Facts of the Case

A complaint was filed by Shri Prabhu Dayal Kodwani against CA Vinay Khemchand Gupta alleging serious professional misconduct in relation to Income Tax assessment proceedings of Ms. Karuna Kodwani, daughter of the complainant. The assessment proceedings for Assessment Year 2014–15 were pending before Shri Navin Kumar, Income Tax Officer, Lalbaug, Mumbai.

It was alleged that the Respondent acted as an authorised representative of the assessee and, during the course of assessment, facilitated illegal gratification to the Income Tax Officer for settlement of tax demand. According to the record, an unexplained cash addition of ₹18,42,255 was proposed, and the Officer demanded a bribe of ₹10,00,000 to reduce the tax liability.

On 29 December 2016, the complainant handed over ₹50,000 as the first instalment of the bribe to the Respondent, who was caught red-handed by the Central Bureau of Investigation during a trap operation while receiving the tainted money. The bribe amount was recovered from the table of the Respondent. Statements recorded, charge sheet filed before the Special Judge (CBI), and corroborative material including recorded conversations formed part of the record.

Issues Involved

Whether the Respondent aided and abetted the payment of illegal gratification to a public servant in connection with Income Tax assessment proceedings, and whether such conduct constituted “Other Misconduct” under Item (2) of Part IV of the First Schedule to the Chartered Accountants Act, 1949 read with Section 22, warranting action under Section 21A.

Petitioner’s Arguments

The complainant contended that the Respondent acted as a conduit between the assessee and the Income Tax Officer, facilitated the bribe transaction, accepted the first instalment of illegal gratification, and thereby abused his position as a Chartered Accountant. It was argued that such conduct not only violated the law but brought grave disrepute to the profession.

Respondent’s Arguments

The Respondent denied the allegations and raised technical objections regarding admissibility of evidence, contending that criminal proceedings and disciplinary proceedings are distinct and that the complaint was motivated. He argued that the money was professional fees and not bribe, that he was falsely implicated, and that reports relied upon were anonymous or unverified. He also relied on pending proceedings before criminal courts and sought discharge.

Court / Authority Order and Findings

The Board of Discipline examined the entire record including the CBI trap proceedings, recovery memo, charge sheet, recorded conversations, assessment records, and the Respondent’s own submissions. The Board noted that the Respondent was caught red-handed while receiving tainted currency, that recovery of ₹50,000 was effected from his table, and that the explanation of professional fees was contradictory, unsupported by documents, and inconsistent with facts.

The Board observed that acceptance of illegal gratification or acting as a facilitator for bribery of a public servant is a serious offence involving moral turpitude. The Board reiterated that disciplinary proceedings are independent of criminal proceedings and are governed by the standard of preponderance of probabilities.

On evaluation of evidence, the Board concluded that the Respondent knowingly facilitated illegal gratification to a public servant to influence assessment proceedings, thereby abusing his professional position. Such conduct was held to be highly unethical, illegal and destructive of public confidence in the profession.

Important Clarification

The Board clarified that any involvement of a Chartered Accountant in bribery or facilitation of illegal gratification to public servants constitutes grave professional misconduct. Pendency or outcome of criminal proceedings does not bar disciplinary action under the Chartered Accountants Act, 1949.

Final Outcome

The ICAI Board of Discipline held CA Vinay Khemchand Gupta (M. No. 030747) guilty of “Other Misconduct” under Item (2) of Part IV of the First Schedule to the Chartered Accountants Act, 1949 read with Section 22. In exercise of powers under Section 21A(3) of the Act, by order dated 24 June 2022, the Board directed removal of the Respondent’s name from the Register of Members for a period of one month and imposed a monetary fine of ₹50,000 (Rupees Fifty Thousand only), payable within 60 days from receipt of the order.

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