Facts of the Case

A complaint was filed by Shri Hariom Goel against CA Yogesh Gupta alleging serious professional misconduct. The complainant was engaged in the real estate business under the name M/s Chirag Enterprises, which was closed in 2012. The Respondent had been providing professional services to the complainant for the period 2000–2012 for an annual fee of ₹23,500.

The complainant alleged that after closure of the firm, the Respondent prepared and filed false and fake TDS returns of ₹10 lakh on behalf of the closed firm and also filed an Income Tax Return for the complainant showing that professional fees of ₹1 crore had been paid to the Respondent for Financial Year 2015–16. It was further alleged that the Respondent prepared a false TDS challan for Assessment Year 2016–17 showing deposit of ₹36,000, whereas only ₹100 was actually deposited, thereby committing fraud and causing loss to the Revenue.

The Board noted that the Director (Discipline) had formed a prima facie opinion; however, upon examination of the material, the Board did not agree with the prima facie view and decided to proceed under Chapter IV of the 2007 Rules.

Issues Involved

Whether the Respondent prepared and filed fake and false TDS returns, fabricated challans, and wrongly reflected payment of professional fees, and whether such acts constituted “Other Misconduct” under Item (2) of Part IV of the First Schedule to the Chartered Accountants Act, 1949.

Petitioner’s Arguments

The complainant alleged that the Respondent fraudulently filed TDS returns and challans after closure of the business, inflated professional fees, and misused the complainant’s credentials, resulting in income tax notices and harassment. It was argued that such conduct amounted to grave professional misconduct and fraud.

Respondent’s Arguments

The Respondent denied the allegations and submitted that he had been suffering from serious brain disorder since 2016 and had been under medical treatment for several years, which prevented him from attending earlier hearings. He contended that after 2012, the complainant’s returns were filed by his office staff without his direct knowledge and that any wrong posting in TDS returns was minor, amounting to approximately ₹10,000–₹20,000.

The Respondent further submitted that he did not receive any professional fees for the last four years and that the matter was amicably settled in January 2017, pursuant to which he paid ₹1 lakh to the complainant through bank cheque. He relied on documentary evidence including bank statements, medical records and a certificate dated 26 September 2016 stating that no professional fees of ₹1 crore were received by him and that the TDS challan was submitted in error.

Court / Authority Order and Findings

The Board of Discipline examined the complaint, documents on record, submissions of the Respondent and evidence including the affirmation dated 26 September 2016 issued by the Respondent, revised TDS statement filed by the complainant, and bank records evidencing settlement. The Board observed that both parties admitted that the Respondent had rendered professional services only up to 2012 and that no professional relationship was established thereafter.

The Board further noted that the complainant failed to bring on record any documentary evidence to establish that the alleged fake TDS returns or challans were prepared or filed at the instance of the Respondent or that he was directly involved in such acts. The Board also found no evidence of malafide intent on the part of the Respondent in issuing the affirmation dated 26 September 2016.

On a holistic appreciation of the material, the Board concluded that serious allegations of fraud and fabrication were not substantiated by evidence and that disciplinary liability cannot be fastened in absence of proof.

Important Clarification

The Board clarified that allegations of fraud, fabrication of statutory returns or challans must be supported by cogent documentary evidence directly linking the Chartered Accountant with the impugned acts. Mere assertions, suspicion or subsequent tax consequences are insufficient to establish “Other Misconduct” under the Act.

Final Outcome

The ICAI Board of Discipline held CA Yogesh Gupta (M. No. 519953) Not Guilty of “Other Misconduct” under Item (2) of Part IV of the First Schedule to the Chartered Accountants Act, 1949 read with Section 22. By order dated 10 June 2022, the Board directed closure of the case under Rule 15(2) of the Chartered Accountants (Procedure of Investigations of Professional and Other Misconduct and Conduct of Cases) Rules, 2007.

Source Link - https://www.mytaxexpert.co.in/uploads/1768899120_ShriHariomGoelvsCA.YogeshGuptaM.No.519953Delhi.pdf

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