

169

practicing lawyers etc. who are well served in all company taxation

and legal matters. In the case of the samples surveyed the

qualification of the tax consultants, appointed by the companies are

as follows:

Table No. 5.74

Qualification wise Classification of Tax Consultants

Particulars No. of Companies Percentage (%)


G.D.C.&A. --- ---

D.I.T.&S.T. --- ---

LLB --- ---

B.Com., M.Com --- ---

Total 30 100%


The above table no. 5.74 shows that though the professionals of

various qualifications such as G.D.C. & A., D.I.T. & S.T., LL.B.,

etc. provide such services, all the companies surveyed, preferred

chartered accountants as their tax consultants. There is a provision

u/s 224 of Companies Act, 1956 to appoint the auditor who is

Chartered Accountant within the meaning of the Chartered

Accountants Act, 1949. Appointment of auditor is compulsory in

the case of Company. The chartered accountant can be of immense

help to company in the matter of taxation, accounting, audit etc.

Therefore the services by Chartered Accountants are preferred by

the companies.

170

2. Appointment of Separate Tax Consultant for Service Tax,

Central Excise etc.

Though the Tax audit and VAT audit is required to be

carried out by Chartered Accountant only, the companies prefer

other services such as preparation and submission of quarterly

returns under VAT and submission of returns of service tax, excise

duty etc. from other tax consultants who are non-chartered

accountants. In a discussion with the directors and office bearers of

the companies, it is revealed that they don't want to rely upon one

single person for all services as it sometimes proves to be risky. It

is also noticed that they want to have quality services from the

specialists in the field of Service tax, VAT, Excise etc. The

position of the company assessees studied in this regard is as

follows:

Table No. 5.75

Appointment of Separate Tax Consultant for Service Tax,

Central Excise etc.

Qualifications No. of Companies Percentage

Not appointed separate consultant 8 26.67%

Appointed separate consultant 22 73.33%

Total 30 100%


It is noticed that out of total 30 companies examined, 22 (73.33%)

companies have appointed separate tax consultants other than their

auditors who are chartered accountants for other tax services such as

Service tax, Central Excise, VAT etc. and 8 (26.67%) companies have

171

relied upon one single person (i.e. chartered accountant) for all tax

services.

3. Services Availed

Services availed by the company assessees for the study purpose has

been divided into taxation services and allied services.


While running the business, the businessman is required to observe the

provisions of various tax laws applicable such as Income-Tax Act, 1961,

VAT Act, Central Excise Duty Act, Finance Act for service tax, custom

duty etc. Such services are known as taxation services.

The following table shows the different taxation services provided

by the income-tax consultants and the number of company assessees

availing these services.

Table No. 5.76



Income-Tax 30 100%

Value-added Tax 25 83.33%

Service Tax 20 66.67%

Central Excise 9 30%

Customs Duty --- ---


Tax Compliances &

procedural work

30 100%


172

The table no. 5.76 shows that almost all the company assessees

avail the services of income-tax issues, tax planning and tax compliances

and procedural work from income-tax consultants. Apart from the core

area of income-tax consultancy services, approximately 25 (84 %) and 20

(67 %) of the company assessees examined, avail the Value Added Tax

consultancy and Service Tax consultancy services respectively. VAT is

paid on inter-state sale or purchase of goods and service tax is paid on

services provided and covered under the Finance Act. Central Excise

service is availed by 9 (i.e. 30%) company assessees. Central Excise Duty

is paid on manufacturing of goods and Custom Duty is paid on import

and export of goods. No company assessees availed these services in

selected area.

b. Allied Services

i. Accountancy Services

Accountancy services mainly include financial accounting which

concerned with financial book-keeping, cost accountancy and audit.

� Book-keeping Services

There are huge numbers of transactions in the case of company and

company is bounded to file returns under various taxation Acts on

frequent intervals. So company has to keep their books of accounts up to

date. Generally, companies themselves appoint staff for book-keeping. In

the case where the size of the company or number of transactions is very

low, company may take the book-keeping services from tax consultants.

From the following table no. 5.77, it can be seen that only 6 (20%)

companies availed book-keeping services from their tax consultants.

