Facts of the Case

The complainant, Shri Sanjay Jain, was a founder Director of Premium Acres Infratech Pvt. Ltd., incorporated on 05.01.2010. On recommendation of another Chartered Accountant associated with the company, the complainant engaged the respondent, CA Kapil Dev Aggarwal, for filing income tax returns and handling taxation matters for himself and his companies. The complainant deposited substantial sums with the respondent through RTGS and cheques towards payment of income tax for Assessment Years 2009-10 and 2010-11. The complainant was provided with duly stamped income tax return acknowledgements showing payment of self-assessment tax. Subsequently, the complainant discovered that the Income Tax Department had no record of receipt of such returns or tax payments. FIRs were lodged alleging forgery, fabrication of income tax acknowledgements, misappropriation of funds, and other fraudulent acts. A complaint was thereafter filed before the Institute of Chartered Accountants of India.

Issues Involved

Whether the respondent Chartered Accountant was guilty of “Other Misconduct” under Item (2) of Part IV of the First Schedule to the Chartered Accountants Act, 1949 for providing forged and fabricated income tax acknowledgements and failing to deposit income tax amounts received from the client, and whether disciplinary action under Section 21A(3) was warranted.

Petitioner’s Arguments

The complainant contended that the respondent received amounts aggregating to ₹24,28,883 towards payment of income tax and professional services but failed to deposit the income tax for Assessment Years 2009-10 and 2010-11. It was argued that forged income tax acknowledgements showing payment of tax were supplied to the complainant, whereas the Income Tax Department categorically confirmed that no such returns had been filed. The complainant submitted documentary evidence including bank statements, income tax department correspondence, assessment orders and demand notices to demonstrate financial loss and professional misconduct on part of the respondent.

Respondent’s Arguments

The respondent denied the allegations and contended that the dispute was essentially a fallout of differences among directors of the company. It was argued that tax payments were made prospectively and that professional fees and service tax were duly charged and deposited. The respondent asserted that the complainant himself filed certain returns and attempted to falsely implicate the respondent. Detailed explanations were given regarding utilisation of funds, professional charges, travel and consultancy services rendered, and payments of tax for subsequent assessment years.

Court Order / Findings

The Board of Discipline examined the documentary evidence, fund flow details and correspondence from the Income Tax Department. The Board noted that the Income Tax Department had categorically stated that no income tax returns were received for Assessment Years 2009-10 and 2010-11 despite acknowledgements shown to the complainant as proof of filing and payment. The Board further noted that the respondent had custody of the complainant’s digital signatures and was authorised to file returns on his behalf. On a preponderance of probabilities and considering the overall conduct, the Board held that the role of the respondent in provisioning forged and fabricated income tax acknowledgements could not be ruled out. Accordingly, the respondent was held guilty of “Other Misconduct” under Item (2) of Part IV of the First Schedule to the Chartered Accountants Act, 1949 read with Section 22.

Important Clarification

The Board clarified that professional misconduct under the Chartered Accountants Act is to be examined on the basis of conduct unbecoming of a Chartered Accountant and that involvement in acts which undermine trust, including furnishing forged documents and mishandling client funds, constitutes “Other Misconduct” even if arising from professional engagements.

Final Outcome

The Board of Discipline, ICAI, held CA Kapil Dev Aggarwal guilty of Other Misconduct under Item (2) of Part IV of the First Schedule to the Chartered Accountants Act, 1949. In exercise of powers under Section 21A(3), the Board imposed a fine of ₹1,00,000 on the respondent by order dated 10.04.2024.

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