ICAI Fumes At CBDT For Maligning CAs In Tax Refund Scam

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

Press Release

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.

About ICAI

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.


12 comments on “ICAI Fumes At CBDT For Maligning CAs In Tax Refund Scam
  1. I agree with the views of the other commentators. The CA community needs to look into the mirror and clean out the black sheep. Otherwise if the regulator has to do it, it will be very hurtful to the profession.

  2. LSolanki says:

    I socked after heard said words from CA. Piyush Goyal. He is a member of prestigious professional body. A pure politician can used such types of shameful words. Sorry sir, but I am saying that corruption is born by the Politician, Govt. Officers/ Bureaucrat and not spread by the C.A. Please to teach your Politician, Party Members and Govt. Officers/ Bureaucrat who are not doing work with honesty. In all financial scam, CA’s name used first but please sir, tell us, how many politician/govt. officer etc are arrested for corruption and are penalized? There may be some persons are doing such type of work, but for that, to blame all CA fraternity, by saying that “CA are not doing work with honesty” it is not good for country? If same things are happened with other professional like Doctors, Advocate, and Teachers etc, than they will come on road and stopped their duties. Are our ICAI Institute is sleeping? If we all CA’s are stop to do work for a month than, Govt. will see the results of our honesty and also its impact on Indian Economy.
    ये नेता लोग, सी.ए. को किया समजते है ! जब कुछ देश में गलत होता है तो इसके लिए सी.ए.जिम्मेदार होते है कियु! सी.ए., सरकार से कोई कोटा (रिजर्वेशन) नहीं माँगा है ! आज देश की देश की जनता जानती है जी. ऐस. टी. को पूरी तरह से देश में किरियान्त्वित करने में सी.ऐ.का अहम भागीदारी है!

    • N G Nileshwar says:

      It is for the CA to stand up and protest. Does he do that? Instead he too joins the party. If every CA stops issuing false certificates there should not be a problem. The question is about black sheep in the Community. They need to be weeded out.
      Recently, I had the occasion of a CA preparing the Accounts of a Housing society. The CA certified it without even verifying the share capital. The Govt. Auditor endorsed it and the Dy. Registrar accepted the returns. When I pointed this deficiency to Audit Commissioner no action was taken. The Commissioner of Co-operation is also not bothered. You will be shocked to know that the share capital has not been verified since 1979, when the society was registered.
      What should any one infer from this? Cover-up is the only answer. You save me, I save you.
      The responsibility of the CA is to certify the the correctness of the account. There are about 50,000 registered societies. If they have filed their returns, the CA would have certified them.
      Tell me how many of them have ever examined the accounts of every society of the 50,000 honestly. If so, there would not have been disputes at all.
      But is that so?
      It is for you to answer.

      Empty threats are of no use.

    • Waghela b.s. says:

      Mr.Solanki, I have been dealing with the Incometax Department, CAs/Advocates/ITPs fraternity for more than 50+ years. What Mr.Piyush Goyal has said is absolutely correct. Perhaps you are living in another world ? Most of the ills of Indian economy are because of CAs. I do not say that all the CAs are dishonest, but such persons are in minority. Nowadays there is competition amongst CAs and one who teaches lessons in tax evasion is preferred. Do not call ICAI a Prestigious Body, it was then – not now.

  3. N G Nileshwar says:

    It is all pervading corruption. Why blame one another?
    Is it not a fact that you are not getting a certificate at a cost?
    Is the Govt. not selective in choosing the corrupt?
    A country which has dedicated itself to untruth can never survive.

  4. Waghela b.s. says:

    Why ICAI should fume ? Who has given it a certificate of Honesty ? When a CA of PW was arrested in Ramalingam Reddy case for False Audit Report, where was this Body of so-called Honest CAs ? There are hundreds of CAs who are engaged in HAWALA dealings and unfair practices ? Once upon a time CAs were looked upon with extreme respect as upright persons; but now it has acquired three different meanings – (1) Chartered Accountant, (2) Chalu-Accountant and (3) Chitiya-Accountant. Instead of blaming the CBDT, ICAI should clean its own house. My suggestion to the Ministry of Corporate Affairs to dissolve this ICAI for its failure to enforce discipline amongst its members ?

    • CA VIJAY GUPTA says:

      We should restrain ourselves blaming the whole fertility for the lapses of few. It is almost in all professions. It is very painful that you are blaming the whole profession even without the credentials of the complaint. Even many Govt.officials are caught red handed for taking bribes.

      • Waghela b.s. says:

        Yes, good sensible comments by a sensible CA.

      • N G Nileshwar says:

        Yes, the Govt officials are equally responsible. Are you trying to shift the blame only to Govt. officials? A clap requires two hands not one. No one blames the whole community. It is only the black sheep.
        If one wants the country to improve equal initiative has to come from both.
        It cannot be a one-way street.

  5. CA M R Hundiwala says:

    What stopped Institute from insisting on the Department to release a press note clarifying and correcting the facts and tendering an apology for the mistake. After all ICAI is no less in status than CBDT, unless the Institute itself considers so.

    • N G Nileshwar says:

      If you are talking of status equivalent to that of the CBDT, then accept that there is corruption also on your side. It is for you to apologise for the black sheep collectively who have tarnished your image. Can you demonstrate this by action not words?

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