� Cost Accountancy Services

Cost accounting relates to the collection, classification,

ascertainment of cost and its accounting and control relating to the

various elements of cost. From the following table no. 5.77 it is clear that

173

in the studied area none of the company assessees availed these services

from their tax consultant.

� Audit

Audit is a systematic examination of books of accounts and

records. It is conducted to ascertain whether the financial statements give

true and fair view of the financial position as at the year end and of the

financial results for that year. VAT audits are mandatory in cases of sales

in excess of Rs. 40,00,000/-. Tax audit is mandatory also for the assessees

having business turnover in excess of Rs.60,00,000/- or gross receipts

from profession in excess of Rs. 12,00,000/-. The table no.85 also

explains various audit services availed by the companies.

Table No. 5.77

Various Allied Services

Particulars No. of Companies (%)

Book-keeping 6 20%

Cost Accountancy NIL NIL

Audit

Cost Audit NIL NIL

Tax Audit 30 100%

VAT Audit 25 83.33%

Internal Audit 3 10%

Financial Audit / Statutory Audit 30 100%

Environmental Audit --- ---

Information System Audit --- ---


174

Table no. 5.77 shows that all the companies availed the services of

tax audit. Out of 30 company assessees examined, 25 (i.e. 83.33%)

company assessees avail the services of VAT audit. All the companies

have availed the services of statutory audit as it is compulsory under

Companies Act, 1956. 3 (10%) companies have availed the service of

internal audit to keep the record accurate. No single company has availed

the services of environmental audit and information system audit.

ii. Consultancy Services

Tax consultancy services availed by company assessees includes

management accountancy, project planning and financing, project

improvement or turnaround studies, arrangement for the sources of

finance, etc. The following table illustrates the different types of

consultancy services availed by the company assessees.

Table No. 5.78

Consultancy Services

Consultancy Services No. of Companies Percentage

(%)

Management Accountancy --- ---



turnaround studies

7 23.33%

Arrangement for the sources

of finance

10 33.33%


The above table no. 5.78 shows that no company assessee availed

the services of Management Accountancy, 5(16.67%) companies availed

the services of project planning and financing, 7(23.33%) companies

175

availed the services of project improvement or turn around studies and 10

(33.33%) companies availed the service of arrangement for the sources of

finance.

Management accounting is concerned with accounting information

which is useful to management in establishing plans for reasonable

economic objectives in making of rational decisions with a view towards

these objectives. Project planning and finance is related to financial

aspects of project. Project improvement or turnaround studies are related

to appraisal of project. Generally these services are availed by big

companies who are having various projects. As discussed earlier

companies in the studied area are of small size. Very few companies

which are comparatively big have availed these services.

iii. Timely Notification of Amendments, Decisions of Supreme

Court etc. by Income-Tax Consultants

Every year budget proposals in the form of finance bill are presented

to parliament for consideration and approval. When the bill is passed by

the parliament and the President of India gives his / her consent, it

becomes Finance Act of the financial year. The respective provisions of

Income-Tax Act are also changed with changes in the finance Act of the

year.

Some tax cases are also decided by the Supreme Court during the

financial year. The decisions given by the Supreme Court in tax matters,

becomes law.


important matters for the assessees for tax planning. Therefore timely

supply of such information to assessees by the tax consultants is

176

necessary. The following table gives the details of supply of such

information:

Table No. 5.79

Intimation Relating to Amendments to Clients


Receipt of intimation 25 83.33%

Non-receipt of intimation 5 16.67%

Total 30 100%


The above table no. 5.79 shows that 25 (83.33%) companies

received such intimation in time from their consultants while 5 (16.67%)

companies not received such intimation.

Sometimes it is not possible for tax consultants to intimate all the

clients regarding the amendments, judgments etc. due to non availability

of proper technical support system and trained staff.

iv. Reminders by Income-Tax Consultants

In case of company assessees they are required to comply various

tax matters frequently. These matters have compulsion nature. Timely tax

compliance plays very important role in avoiding penalty and defaults. As

such tax consultants intimate assessees from time to time regarding

compliance matter. The position in this regard is:

177

Table No. 5.80

Reminders by Income-Tax Consultants


Reminded 30 100%

Not reminded --- ---

Total 30 100%


Table no. 5.80 shows that all the company assessees surveyed

received various intimations and reminders for compliance from their

income-tax consultants.

v. Behavior of Staff

Companies have to fulfill so many compliances regarding tax

matters within the time limit. So these companies need much more

support from tax consultants and their staff. Staff members of the tax

consultants generally courteous and helpful to company assessees too.

