2023 (8) TMI 401 - HC - Indian Laws

Professional Negligence - abetting in evasion of Central Excise and Customs duties - Removal of Chartered Accountant (CA) from the list of Members for a period of three months - if Solvency Certificate did not contain the details of the property, how did the Excise Department accept said Solvency Certificate and in two months allowed exports to such extent where duty involved was about Rs. 86 lakhs? HELD THAT - Respondent has also stated that there was no statutory requirement that the name and addresses of the properties or investments should have been mentioned in the Certificate and it seemed to be a deep rooted conspiracy by the excise duty evaders and the officers concerned and that they are now ganging up to pass on the blame to an innocent Chartered Accountant. Respondent has also denied that he was careless in his duties. We also wonder, if the Solvency Certificate was acceptable when it was filed, certainly it cannot become unacceptable during the course of carrying out investigation. Even as per the statement of Respondent recorded by Complainant, Respondent has categorically stated that he relied on certain documents produced by Shri Dhanraj Sodhi before issuing a Solvency Certificate It is observed that Respondent had taken adequate precaution before issuing Solvency Certificate. On the basis of this complaint, Respondent cannot be held guilty of any professional negligence - This Reference disposed off by issuing a reprimand to Respondent.

Summary

Issues involved:
The issues involved in this case are professional negligence in issuing a Solvency Certificate without complete details, potential loss to the Government exchequer, and the guilt plea by the Respondent.

Professional Negligence in Issuing Solvency Certificate:
The case revolves around a complaint lodged against the Respondent, a partner of a firm, for issuing a Solvency Certificate without mentioning the details of properties and investments, which led to a potential loss of Rs. 60 lakhs to the Government exchequer. The Respondent defended his actions by stating that he relied on documents produced by the individual mentioned in the certificate. The court observed that the Excise Department had accepted the certificate initially, raising questions about its sudden unacceptability during the investigation. Ultimately, the court found that the Respondent had taken adequate precautions before issuing the Solvency Certificate and could not be held guilty of professional negligence based on this complaint.

Guilt Plea and Disciplinary Action:
The Respondent, during the proceedings, pleaded guilty to the charges alleged against him and made submissions. Despite the plea, the court noted that there was no indication of any prior or subsequent misconduct by the Respondent, suggesting that this incident was an aberration in his otherwise clean professional record. The minutes of the Disciplinary Committee meeting recorded the Respondent's guilty plea, leading to the court issuing a reprimand as disciplinary action. The court disposed of the reference accordingly, without imposing any costs.