TMI Blog2012 (3) TMI 195X X X X Extracts X X X X X X X X Extracts X X X X ..... Rakesh Aggarwal, Advocate. For Respondent: Mr. Sandeep Sethi, Sr. Advocate with Mr. Dilip Singh, Advocate. 1. This is a reference case under Section 21 (5) of the Chartered Accountants Act, 1949 (hereinafter referred to as the Act‟) in respect of respondent who is a Chartered Accountant practicing in Delhi. Inquiry was held by the Council of the Institute of Chartered Accountants of India (hereinafter referred to as the petitioner‟) on the allegations contained in a complaint submitted by the Commissioner of Income Tax, New Delhi. The Disciplinary Committee found that the allegations were substantiated and proved. This report was considered by the Council of the petitioner in its 287th Meeting of the Council held on 17th to 19th April, 2009. The Council considered the report of the Disciplinary Committee alongwith the written representation dated 8th April, 2009 received from the complainant as well as written representation dated 13th April, 2009 received from the respondent. After considering the report, the Council decided to accept the report thereby holding the respondent guilty of professional misconduct falling within the meaning of Clause (7) of Par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statement of Shri Subhash Chander Jain on 0ath on 5.4.2002 and in answer to Q.No. 19, Shri Jain has categorically stated that no export proceeds relating to the export consignment has been received in India till date and suit for recovery has been filed with Delhi High Court. The respondent has furnished a wrong and bogus certificate whereby he has helped the assessee in obtaining wrongful tax deduction of Rs. 18,32,985/-. A copy of the aforesaid complaint was sent to the respondent with covering letter dated 10th March, 2003. The respondent submitted his written statement dated 17th April, 2003. This was forwarded to the complainant who gave its rejoinder duly verified on 20th April, 2003. Comments on this rejoinder were also invited from the respondent who gave the comments on 3rd January, 2005. Thereafter the matter was considered by the Council in its 252nd Meeting held on 6-8th July, 2005 and it decided to refer the case to the Disciplinary Committee for inquiry. The Disciplinary Committee examined the complainant as well as the respondent and allowed both of them to make their submissions. It submitted its report dated 3rd February, 2008 giving the opinion that the respon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er to the Question No.19 given by the assessee. This question and answer thereto is as under: 19. Question: You have claimed deductions u/s 80 HHC of the IT Act, 1961 for Rs. 18.32 lacs as per the form No.10 CCAC Certificate attached with the return of Income for the asst. year 1998-99. As per this certificate the foreign exchange is said to have been received in India on the basis of which the deduction under Section 80HHC has been determined. However, as per your reply to Q. No. 7 no export proceeds relating to the export consignment has been received in India till date. Please explain. Ans: Sale proceeds have not been received and the suit for recovery have been filed in Delhi High Court. 6. It was argued that on the basis of answer to one question such an opinion could not have been formed when the assessee was asked 17 questions. He argued that the complainant deliberately withheld the complete questionnaire and answer thereto and since that document was not furnished, it amounted to denial of proper opportunity. He also argued that insofar as the respondent is concerned, he had issued the certificate dated 20th June, 1998 after taking every precaution and due care and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure of information has been made a ground for imputing misconduct. By betrayal of the trust, the conduct becomes one which is unbecoming of the professional. Sections 126 and 129 of the Indian Evidence Act, 1872 (in short, the `Evidence Act') throws beacon light on the importance of professional communications. As observed in Mc.Kelvery's Evidence (Page 236), at common law, in very early times, a privilege war recognized as to matters between an attorney and his client, and this privilege has continued in the strictest form to the present day. The privileges mentioned in Sections 126 and 129 are designed to secure the clients confidence in the secrecy of his communication. Any breach of the confidence is a stigma not only on the individual concerned, but is also likely to have effect on credibility of the profession as a whole. That is why the anxiety of the legislature to punish the erring individual. It is to be noted that for breach of trust by a person entrusted with property or dominion over it, action under criminal law can be taken. When considered in that background, disclosure of information which would not have otherwise come within his knowledge, but for his professional ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in all cases, long passage of time cannot be a mitigating factor, while considering the appropriate punishment to be awarded, in the peculiar circumstances of the case, reprimand to the respondent would meet the ends of justice Reference is accordingly disposed of. 10. He also referred to another judgment of this Court in Council of the Institute of Chartered Accountants of India Vs. D.R. Bahl, 177 (2011) DLT 332 where again the punishment of reprimand was imposed on the ground that the complaint was of the year 1992. Another judgment on which reliance was placed was the Council of the Institute of Chartered Accountants of India Vs. S.N. Sachdeva, Chat. A. Ref. 1/2002 decided on 24.1.2011 wherein the Court took the view that lapse of time was a mitigating factor and instead of debarring the delinquent in the said case, directed him to do some social service. We would like to reproduce the following discussion from this judgment:- 19. In so far as instances by the respondent are concerned, we are inclined to give learned counsel for the Institute that they may not become the basis for awarding the penalty of reprimand. Each case has to be viewed at its own facts. In the prese ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tance of time, may not advance the course of justice. The facts narrated above, would show that the period of employment of the respondent with IRCON, during which period the irregularities were committed by the respondent, is from 1982 to 1990. The respondent left the service of IRCON on 30th September, 1990. Thus, he is in private practice for more than twenty years now. The Institute received the complaint sometime in the year 1992 and issued notice to the respondent to explain on 24th July, 1992. No doubt, the respondent took substantial time in submitting his written statement which was filed only on 20th Mary, 1995. However, during this period, even the Institute kept-quiet and started further action only after the receipt of written statement. The Institute could have proceeded to take action if the respondent was not submitting reply. To that extent, the Institute has contributed to delay. Thereafter, the matter was referred to the Disciplinary Committee and first meeting of the Committee was held only in February, 1998 almost three years after the submission of the Written Statement by the respondent. The respondent pleaded guilty vide his letter dated 12th March, 1998 i.e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n in the aforesaid judgments, we find that on the one hand the respondent pleads his sickness, has otherwise unblemished practice of 21 years and that the incident is old which may provide some mitigating factors in his favour, on the other hand, the misconduct is of serious nature. Submitting a false/bogus certificate to the client to enable him to make false claim of deduction under the Income Tax Act, is of serious offence. The deduction to the tune of Rs. 18,32,985/- was claimed on the strength of this certificate which would mean the tax saving of almost 6.5 lacs. The attempt was thus to dupe the tax authorities and help the assessee to avoid the tax to that extent such a conduct has to be taken seriously. 12. After weighing the aforesaid factors on either side, we are of the view that in the present case the respondent cannot be let off merely by giving him reprimand. Some penalty needs to be imposed so that it acts as deterrent and such professional misconduct are not committed. Weighing the circumstances, we are of the opinion that the ends of justice would be subserved by removing the name of the respondent from the Register of Members for a period of six months. 13. T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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