They avoid behave rudely with them. The details in this regard are as

follows: Table No. 5.81

Behavior of Staff


Polite 12 40%

Co-operative / Helpful 14 46.66%

Non-cooperative 2 6.67%

Irresponsible 2 6.67%

Rude --- ---

Total 30 100%


178

From the table no. 5.81 it can be observed that 12 (40%) company

assessees stated that behavior of the staff of the tax consultants is polite,

14 (46.66%) company assessees stated that its co-operative while 2

(6.67%) companies stated that staff of tax consultants are non-

cooperative. 2 (6.67%) company assessees complained that they are

irresponsible and no company assessee complained that they are rude.

III. Tax Awareness

Tax awareness among the assessees saves their time and money as

such each and every assessees tries to become properly aware in this

regard.

1. Modes of Tax Information

Provisions of the Income-Tax Act, 1961 are changed every year with

the changes made in finance Act. Frequent changes are also made

intermittently in the provisions of Income-Tax Act by passing

Amendments Act or Ordinance. These changes have bearing upon the

assessees' tax liability and other obligations under the Act. The assessee

can get such information from the sources such as tax consultants, media

or other companies.

Table No. 5.82



Tax Consultants 30 100%

Other companies 4 13.33%

Media 28 93.33%


179

The above table shows that all the companies are getting

information from their tax consultants as well as the details about it from

the advertisement through media. All the 30 (i.e.100%) of company

assessees get the information of taxation through tax consultants,

4(13.33%) company assessees get information through other companies

and 28 (93.33%) company assessees get the information through media.

The data in the above table makes it clear that media also plays a vital

role in providing information on tax matters to the company assessees.


It is surveyed that whether the assessees knew the specific provisions

made in the Act as to which affect their tax liability such as the various

items of their income exempt from tax, other deductions allowed etc. The

position in this regard is as follows:

Table No. 5.83


No. of Companies Particulars

Knowing Percentage Not-knowing Percentage

Awareness of

changes in

Finance Act

25 83.33% 5 16.67

Items exempt

from tax

14 46.67% 16 53.33%

Deduction

under chapter

VI-A

30 100% --- ---


Above table shows that 25 (83.33%) Company assessees know that

Income-Tax Act undergoes changes every year with the changes in

180

Finance Act. Remaining 5 (16.67%) assessees are unaware of changes in

Finance Act and impact of it on their tax liability.

Only 14 (46.67%) Company assessees know various items exempt

from tax under section 10 while 16 (53.33%) company assessees are

unaware of such items.


effect to the provisions of clubbing of income and set off of losses is

known as "gross total income". In computing the total income of an

assessee certain deductions from Gross Total Income are permissible

under chapter VI-A of Income-Tax Act, 1961. As per table No. 5.83

shows all Company assessees know these deductions.

It is observed that majority of all types ssesses try to know only

those provisions which are relating to them e.g. they want to know the

rate of income-tax applicable to them only. But they are not interested in

how the rates of income tax are decided and how it is related with

Finance Act.


Assessees who are curious about their burden of tax liability discuss

among themselves as to which change in annual budget are beneficial to

them. From time to time they demand before presenting annual budget to

insert the provisions / changes which are beneficial to them. A survey is

conducted to know how many assessees discuss such tax provisions with

their tax consultants. The picture in this regard is as follows:

181

Table No. 5.84



Discussed 27 90%

Not discussed 3 10%

Total 30 100%


Above table no. 5.84 shows that 27 (90%) companies discuss the

annual budget provisions with the tax consultants before hand. And only

3 (10%) companies don't hold such discussions.

In a personal interview with the directors and managers of the

companies, it is revealed that they hold discussions regarding provisions

of annual budget with tax consultants. And whenever they do so their tax

consultants help them in understanding such provisions.

