Preparation & uploading fake ITR by Chartered Accountant. ITAT remands case

Preparation and uploading of fake ITR by Chartered Accountant. ITAT remands the case to AO to decide in the light of pending criminal case

ABCAUS Case Law Citation:
ABCAUS 3755 (2023) (05) ITAT

In the instant case, the assessee had challenged the order passed by the National Faceless Appeal Centre (NFAC)

The assessee’s case was that there was no real income in his hands and whatever the return of income was furnished by the Chartered Accountant was false and without his knowledge and authority.   

The assessee was a partner in a liquor business. According to the assessee, his partners had played a fraud on him with the connivance of a Chartered Accountant by way of furnishing his return of income and other documents by making use of his PAN and also the same Chartered Accountant appropriated the refund that was issued by the department.

However, both the Assessing Officer (AO) and the CIT(A)/NFAC did not agree with the assessee and made the impugned addition.

Before the Tribunal the assessee submitted that he had no income at all in the relevant year due to his illness and as a matter of fact, he did not conduct any business what-so-ever in such year. According to the assessee, he did not file returns of income for the relevant assessment year but by using his PAN number, bank details, liquor license etc., his partners and the   Chartered Accountant fraudulently uploaded the ITR on the basis of fake documents.

The Assessee further submitted that because of the fraud played by the Chartered Accountant, the assessee filed a complaint before the Institute of Chartered Accountants of India (ICAI) and in the disciplinary proceedings, it was concluded that the said Chartered Accountant filed the returns of income without his consent. The assessee produced the proceedings of the ICAI whereby ICAI had found that the Chartered Accountant guilty of such charges.

The assessee further filed a copy of charge sheet his partner and the Chartered Accountant before the Judicial First Class Magistrate for the said offences. The investigation conducted by the police also showed that there was a fraud played against the assessee by the accused therein by making using of the bank accounts, PAN etc.

The Tribunal observed that in a Criminal Petition filed with the Hon’ble High Court the accused partners/CA had sought anticipatory bail. The order clearly read that they had admitted to be the partners of the assessee in the liquor business.  There was no denial of the fact that the said Chartered Accountant had uploaded the ITRs of the assessee. Further the findings of the ICAI were also 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.   

The Tribunal opined that the above findings prima facie creates doubt as to whether there was any income in the hands of the assessee for this year or not?

The Tribunal stated that 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 which lends support to the contention of the assessee.

In view of the fact that criminal case was pending against the alleged perpetrators of the fraud and the findings of the  criminal court would be decisive on this  aspect, the ITAT set aside the issue to the file of the Assessing Officer with direction to take a view basing on the outcome of the criminal case. 

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