Facts of the Case

A complaint was filed by the Deputy Director, Income Tax (Investigation)-III, Jaipur, alleging that CA Desh Nidhi Gupta created and caused issuance of fake summons purportedly under Section 131 of the Income-tax Act, 1961 in the name of the Income Tax Department to his client Shri Abhishek Godha, with an intent to extract money on the pretext of settling an income-tax matter.

It was alleged that a fake summons dated 22 March 2019 bearing incorrect email ID, phone number and signature was shown to Shri Abhishek Godha, following which the Respondent allegedly informed him that payment of ₹1,00,000 to ₹1,50,000 would be required to settle the matter. Shri Abhishek Godha, upon suspecting foul play, approached another Chartered Accountant, and when an authorised representative appeared before the Income Tax Department on 26 March 2019, the alleged fake summons came to light.

An FIR No. 89/2019 dated 28 March 2019 was lodged with Ashok Nagar Police Station, Jaipur. After investigation, the police submitted a Final Report on 31 December 2019 concluding that the culprit could not be identified and that no charges were proved against the Respondent. The disciplinary proceedings thereafter continued before the ICAI Board of Discipline.

Issues Involved

Whether the Respondent created, issued or facilitated issuance of fake Income-tax summons to his client with intent to extract money, and whether such conduct constituted “Other Misconduct” under Item (2) of Part IV of the First Schedule to the Chartered Accountants Act, 1949.

Petitioner’s Arguments

The complainant department alleged that the Respondent hatched a conspiracy to create fake summons of the Income Tax Department, misrepresented official authority and attempted to extort money from the assessee. It was contended that such acts, even if not resulting in criminal conviction, amounted to grave professional misconduct.

Respondent’s Arguments

The Respondent denied all allegations and submitted that the complaint was based solely on suspicion and affidavits of interested parties without any direct evidence. He relied upon the police investigation and Final Report which categorically stated that no proof existed that the alleged notice or envelope was handed over to him or that he demanded or received any settlement money.

The Respondent furnished copies of the FIR, Final Report, translated police findings, affidavits of independent witnesses who were present when the client visited his residence, and documentary evidence including his authorised pass issued by the Income Tax Department. He contended that the original summons or envelope was never produced before police or the Board and that disciplinary liability cannot rest on conjecture.

Court / Authority Order and Findings

The Board of Discipline examined the complete record, including police investigation documents, affidavits, statements of witnesses, visitor register extracts, and submissions of the Respondent. The Board noted that the police, after an independent and detailed investigation of over nine months, concluded that there was no clear evidence identifying the Respondent or any other person as the culprit and closed the case under the status “culprit not found”.

The Board further observed that neither the original alleged summons nor the envelope was ever produced, no documentary evidence established that the Respondent prepared or delivered the alleged summons, and no proof was adduced to show that the Respondent demanded or received any money. The affidavits relied upon by the complainant were found to be unsupported by contemporaneous evidence, and timings of alleged events were not proved.

On an overall appreciation of the material, the Board held that there were neither direct nor circumstantial evidences on record to establish the Respondent’s involvement in issuance of fake summons or any attempt to extract money. Suspicion, however strong, was held insufficient to establish professional misconduct.

Important Clarification

The Board clarified that allegations involving fabrication of official documents and extortion are serious in nature but must be proved by cogent, reliable and direct evidence. Where independent police investigation results in closure for want of evidence and no additional material is brought on record, disciplinary action cannot be sustained on suspicion alone.

Final Outcome

The ICAI Board of Discipline held CA Desh Nidhi Gupta (M. No. 078560) 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 02 November 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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