IV. Filing Returns of Income

The return is a legal format which is provided by the Income-Tax

Department to show the income calculations and final tax to be paid by

the assessees. Each and every assessee has to submit his returns with

specified amount of tax in it, up to a specified date every year to the

Income-Tax Department. It is obligatory on the assessee by the law to file

the return regularly. A survey is carried on as to when the company

started to file their returns regularly and for what reason.

1. First Return of Income

In case of company engaged in engineering activity / business the

investment in building, plant & machinery etc. is high. In the books of

accounts depreciation is to be charged on these assets which may result in

182

loss. Such business loose can be carried forward for next 8 (eight) years

and set off can be claimed against the profit earned during this period. For

this purpose submission of return in time is necessary. This may be the

reason for filing first return of income. There is also a case of claim of

refund. If the tax is deducted at source and company is not liable to pay

tax then in such case the tax deducted at source should be refunded to the

company. To get this refund company has to file return. In case, the

company is at profit then it is necessary to file the first return of income

and pay the tax. Company is taxed at flat rate of 30% on its profit even if

it is Re. 1/-. Therefore, the companies, in general, file the first return of

income as per regular provisions of Income Tax Act, 1961. The following

table no. 5.85 show the position in this regard:

Table No. 5.85

Filing of First Return of Income


For the payment of Tax 8 26.67%

To claim loss 6 20%

Refund claim 7 23.33%

Voluntarily 9 30%

Notice from Income-

Tax Department

--- ---

Total 30 100%


Table No. 5.85 shows that 8 (26.67%) company assessees out of 30

company assessees examined has filed their first return of income for the

payment of tax, due to taxable profit, 6 (20%) company assessees to

claim loss, 7 (23.33%) company assessees have filed first return of

183

income to claim refund and 9 (30%) companies have filed their first

return of income voluntarily for their own sake.

2. Preparation for Filing Returns of Income

By law a company is required to appoint an auditor u/s 224 of the

Companies Act, 1956 to audit the annual accounts of the company and to

keep before the Annual General Meeting, the copies of audited Balance

Sheet and Profit and Loss Account for the information of their

shareholders. Annual general meeting is required to be held within the

stipulated period. As well as the tax audit u/s 44AB of Income-Tax Act is

also compulsory to the company if their turnover is in excess of a

stipulated amount. It was Rs. 40,00,000/- for assessment year (A.Y.)

2010-11 (Rs. 60,00,000/- for A. Y. 2011-12) .

Under the provisions of Income Tax Act, the company must file

the return of income with digital signature in the prescribed form no.

ITR-6 latest by 30th September of the assessment year to avoid the

penalty for late filing.

Generally due to legal compulsions as above the office bearers of

the company start preparatory work well in advance and submit the

documents to the tax consultants before the due date. In survey it is

observed that all the companies selected for the study, are punctual in

submitting the documents to the tax consultants and have submitted the

necessary documents to their tax consultants well in advance.

3. Time Lag for Filing Returns after Documentation

Generally time lag of one to two month is taken by the tax

consultants after receiving necessary documents from the company

assessees. Computing the taxable income of a company considering all

the documents placed before him, preparing the tax audit report by

184

examining the accounts of the company and preparing the policy

statement is a time consuming job. A survey is carried on as to how much

period is taken by tax consultants to prepare returns of income and submit

the same to Income-Tax Department. The position in this regard is as

follows:

Table No. 5.86

Period for Submission of Returns of Income by Tax Consultants


Within 1 day --- ---

Within a week 2 7%

Within a month 25 83%

More than a month 3 10%

Total 30 100%


Figure 5.21

Period for Submission of Returns of Income by Tax Consultants

185

It can be observed from the above table no. 5.86 that in case of 2

(7%) companies, their tax consultants filed return of income within a

week after receiving required documents. In case of 25 (83%) companies,

their tax consultants filed return of income within a month while in case

of remaining 3 (10%) companies; their tax consultants filed it after a

month.

