ITAT Hauls Up CA For Committing Fraud

The following important judgement is available for download at
itatonline.org.

ITO vs. Bhagwan Agarwal (ITAT Agra) <http://itatonline.org/archives/?p=7129>

*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.


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