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| DATE: | August 27, 2013 (Date of publication) |
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| Click here to download the judgement (Bhagwan_Agarwal_ITAT.pdf) |
ICAI directed to initiate disciplinary proceedings against CA for suppressing information and obtaining order by fraud
The assessee bought and sold shares and claimed that he had earned capital gains which were exempt u/s 54F. When the AO alleged that the transactions were bogus and entered into for converting black money into white, the assessee surrendered the claim for exemption u/s 54F and offered the capital gains to tax. The AO levied penalty u/s 271(1)(c) on the ground that the surrender of income was not voluntary. This was upheld by the Tribunal. The assessee filed an appeal before the High Court which was dismissed. The assessee thereafter filed a Miscellaneous Application before the Tribunal on the ground that as the AO had not specified whether the penalty was for concealment or for furnishing inaccurate particulars, penalty could not be levied. The Tribunal allowed the MA and deleted the penalty (order included in file). The Department then filed a MA stating that as the first order of the Tribunal had merged in the order of the High Court, the subsequent MA was not maintainable. The assessee accepted that he was advised by his CA not to disclose the fact of dismissal of the appeal by the High Court in the MA so filed. The CA argued that though the fact of dismissal of the appeal was not stated in the MA he had not concealed the fact because it was known to the Department. HELD by the Tribunal allowing the MA:
In the last 40 years, a new creed of litigants has cropped up. Those who belong to this creed do not have any respect for truth. They shamelessly resort to falsehood and unethical means for achieving their goals. In order to meet the challenge posed by this new creed of litigants, the courts have, from time to time, evolved new rules and it is now well established that a litigant, who attempts to pollute the stream of justice or who touches the pure fountain of justice with tainted hands, is not entitled to any relief, interim or final. On facts, it was the duty of the assessee to disclose the decision of the High Court to the Tribunal while moving the MA and by not doing so, they did not come to the ITAT with clean hands. The assessee and his CA are guilty of fraud for deliberately suppressing the fact that the High Court had dismissed the assessee’s appeal and that the MA was not maintainable. The MA order is thus a nullity and non est in the eyes of law. The CA’s conduct amounts to professional misconduct and requires disciplinary action by the ICAI.
In (2005) 94 TTJ (Ahd)(TM) 973 : (2005) 94 ITD 227 (Ahd)(TM), it is held that the Order of High Court dismissing appeal under s. 260A on the ground that no substantial question of law was involved, would not attract the doctrine of merger and in such a case, order of Tribunal would remain amenable to its rectification jurisdiction under s. 254(2). It is further held that the dismissal in such a case is not of the appeal but of the petition for appeal, on the ground that there is no substantial question of law involved therein. Kunhayammed & Ors. vs. State of Kerala & Anr. (2000) 162 CTR (SC) 97: (2000) 245 ITR 360 (SC) and S. Shanmugavel Nadar vs. State of Tamil Nadu & Anr. (2003) 185 CTR (SC) 593 : (2003) 263 ITR 658 (SC) were applied.
Thus, when the same is rectifiable despite such an order of the High Court, how the rectification sought is affected by the fact that HC order is disclosed or not? It is immaterial for the purpose. Under these circumstances, the assessee cannot be alleged of suppressing the facts.
It is pertinent to note that one of the members who passed the present order was also the then sitting member of the Ahmedabad bench, wherein the different views were taken.
Adv. Shanker Patel
Rectification is to correct the apparent mistake. Where is the question of HC order?
I think there is no concealment/ fraud as ITAT Agra was opponent party in Hon’ble highcourt.
The CA argued that though the fact of dismissal of the appeal was not stated in the MA he had not concealed the fact because it was known to the Department. advices may differ from person to person. but i think its correct because if it was already know to the department, how could the assessee conceal it?
Agra bech taen itself as if it is law. They have taken similar kind of view in number of cases, which has not been even by jurisdictional High Court. The bench mambers are not prepared to hear the argument patiently and jump on conclusion as is also evident from the resolution recently passed by Taxation Bar Association, Agra and Agra Branch of ICAI. The learned Member who has been party of this case as well as in (2005) 94 TTJ (Ahd)(TM) 973 : (2005) 94 ITD 227 (Ahd)(TM) was party to the case of Hardayal Charitable Trust which held that if the Trust had not carried any activity, it would not be eligible for registration under section 12AA whereas same Member in one SMC case had taken view that non carrying of activity would not disentitle the institution for registration under section 12AA, but did not dissent while sitting in DB. Fortunately, Allahabbad High Court decided the case of Hardayal Charitable Trust expedititously.
So far comments made by the Bench towards conduct of Member of Bar, same are unfortunate. The Bench did not refer to ITAT Rules, which prescribes that fate of earlier MA is required to be disclosed. It nowhere prescribes that fate of High Court appeal should also be disclosed.
In number of cases, High Courts have held that comments on conduct of Bar Members should be avoided, which detoriate the quality of judgment.
Breaking a law is fashion of the day and expecting undue privellige from the court is essential part of the practice. BAR & BENCH relation must be honoured from the both end for the true and speedy trial and public faith in to judiciary.