4. Levy of Penalty

If the assessees fails to comply the statutory provisions of the Act

attracts some kind of penalty.

i. Penalty Levied (for Late Filing of Returns)

Under section 271B of Income-Tax Act, if the return have not been

filed within specified date the assessee becomes liable to pay a penalty

which is presently 0.5% of the company’s turnover. As such all the

companies try to submit returns in stipulated time limit as well as the tax

consultants also gives topmost priority to preparing and filing the returns

of income of companies. In case of the present study the position in this

regard is as follows:

Table No. 5.87

Penalty Levied (for late filing of returns)

Particulars No. of companies Percentage (%)

Penalty levied --- ---

Penalty not levied 30 100%

Total 30 100%


It is observed that due to timely action by tax consultants in

submitting the returns of income, no single company in the selected area

186

for the study is found facing the penalty proceeding for late filing of

return of income.

5. Penalty Levied (other than Late Filing of Returns)

There are various types of offences other than late filing of returns

which assessees commit e.g. failure to pay tax or interest on self

assessment, failure to comply with the notice by Income-Tax Department,

furnishing wrong particulars of income failure to get accounts audited etc.

There are various sections which provide penalties for these various

offences. A survey is conducted as to how many companies penalized for

offences other than late filing of returns. Details in this regard are as

under:

Table No. 5.88

Penalty Levied (other than for Late Filing of Returns)


Faced penalty 1 2%

Not faced penalty 49 98%

Total 30 100%


From table no. 5.88 it can be seen that only one company faced the

penal proceeding and penalty is levied for contravention of provisions of

section 269(T) of Income Tax Act (for the cash repayment of deposit) and

of section 269SS (Cash receipt of deposit) of Income Tax Act. Penalty of

equal amount of deposit received and repaid is levied.

187

V. Scrutiny of the Returns by Income Tax Department:

If the low income than reasonable income is shown in the return of

income by assessee or to confirm the genuiness of source of huge

investment made in the business by assessee, Income-Tax Department

may call that assessee for scrutiny. With this Department randomly

selects some cases for scrutiny. At present the cases are selected for

scrutiny under CASS (Computer Assisted Support System) for example

randomly, case No. 1, 10, 20, 30, 40 etc.

If the case of assessee is selected for the scrutiny, the books of

accounts of the assessee are required to be produced before Assessing

Officer for examination. In the examination of accounts, if some

irregularities are detected by Income-Tax Officer he enquires about it

from the assessee and if he is not satisfied on the basis of such

information, he starts the penal proceedings against the assessee as per

law. While carrying on study in this respect the following information is

received:

Table No. 5.89

Scrutiny

Particulars No of Companies Percentage (%)

Scrutinized 3 10%

Non-scrutinized 27 90%

Total 30 100%


Table no. 5.89 shows that as per norms laid down by the Income-

Tax Department for selection of scrutiny cases, 3 Company assessees are

selected for scrutiny.

188

In personal interviews with directors and managers of the

companies selected for scrutiny, it is revealed that the tax consultants

played the cooperative role by attending the hearing of the cases before

the officers of Income-Tax Department. Tax consultants have

successfully handled the matters.

VI. Relation with Income-Tax Consultant

Generally any relation stands on trust. Tax consultation is related to

financial matters of the assessee. So both the parties try to maintain

cordial and friendly relationship and try to avoid any unnecessary clashes

among them. Tax consultants are expected as trustees for assessees. With

this trust if, the services rendered by tax consultant to assessee are

satisfactory, then assessee do not change his tax consultant and take his

services continuously year after year. This builds strong and healthy

relation between the assessee and the tax consultant.

A survey is carried on as to how long the parties are in associate with

each other. The following table no. 5.90 shows information in this regard:

Table No. 5.90

Service period of filing the returns of income


0-5 years 12 40%

5-10 years 9 30%

10-15 years 3 10%

15-20 years 4 13.33%

more than 20 years 2 6.67%

Total 30 100%


189

Figure No. 5.22

Service period of filing the returns of income

It is observed that 12(40%) company assessees are filing the

returns of income since 5 years, 9 (30%) assessees since 10 years, 3

(10%) assessees since 15 years and 4 (13.33%) assessees since 20 years.

And 2 (6.67%) Company assessees are filing the returns of income since

more than 20 years with the help of same tax consultant.

