2023 (7) TMI 225 - AT - Income Tax

Assessment of income in the hands of the assessee - fraudulent filing of returns of income by the Chartered Accountant - uploading the ITR basing on fake and fabricated documents without assessee consent - According to the assessee, there was a fraud played by his partners with the connivance of Chartered Accountant in furnishing the return of income and other documents by making use of PAN of the assessee and also the same Chartered Accountant appropriated the refund that was issued by the department. HELD THAT - Assessee furnished the order in Criminal Petition on the file of the Hon'ble High Court of Judicature at Hyderabad wherein Mr. Abbineni Srinivasulu Goud and others were accused/petitions sought anticipatory bail which clearly reads that they have admitted therein that they happen to be the partners of the assessee herein in the liquor business. There is no denial of the fact that Chartered Accountant, who uploaded the ITRs of the assessee for the assessment year 2014-15. The finding by the Board of Discipline of ICAI is to the effect that the said Chartered Accountant, with the connivance of the partners of the assessee, prepared fake documents to support the ITR which was uploaded without the knowledge of the assessee. It prima facie creates any doubt as to whether there is any income in the hands of the assessee for this year or not? ICAI is a professional body competent to deal with the complaints against the Chartered Accountants, and the proceedings of the Disciplinary Board thereof carry their own credibility and cannot be simply brushed aside. Due regard has to be given to the findings of such professional Body. The said findings lends any amount of support to the contention of the assessee. Thus as criminal case is pending against the alleged perpetrators of the fraud and the findings of the criminal court would clinch the issue with this aspect. Fraud vitiates everything. It would not be in the interest of justice to direct the assessee to pay the taxes resulted on the fraud played against him and then, to collect the same from the perpetrators of the fraud. Set aside the issue to the file of the learned Assessing Officer to take a view basing on the outcome of the criminal case - Appeal of the assessee is treated as allowed for statistical purposes.

Summary

Issues involved: Determination of income in the hands of the assessee based on fraudulent activities by partners and Chartered Accountant in filing returns.

Summary:
The appeal was filed by the assessee against the order of the Commissioner of Income Tax (Appeals) regarding the assessment year 2014-15, claiming no real income due to fraudulent activities by partners and the Chartered Accountant. The assessee contended that the returns of income filed were false and made without his knowledge, as he had no income in the relevant year due to health issues and retirement from previous businesses. The Chartered Accountant was found guilty of misconduct by the Institute of Chartered Accountants of India for filing returns without the assessee's consent. The assessee also initiated criminal proceedings against the perpetrators of the fraud. The authorities did not agree with the assessee, insisting on tax liability, but the Tribunal considered the evidence and findings of the professional body ICAI, concluding that the issue should be decided based on the outcome of the criminal case. The Tribunal set aside the matter to the Assessing Officer pending the criminal case, allowing the appeal for statistical purposes.