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TMI Blog2016 (6) TMI 368X X X X Extracts X X X X X X X X Extracts X X X X ..... removed from the register of members of the Institute of Chartered Accountants of India for life. Ordered accordingly. - Civil Reference No. 5 of 2012 (O&M) - - - Dated:- 18-3-2016 - MR. RAJESH BINDAL MR. HARINDER SINGH SIDHU JJ. Mr. Arun Nehra, Advocate for the petitioner. Mr. P. C. Goel, Advocate for Union of India. Mr. Denesh Goyal, Advocate for respondent No. 4. ... Rajesh Bindal J. 1. This order will dispose of three references bearing Nos. 5 and 6 of 2012 and 1 of 2013 received from Institute of Chartered Accountants of India (for short, 'the Institute') under Section 21(5) of the Chartered Accountants Act, 1949 (for short, 'the Act') in respect of disciplinary action taken against respondent No. 1-Vivek Kapoor, a practising Chartered Accountant at Amritsar. 2. After receipt of statement of case, notice was issued to respondent No. 1, however, it was reported that he had gone broad, hence, could not be served. Number of efforts were made thereafter for service of respondent No. 1, but all failed. The order passed on 7.8.2013 shows that house of respondent No. 1 was found to be locked. The Process Server was informed that he had sol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unity of hearing afforded at different stages, not only the recommendations made by the Council be accepted, but seeing the conduct of respondent No. 1, he deserves to be penalised by removing his name from the register of members for life. He being a Chartered Accountant was bound to discharge his duties strictly in accordance with law, however, he not only violated the provisions but caused loss of revenue to the State to the tune of lacs of rupees for his undue benefit. He further submitted that respondent No. 1 had, in fact, admitted his guilt before the income-tax authorities later on. After committing the fraud, he left the country. 5. Learned counsels appearing for Union of India and Income-tax Department supported the case of the petitioner. 6. Heard learned counsel for the parties and perused the paper book. 7. Though there are many frauds in which Chartered Accountants are involved, but there are very few cases in which the complaints against them are pursued to its logical end and the Institute take disciplinary action against its members. In the case in hand, the process against respondent No. 1 was initiated with a complaint filed by the Commissioner of Income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gal notices sent by Zubin Khurana, Alka Khurana, Vinod Khurana to Shri Vivek Kapoor (Annexure 6B, 7B, 8B). (5) Shri Vivek Kapoor was advisor of Zubin Khurana, Alka Khurana, Vinod Khurana. These persons have sent legal notice to him (enclosed as Annexure 6B, 7B, 8B), which shows that he did not disclose the true statement of affairs. (6) The accommodation entries given by him to various persons as admitted by him in the statement of facts (Annexure -2) and statements given before the Investigation Wing (Annexure 1A, 1B and 1C) as such Shri Vivek Kapoor failed to report a material mis-statement known to him. (7) The overall misconduct of Shri Vivek Kapoor in giving bogus entries, fraudulently preparing partnership deeds, profit and loss account, balance sheet etc. as detailed in his own statements before the Investigation Wing, Amritsar and in his application before the Settlement Commission clearing being out that Shri Vivek Kapoor was grossly negligent in conduct of his professional duties. 8. After receipt of the complaint, copy thereof was sent to respondent No. 1 vide letter dated 2.6.2006 for his response. He did not submit any reply. The matter was referr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operating Bank Accounting using fake names and photographs, giving bogus entries, preparing fraudulent partnership deeds. Profit Loss Account and Balance Sheet and has thereby done cheating with clients and has help clients to defraud the revenue by helping in evading Taxes and, therefore, has committed acts which are unbecoming of a Chartered Accountant. The Committee is thus of the view that the respondent is guilty of Other Misconduct under Section 22 read with Section 21 of the Chartered Accountants Act, 1949. CONCLUSION : 15. Thus, in conclusion, in the considered opinion of the Committee, the respondent is guilty of Other Misconduct under Section 22 read with Section 21 of the Chartered Accountants Act, 1949. 9. On receipt of the report of the Disciplinary Committee, the Council observed as under: 10. On consideration of the Report of the Disciplinary Committee along with the written representations dated 17th August, 2010, 15th March, 2011, 11th April, 2011, 24th May, 2011 and 30th June, 2011 received from the complainant- Department, the Council decided to accept the report of Disciplinary Committee and accordingly held that the respondent was g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... una Nagar and Jagadhari. They were after getting the entries of export concerns. This was because the export project is tax free. Since I was having some export concerns with me. I was lured by them into sending the export entries to their clients at Yamuna Nagar and Jagadhari. At Amritsar I was only being sent the cash by this person, i.e., Ashwani Mittal. When the cash being received it was then deposited in various bank accounts at Amritsar which I shall state later on. The cash was sent on the instruction of Sh. Ashwani Mittal with the direction reg only the name blank and the amount of the draft to be prepared. In fact Ashwani Gupta is in the league with the local C.As. at Yamuna Nagar who approach him and he then sends the money to Amritsar. The money received at Amritsar was deposited by me with the help of my employees in the office. They used to prepare the drafts from the bank and send the drafts to Yamuna Nagar at the address of Ashwani Mittal, Kheri Bazar, Jagadhari by courier service i.e. First Flight, Court Road, Opp. Swami Motors, Amritsar. The detail of the bank accounts used at Amritsar is as follows: (1) OBC Putlighar in the nameof J K E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re were entries also on which I did not get any consideration. I am ready to pay taxes on it. My case maybe viewed sympathetically. I have discussed everything. I am ready to pay taxes subject to no penalty and prosecution. Statement of Sh. Vivek Kapoor recorded on 18.1.2002 xx xx xx Q.3 Pl. tell who is Deepak Kumar, the prop. of J K Enterprises in the account 52626 in OBC Putlighar. Ans. Actually nobody in the name of Deepak Kumar