Change of Income-Tax Consultant

There may arise some cases of change of tax consultants from the

part of the assessee. Such tax consultants can be changed by the assessee

due to number of reasons which mainly includes inconvenience, fees

charged by tax consultant, death of tax consultant etc. During survey it is

noticed that out of 30 companies examined, 3 (10%) companies have

changed their tax consultant. The details in this regard are as under:

190

Table No. 5.91

Reasons for Change of Income-Tax Consultant

Particulars No. of Assessees Percentage (%)

Change in office place

of tax consultant

1 33.33%

Change in office place

of assessees

1 33.33%

High charges --- ---

Dissatisfaction 1 33.34%

Death of tax consultant --- ---

Conflicts with

consultant

--- ---


Total 3 100%


From the above table no. 5.91 it can be observed that 3 (10%)

Companies have changed their tax consultants (only once). Out of 3, 1

Company has changed their tax consultant due to change in their office

place while, 1 (33.33%) had changed its tax consultant because of change

in tax consultants office and 1 company has changed its tax consultant

due to dissatisfactory service by tax consultant.

VII. Misplacement of Documents by Tax Consultants

There is possibility of misplacement of documents in the office of

the tax consultant. The reason may be negligence or wrong filing of

documents. The details in this regard are as under:

191

Table No. 5.92

Misplacement of Documents by Tax Consultants


Documents misplaced --- ---

No documents misplaced 30 100%

Total 30 100%


From the table no. 5.92 it is observed that out of 30 (100%)

companies selected randomly for study, there is no single case of

misplacement of documents by tax consultants.\

VIII. Non-disclosure of Secret Information

It is expected that the tax consultants should not disclose the

confidential tax information of assessee to others without his permission.

A survey is carried on as to whether the assessees are satisfied in this

respect or not. The data in this regard is as follows:

Table No. 5.93

Confidentiality of the Information


Confidentiality followed 30 100%

Confidentiality not

followed

--- ---

Total 30 100%


192

All directors and managers of all companies are found satisfied that

tax consultant keeps all the information regarding their tax matters

confidential.

In personal interviews with Directors and Managers of companies,

it is confirmed that just no single tax consultant is found discussing the

financial matters of assessees with others. Tax consultancy service mainly

depends upon the trust. Therefore tax consultants strictly follow their

professional ethics.

IX. Fees Charged

Tax consultant renders services to the clients. He computes his

taxable income and quantifies the amount of tax payable by him. The

expectations of the clients from the tax consultants are also reasonable.

They expect that the tax consultant should render services on time to

avoid last minute services, the paper work done by him should be

accurate. But sometimes his expectations are disturbing to the tax

consultant. The client expects without any reasonable basis that his tax

liability should be minimum and fees charged by him for the services

rendered should also be minimum as per his terms.

The factual data collected through questionnaire is as follows:

Table No. 5.94

Fees Charged

Particulars No. of companies Percentage%

Reasonable 25 83.33%

Higher 2 6.67%

Lower 3 10%

Total 30 100%


193

From the table no. 5.94 it is observed that in case of 25 (83.33%)

companies, the directors and managers of those companies agreed that the

fees charged by their tax consultants for the services rendered by them are

reasonable. Directors and managers of 2 (6.67%) companies stated that

the fees charged by their tax consultant are higher while directors and

managers of 3 (6.67%) companies stated that the fees charged by their tax

consultant are lower.

X. Satisfaction

Assessees assign the taxation work to tax consultants considering

his sincerity and integrity in the professional work. A survey is carried on

as to know the satisfaction level of the assessees in this regard:

Table No. 5.95

Satisfaction of company assessees


Fully satisfied 27 90%

Partly satisfied 3 10%

Not satisfied --- ---

Total 30 100%


From the table no. 5.95 and the graphical representation it can be

seen that 27 (90%) companies are fully satisfied with the services

provided by their tax consultants and 3 (10%) companies are partly

satisfied with the services provided by their tax consultants.

194

Testing of Hypothesis:

Hypothesis 1-

H01: The tax consultants face problems while providing consultancy

services to their clients due to unawareness of tax-payers regarding

tax laws and procedures.

H11: The tax-payers are aware about tax laws and procedures.

Table No.5.96

Unawareness of Individual Assessees Regarding Tax Laws and

Procedures.

