The CBDT issued a press release a few days ago alleging that it has busted a tax refund scam master-minded by a Chartered Accountant. This has has not gone down well with The Institute of Chartered Accountants of India (ICAI).
The ICAI has issued a stern press release stating that Nagesh Shastry, the alleged culprit, is not a Chartered Accountant. Instead, he is a tax consultant who was masquerading as a Chartered Accountant and misleading gullible members of the public.
The ICAI has pointed out that the said press release of the CBDT has “maligned the reputation of Chartered Accountants in the eyes of public and has thus lowered the image and credentials of CA profession”.
It has also expressed concern that the Income tax department did not bother to verify the credentials of the alleged culprit before issuing a statement to the media.
The ICAI has suggested that in such sensitive cases, the income-tax department and publications should verify the facts with the Institute before issuing any statement wherein the involvement of a Chartered Accountant is suspected.
Earlier ICAI defended CAs against baseless strictures of the ITAT
It may be recalled that in Vijay Meghani vs. DCIT, the ITAT had passed strictures against the entire CA profession for alleged “fall in standards” arising from the alleged misdeeds by one CA.
In that case also, the ICAI had taken a stern stance and got the ITAT to withdraw/dilute the strictures.
Later, the Bombay High Court also expressed disfavour with the strictures passed by the ITAT against the CA profession in the following words:
“Thus, we find that the Tribunal, out of sheer desperation and frustration and agitated by the fact that the Revenue is not opposing the request for condonation of delay, turned its attention towards the assessee’s Chartered Accountant. It is unfortunate that thereafter paragraphs after paragraphs are devoted to how a Chartered Accountant ought to conduct himself and while advising litigants in tax matters. How a Chartered Accountant, as a professional, should be aware that legal proceedings should be filed in time and if there are adverse orders, how proper advice should be given. It is very unfortunate that the Tribunal has, apart from seeking to advice professionals, blamed not only individual Chartered Accountants but equally the Institute of Chartered Accountants of India. It is unfortunate that Courts of law or Tribunals, which are the last fact finding authorities in this case, adopted this course.”
Text of press release issued by the ICAI
The Institute of Chartered Accountants of India (ICAI) has come across a news-item titled ‘I-T busts B’luru CA’s tax refund racket with clients from top tech cos’ published in media dated January 26, 2018
It was stated in the news item that “The Income Tax Department on Thursday busted a racket in which tax refunds running into crores were fraudulently claimed by employees of around 50 companies in Bengaluru, including Infosys, IBM, Biocon and Vodafone. I-T officials of Karnataka and Goa found the employees had availed the services of a Chartered Accountant in Bengaluru, who filed false returns for them and secured refunds amounting to Rs.18 crore. The CA, the employees told investigators, took a 10% cut on the refund.”
On going through the aforesaid news-item, ICAI, being the regulator of the profession of Chartered Accountants has taken up the matter with concerned authorities. The representatives of ICAI immediately had a meeting with Director General of Income Tax (Investigation), Bengaluru seeking details in the aforesaid matter & requested Income Tax Department to share information about the accused i.e. Nagesh Shastry.
The Institute verified its records and found that Nagesh Shastry is not a Chartered Accountant as his name does not appear in the Register of members maintained by the ICAI. There are various fraudulent cases being reported wherein individuals/ Tax Consultants are falsely claiming to be Chartered Accountants and during preliminary investigations only it comes to the fore that the accused are not Chartered Accountants but are either Tax Practitioners/Accountants/ Commerce Graduates.
In view of the above, it is a matter of concern for ICAI that in the aforesaid matter neither Income tax department verified the credentials of the person in question with ICAI before issuing a statement to the media nor the Publication cross checked the validity of the statement with ICAI before publishing the story.
The news which has appeared in a section of media certainly has maligned the reputation of Chartered Accountants in the eyes of public and has thus lowered the image and credentials of CA profession.
The Institute has already taken up the matter with the concerned authorities of the Income Tax Department (Investigation), Bengaluru and has pointed out that such statement should not be considered to be issued to media before verifying the facts with ICAI. It would also be requested that in future, if any such case comes for their investigation wherein there is an alleged involvement of an individual claiming to be a Chartered Accountant, the matter may be referred to ICAI for cross verifying the credentials from its records.
The ICAI takes a strong exception to the contents of the news-item published in the newspaper which is incorrect and misleading in so far as the reference to a `Chartered Accountant’ was made. In such sensitive cases, the concerned Department and Publications ought to have verified the facts with the Institute before issuing any statement wherein the involvement of a Chartered Accountant is suspected.
ICAI is a statutory body established under the Chartered Accountants Act, 1949 for regulating the profession of Chartered Accountants in India. ICAI is the second largest accounting body in the world. During its more than 68 years of existence, ICAI has achieved recognition as a premier accounting body not only in the country but also globally, for maintaining highest standards in technical, ethical areas and for sustaining stringent examination and education standards. The strength of Chartered Accountant fraternity has grown to over 2.70 lakh members and about 8 lakh active students. The Institute functions under the Ministry of Corporate Affairs, Government of India. It has its headquarters in New Delhi and 5 Regional offices. It presently has 163 branches spread all over the country. In addition, it has also set up 31 chapters outside India and an overseas office in Dubai.