exits. Any available photograph was attached. This photograph is not known to me. However the account was operated by me and I used to sign as Deepak on the cheques. Q.4 Pl tell who is Deepak Kumar on the account opening form of A/c number 10350 in OBC Hall Bazar. Ans. This account was also operated by me and I used to sign as Deepak Kumar. However the photograph which was picked randomly in this case happen to be that of Manu r/o Gopal Di Haqtti, Swawer Mandi, Amritsar. He happened to be one of my articles. Similar in the OBC Jalianwala Bagh account in the name of Deepak Kumar prop. J K Enterprises the photograph is of somebody else. But the account was operated byme by signing again as Deepak. The photograph was arranged r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he names of various export namely RK Overseas, AG Exports, bani Exports, Jac Bros. Bee Bee International either cash, cheque or draft are not having any basis. This is only a method of converting the unaccounted i.e. black money of the beneficiaries as legitimate accounted money without the payment of income tax. 11. Besides this, respondent No. 1 filed application before the Settlement Commission constituted under the Act for settlement of his income tax cases by surrendering undisclosed income. In the statement of facts submitted by respondent No. 1 before the Settlement Commission, he again admitted his modus operandi. The same are extracted below: Statement of Facts 1.1 The applicant is a whole time practicing Chartered Accountant practicing Company in Amritsar and having a few clients with Branch Offices in Delhi and Karnal as well. The applicant was also auditing the books of account of the following exporter firms u/s 44AB of the Act. 1. M/s AG Exports, Tarn Taran Road, Amritsar. 2. M/s Bant Exports, Tarn Taran Road, Amritsar 3. M/s R. K. Overseas, Tarn Taran Road, Amritsar 4. M/s Jac Bros., Tarn Taran Road, Amritsar 5. M/s Be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... State Bank of Bikaner Jaipur, M.M.M. Road A. G. Exports A/c No. 288 State Bank of Bikaner Jaipur, M. M. M. Road Bee Bee International A/c No. 294 State Bank of Bikaner Jaipur, M. M. M. Road Gaurav Arora A/c No. 369 State Bank of Bikaner Jaipur, M. M. M. Road Rajan Arora HUF A/c No. 354 Pb. Sind Bank, Tunda Talab, ASR Jac Bros., A/c No. 1211 Central Bank of India Guru Bazar, ASR J. K. Enterprises A/c No. 1502. 1.4 None of the aforesaid accounts were in the name of the applicant and as such none of the deposits or remittances in the said accounts belonged to the applicant. 1.5 After preparation of duplicate sets of Trading and Profit Loss A/c, Capital are having names of various interested parties and balance sheets, as well as duplicate partnership deeds having names of interested parties as partners and opening of bank accounts, the next step used to be to issue bank drafts interested ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in deposits of small amounts or lent in cash on interest to third parties. While computing interest on investment it has been presumed that all the available funds/ savings were deployed for earning interest @ 12% for the whole year. The applicant after carefully perusing his profit and loss account filed before the income tax department for the AY. 1998-99 to AY 2001-02, had identified certain expenses that may not have been incurred for the purpose profession and has therefore offered the same to tax before the Hon'ble Settlement Commission. The applicant had also offered to tax for each of the assessment years certain amounts which may have been earned by way of commissions etc. for which no records are available in order to ensure that there is no escapement of income. Neither the commission nor the interest income earned through investments was recorded in the regular books of accounts. There is also no other record of such transactions except the bank accounts. Based on the entries in the bank accounts and on the basis of memory and the unaccounted net wealth, the applicant has prepared the revised computation of income for each of the five years. The revised income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Committee, and the Disciplinary Committee shall thereupon hold such inquiry and in such manner as may be prescribed, and shall report the result of its inquiry to the Council. (2) If on receipt of such report the Council finds that the member of the Institute is not guilty of any professional or other misconduct, it shall record its finding accordingly and direct that the proceedings shall be filed or the complaint shall be dismissed, as the case may be. (3) If on receipt of such report the Council finds that the member of the Institute is guilty of any professional or other misconduct, it shall record a finding accordingly and shall proceed in the manner laid down in the succeeding sub-section. (4) Where the finding is that a member of the Institute has been guilty of a professional misconduct specified in the First Schedule, the Council shall afford to the member an opportunity of being heard before orders are passed against him on the case, and may thereafter make any of the following orders, namely: (a) reprimand the member; (b) remove the name of the member from the Register for such period, not exceeding five years, as the Council thinks fit: Pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccountants, the introduction of which reads as under: INTRODUCTION Financial statements of an enterprise depict the wholesome financial situation of the enterprise for a particular period/ at a particular date. The information in these statements are of vital importance for a large section of the society, which deal with that enterprise. It may be suppliers of material, customers, investors, Banks, Financial Institutions, Insurers, Government, Tax Authorities, employees, collaborators and even their competitors. Keeping in view the importance of these statements and the large section of the society who use these statements for taking many vital decisions, it is necessary that these statements are attested by some person who is expert in this field so that the objectivity, integrity, reliability and credibility of the information is assured to a large extent. This function of attestation is done by professional accounts, who are Chartered Accountants in our country. It has been however observed that there have been a number of cases in banks and financial institutions wherein due to the erroneous/ ambiguous advice tendered by the respective Chartered Accountants, borrowa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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