(At level of significance α =0.05)

Knowledge

Range

Calculated

Value of ‘Z’ (Z)

Table Value of

‘Z’ (Zα/2)

Test Criteria

75-100 1.863961012 1.96 Z < Zα/2

50-75 0.577350269 1.96 Z < Zα/2

25-50 0.577350269 1.96 Z < Zα/2

0-25 3.872983346 1.96 Z > Zα/2

Table no. 5.96 shows that the value of Z is less for the 50%

individual assessees who are in the knowledge range 25-100. It means

that 50% individual assessees are unaware regarding tax laws and

procedures. Hence, first null hypothesis (H01) is accepted. Therefore first

alternative hypothesis (H11) is rejected.

Table no. 5.96 shows that the value of Z is greater for the remaining

50% individual assessees who are in the knowledge range 0-25. It means

that remaining 50% individual assessees are aware of tax laws and

195

procedures. Hence, first null hypothesis (H01) is rejected. Therefore first

alternative hypothesis (H11) is accepted.

Table No.5.97

Unawareness of Partnership Firm Assessees Regarding Tax Laws

and Procedures.


Knowledge

Range

Calculated


Table Value of

‘Z’ (Zα/2)

Test Criteria

50-100 4.247653 1.96 Z > Zα/2

0-50 2.070197 1.96 Z > Zα/2

Table no. 5.97 shows that the value of Z is greater for partnership

firm assessees. It means that partnership firm assessees are aware of tax

laws and procedures. Hence, first null hypothesis (H01) is rejected.

Therefore first alternative hypothesis (H11) is accepted.

Table No.5.98

Unawareness of Company Assessees Regarding Tax Laws and

Procedures.


Knowledge

Range

Calculated


Table Value of

‘Z’ (Zα/2)

Test Criteria

25-100 4.247653 1.96 Z > Zα/2

Table no. 5.98 shows that the value of Z is greater for company

assessees. It means that company assessees are aware of tax laws and

196

procedures. Hence, first null hypothesis (H01) is rejected. Therefore first

alternative hypothesis (H11) is accepted.

Hypothesis 2-


services to their clients due to improper book-keeping and

documentation by the tax-payers.

H12: There is proper book-keeping and documentation by the tax-payers.

Table 5.99

Improper Book-Keeping and Documentation by the Individual

Assessees


Range Calculated

Value of ‘Z’

(Z)

Table Value of

‘Z’ (Zα/2)

Test Criteria

50-100 2.828427 1.96 Z > Zα/2

50-75 1.720147 1.96 Z < Zα/2

25-50 0.57735 1.96 Z < Zα/2

0-25 1.445998 1.96 Z < Zα/2

According to table no. 5.99, it is seen that calculated value of Z is

greater. Hence the second null hypothesis (H02) is rejected for individual

assessees. Therefore second alternative hypothesis (H12) is accepted that

means 40 % individual assessees maintain proper book-keeping and

documentation.

On the other hand for remaining 60 % individual assessees, the

calculated value of Z is less. Hence second null hypothesis (H02) is

197

accepted for these individual assessees. Therefore second alternative

hypothesis (H12) is rejected for these individual assessees. That means

these 60% individual assessees not maintain proper book-keeping and

documentation.

Table 5.100

Improper Book-Keeping and Documentation by the Partnership

Firms Assessees


Range Calculated

Value of ‘Z’

(Z)

Table Value of

‘Z’ (Zα/2)

Test Criteria

50-100 4.551295 1.96 Z > Zα/2

50-75 0.204124 1.96 Z < Zα/2

25-50 0.840168 1.96 Z < Zα/2

0-25 1.338734 1.96 Z < Zα/2

Source : Table No. 5.15


greater. Hence the second null hypothesis (H02) is rejected for partnership

firm assessees. Therefore second alternative hypothesis (H12) is accepted

that means 58 % partnership firm assessees maintain proper book-

keeping and documentation.

On the other hand for remaining 42 % partnership firm assessees, the


accepted for these partnership firm assessees. Therefore second

alternative hypothesis (H12) is rejected for these partnership firm

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assessees. That means these 42% partnership firm assessees not maintain

proper book-keeping and documentation.

