Facts of the Case

Disciplinary proceedings were initiated against CA Sanjay Bhandari on the basis of a letter dated 16 February 2016 received from the Central Bureau of Investigation, Anti-Corruption Branch, Mumbai. The information alleged that during an Income Tax Survey conducted under Section 133A of the Income-tax Act, 1961 in the case of M/s Nina Concrete Systems Pvt. Ltd., Mumbai in November–December 2014, certain officers of the Income Tax Department abused their official position to favour the said company.

It was alleged that the Respondent had indulged in telephonic conversations with Shri Mehul Parikh, Managing Director of the company, and with Shri Suresh Jandhyala, then Director General of Income Tax (Investigation), Mumbai, promising help by using his clout with the Income Tax Department. It was further alleged that the Respondent contacted late CA Devendra Mehta to arrange receipt of money aggregating to ₹25 lakh from the directors of the company for settlement of the survey proceedings.

Based on the gravity of allegations, the Board disagreed with the prima facie opinion of the Director (Discipline) and decided to proceed under Chapter IV of the 2007 Rules to examine the Respondent’s role.

Issues Involved

Whether the Respondent influenced or attempted to influence Income Tax survey proceedings by using alleged clout, facilitated or arranged payment of illegal gratification to public officials, and whether such conduct constituted “Other Misconduct” under Item (2) of Part IV of the First Schedule to the Chartered Accountants Act, 1949.

Respondent’s Submissions

The Respondent denied all allegations and submitted that the information was vague, baseless and unsupported by any material evidence. He contended that no charge sheet had been filed by the CBI, no forensic voice examination was produced, and no documentary evidence substantiating the allegations was placed on record.

He further submitted that he did not represent M/s Nina Concrete Systems Pvt. Ltd. during the survey proceedings, that the company was represented by another Chartered Accountant firm, and that his interaction with the company directors was limited to general professional acquaintance and discussion of financial services. The Respondent also raised objections regarding delay and procedure, which were considered and rejected by the Board.

Court / Authority Order and Findings

The Board of Discipline examined the entire record including communications from the CBI, witness depositions, and submissions of the Respondent. The Board noted that despite repeated directions, the CBI confirmed that no charge sheet had been filed in the matter and that no further evidence beyond the self-contained note was available.

The Board examined the sworn depositions of Shri Mehul Parikh and Smt. Hetal Parikh, Directors of M/s Nina Concrete Systems Pvt. Ltd., recorded during the hearing on 26 December 2022. Both witnesses categorically stated that the Respondent was not involved in the survey proceedings, did not represent the company before the Income Tax Department, and that no money was paid to the Respondent or to any Chartered Accountant for obtaining relief. They further stated that there was no bribery and that the Respondent had only general discussions with them in the past regarding financial or consultancy services.

The Board observed that no direct or circumstantial evidence was brought on record to establish that the Respondent promised influence, arranged money, or played any role in alleged illegal activities. The Board also noted that mere telephonic conversations on general topics, without corroboration, could not establish misconduct.

On appreciation of the evidence, the Board concluded that the allegations remained unsubstantiated and that disciplinary proceedings cannot be sustained on suspicion or conjecture.

Important Clarification

The Board clarified that allegations of bribery, influence peddling or interference with statutory proceedings must be proved by clear, cogent and reliable evidence. In the absence of charge sheet, forensic confirmation, or corroborated witness testimony implicating the member, disciplinary action under the Chartered Accountants Act, 1949 cannot be sustained.

Final Outcome

The ICAI Board of Discipline held CA Sanjay Bhandari (M. No. 028112) 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 February 2023, 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/1768898462_CA.SanjayBhandariM.No.028112Chennai.pdf

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