Facts of the Case

Disciplinary proceedings were initiated against CA Krishan Gopal Agrawal in relation to Income Tax proceedings of Shri Bhagwan Agrawal for Assessment Year 2001–02. The assessee had been subjected to penalty proceedings under Section 271(1)(c) of the Income-tax Act, 1961 for alleged concealment of income. The penalty was confirmed by the Commissioner of Income Tax (Appeals), and the assessee’s appeal before the ITAT was dismissed by order dated 27 April 2007.

Thereafter, the assessee filed an appeal before the Hon’ble Allahabad High Court, which was dismissed on 17 August 2010 on the ground that no substantial question of law arose. Subsequently, the assessee filed a Miscellaneous Application under Section 254(2) of the Income-tax Act, 1961 before the ITAT, which was allowed on 28 July 2011, resulting in recall of the earlier ITAT order and deletion of penalty.

The Income Tax Department later filed a Miscellaneous Application contending that the assessee had suppressed the fact of dismissal of appeal by the High Court. The ITAT, by order dated 12 July 2013, recalled its order dated 28 July 2011. Allegations were thereafter made that the Respondent, acting as Chartered Accountant, deliberately suppressed material facts relating to the High Court’s dismissal order, thereby misleading the ITAT.

Issues Involved

Whether the Respondent deliberately suppressed the fact of dismissal of the assessee’s appeal by the Hon’ble Allahabad High Court while representing before the ITAT, 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 submitted that he was not an ITAT practitioner and had only appeared once before the ITAT on 15 July 2011 without arguing the matter. He stated that the Miscellaneous Application was led and argued by another senior Chartered Accountant, CA S. C. Jain, who regularly practiced before the ITAT. The Respondent contended that he was not aware of the outcome of earlier proceedings and had no occasion to suppress any fact before the Tribunal.

He further submitted that the assessee acted on legal advice available from multiple professionals and that the fact of dismissal of appeal by the High Court was within the knowledge of the Income Tax Department, which was itself a party to the proceedings. The Respondent denied any deliberate concealment or intent to mislead the Tribunal.

Court / Authority Order and Findings

The Board of Discipline examined the entire record including ITAT order sheets, proceedings of Miscellaneous Applications, High Court order, and submissions of the Respondent. The Board noted that the Respondent was not representing the assessee in the earlier ITAT appeal or the High Court proceedings and had only appeared once before the ITAT without making submissions.

The Board further observed that the Income Tax Department was itself a party to the proceedings before the ITAT and the High Court, and therefore was fully aware of the dismissal of the appeal by the Hon’ble Allahabad High Court. The Board held that non-disclosure of a fact already within the knowledge of both parties cannot be treated as deliberate suppression by one professional.

The Board also noted that the ITAT itself observed that it was equally the duty of both parties to place correct and material facts before the Tribunal. On appreciation of the facts, the Board concluded that there was no merit in the allegation that the Respondent deliberately suppressed material facts or misled the ITAT.

Important Clarification

The Board clarified that for establishing “Other Misconduct” on the ground of suppression of facts, there must be clear evidence of deliberate concealment with intent to mislead. Where the facts are already within the knowledge of all parties and the authority concerned, disciplinary liability cannot be fastened on a Chartered Accountant merely on assumptions or conjectures.

Final Outcome

The ICAI Board of Discipline held CA Krishan Gopal Agrawal (M. No. 072528) 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 13 December 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.

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