Table 5.101

Improper book-keeping and documentation by the Company

Assessees


Range Calculated

Value of ‘Z’

(Z)

Table Value of

‘Z’ (Zα/2)

Test Criteria

50-100 9.899495 1.96 Z > Zα/2

50-75 0.252646 1.96 Z < Zα/2

25-50 --- --- ---

0-25 0.252646 1.96 Z < Zα/2

Source : Table No. 5.17


greater. Hence the second null hypothesis (H02) is rejected for company

assessees. Therefore second alternative hypothesis (H12) is accepted that

means 88 % company assessees maintain proper book-keeping and

documentation.

On the other hand for remaining 12 % company assessees, the


accepted for these company assessees. Therefore second alternative

hypothesis (H12) is rejected for these company assessees. That means

these 12% company assessees not maintain proper book-keeping and

documentation.

199

Hypothesis 3-


services to their clients regarding electronically filing of returns.

H13: There is no problem regarding electronically filing of returns.

Table 5.102

Problems in Electronically Filing of Returns of Income

(At level of significance α =0.05) (For tax consultants)

Range Calculated

Value of ‘Z’

(Z)

Table Value of

‘Z’ (Zα/2)

Test Criteria

Not-facing

Difficulties

5.380143673 1.96 Z > Zα/2

Source: Table No. 5.14

Table no. 5.102 shows that calculated value of Z is greater. Hence

third null hypothesis (H03) is rejected. Therefore third alternative

hypothesis (H13) is accepted. It means that 63% tax consultants are

not facing problems in electronically filing the returns. On the other

hand it means that 37% tax consultants facing problems in

electronically filing of returns.

Hypothesis 4-

H04: The assessees face problems while receiving consultancy services

from the tax consultants due to no proper guidance or detailed

explanation by the tax consultants.

H14: Tax consultants provide proper guidance or detailed explanation to

their assessees.

200

Table 5.103

Proper Guidance or Explanation by Tax Consultants

(At level of significance α =0.05) (For assessees)

Range Calculated Value

of ‘Z’ (Z)

Table Value of

‘Z’ (Zα/2)

Test Criteria

To Individual

Assessees

6.21059 1.96 Z > Zα/2

To Partnership

Firm Assessees

0.745356 1.96 Z < Zα/2

To Company

Assessees

15.58846 1.96 Z > Zα/2

Source : Table No. 5.31, 5.60 and 5.84

Table no. 5.103 shows that calculated value of Z is greater in case

of individual assessees and company assessees. It means that the

individual and company assessees hold discussion regarding provisions of

annual budget with tax consultants. Hence fourth null hypothesis (H04) is

rejected. Therefore fourth alternative hypothesis (H14) is accepted.

But table no. 5.103 shows that calculated value of Z is less. It

means that the partnership firm assessees don’t hold such discussions and

whenever they do so their tax consultants help them in understanding

such provisions. Hence fourth null hypothesis (H04) is accepted.

Therefore fourth alternative hypothesis (H14) is rejected.

Hypothesis 5-

H05: The assessees face problems while receiving consultancy services

from the tax consultants due to no intimation relating to

amendments, decisions of Supreme Courts by them.

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H15: Tax consultants intimate relating to amendments, decisions of

Supreme Courts to their assessees.

Table 5.104

Intimation relating to amendments, decisions of Supreme Courts

(At level of significance α =0.05) (For assessees)

Range Calculated Value

of ‘Z’ (Z)

Table Value of

‘Z’ (Zα/2)

Test Criteria

To Individual

Assessees

52.44256117 1.96 Z > Zα/2

To Partnership

Firm Assessees

20.1246118 1.96 Z > Zα/2

To Company

Assessees

11.04802351 1.96 Z > Zα/2

Source : Table No.5.28, 5.55 and 5.79

Table no. 5.104 shows that calculated Z is greater for all types of

assessees. It means that 88% tax consultants intimate relating to

amendments, decisions of Supreme Courts to their assessees. Hence,

fifth null hypothesis (H05) is rejected. Therefore fifth alternative

hypothesis (H15) is accepted.

CHAPTER - V PRESENTATION OF THE DATA AND ANALYSIS...

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