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TMI Blog2018 (6) TMI 1286X X X X Extracts X X X X X X X X Extracts X X X X ..... s not call for any interference. Appellate Tribunal may only be faulted for not reporting Roy Ghosh and Associates to the Institute of Chartered Accountants for having apparently abetted in the commission of a colossal act of misrepresentation which the appellant assessee undertook before his bankers for the purpose of obtaining credit facilities by indicating a financial position that was not warranted by the books of the assessee. Appeal dismissed with costs assessed at ₹ 10,000/- to be paid to the Department within four weeks from date. - ITAT No. 22 of 2015, GA No. 436 of 2015 - - - Dated:- 21-6-2018 - Sanjib Banerjee And Abhijit Gangopadhyay, JJ. For the Petitioner : Mr. Gopal Ram Sharma, Adv For the Respondent : Ms. Smita Das De, Adv ORDER The Court : The matter is typical of how business is conducted in this country and why loans obtained from banks remain unpaid. The question of law framed on behalf of the appellant-assessee is as follows: Whether any addition to income can be made on the basis of balance-sheet and profit and loss accounts certified to have been prepared on estimate basis to avail bank loan and having no relation with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . A. R. in this regard we have pursued both the audited balance sheets and profit and loss account for the year ended 31st March, 2005 along with audit report in form no.3CB. The audited balance sheet and profit and loss account no where state that these are on the basis of estimate. The audited profit and loss account and balance sheet dated 18.7.2005 which is signed by as partner of Roy Gosh Associates does not give any indication that they are only the estimated figures. A Chartered Accountant is governed by certain discipline and he has to conduct audit in accordance with the provisions and rules of the Chartered Accountants Act. Schedule II and part1 holds a chartered accountant guilty of professional misconduct if he permits his name or name of his firm to be used in connection with the audit based on estimate. The assessing officer in our opinion is bound to rely on the audited financial accounts dated 18.7.2005 for making the assessment and determining the taxable income of the assessee. We noted that the provisions of section 44AB are applicable in the case of the assessee. The assessee got the tax audit and obtained the tax audit report from two different auditors one i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Roy Ghosh and Associates appended to the balance-sheet of July 18, 2005 was presented to the bank from which credit facilities had been sought. The certificate is in Form 3CB in accordance with Rule 6G(1) (b) of the said Rules. Paragraph 2(A) of the certificate, on which much emphasis has been sought to be laid on behalf of the assessee, reads as follows: (A). We are giving the information and explanations herewith purely based on estimate basis and have no relation with the actual figures and to avail the bank loan. Form 3CB is relatable to Rule 6G(1)(b) of the said Rules that pertains to the report of audit in the case of a person who carries on any business or profession other than a person covered by Rule 6G(1)(a) of the said Rules. The assessee is quick to point out that under Rule 6G(2) of the said Rules the particulars which are required to be furnished under Section 44AB of the Income Tax Act, 1961 are to be in Form No. 3CD. The assessee says that the certificate of July 18, 2005 of Roy Ghosh and Associates was not in Form No.3CD and, as such, the Appellate Tribunal fell into error in making observations as to the veracity of the particulars under Section 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is the further submission on behalf of the assessee that upon the regular balancesheet and profit and loss accounts being prepared, copies thereof would be furnished to the bank and retained with the records pertaining to the constituent. In other words, a rosy picture as to the financial position of the applicant seeking credit facilities from a bank would be presented before the bank for the bank to assess the creditworthiness of the applicant and the desirability of extending credit facilities to such applicant; but later another balance-sheet and profit and loss accounts would be slipped into the file, possibly indicating a less robust financial position of the constituent. If such was the object on the exercise, to which Roy Ghosh and Associates appear to have been a willing accomplice, the assessee has been appropriately dealt with by the fora below. The balance-sheet and profit and loss accounts of an assessee accompanied by a certificate as to its fairness, notwithstanding the caveat as noticed in paragraph 2(A) thereof, cannot be tailor-made to suit a particular purpose or window-dressed to make it attractive for bankers to rely thereupon and all the gloss and sheen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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