Preparation of fake Documents and Upload of ITR by CA without Consent of Assessee: Hyderabad ITAT remands the matter to AO [Read Order]

The Hyderabad Bench of the Income Tax Appellate Tribunal (ITAT) has recently remanded the file for a fresh decision to the file of the Assessing Officer to decide in accordance with the outcome of the criminal case pending against the partners in the matter where the Income Tax Return (ITR) of the assessee was filed without his consent by a Chartered Accountant in connivance with the partners of the Assessee.

Whether or not there is income in the hands of the assessee was the question involved in this appeal.

According to the assessee, there was a fraud played by his partners with the connivance of the Chartered Accountant in furnishing the return of income and other documents by making use of the PAN of the assessee and also the same Chartered Accountant appropriated the refund that was issued by the department.

Assessee also pleaded before the learned CIT(A) that there was no real income in his hands and whatever the return of income that was furnished by the Chartered Accountant was false and without his knowledge.

It was further submitted that “Both the authorities did not agree with the assessee and according to them, the assessee is putting up his case of fraudulent filing of returns of income by the Chartered Accountant and various representations made by him before various forums, but there is nothing to dispute the addition that is made.”

The assessee personally presented his case and submitted several documents to support his assertion that he had no income whatsoever during the relevant year due to his illness. He claimed that he had completely ceased all business operations during that period.

The assessee stated that he retired from the Navy as an ex-serviceman in 2001 and subsequently ran a hot chips business for a few years until his heart-related health issues forced him to discontinue it. In 2012, he obtained a liquor business license in Dhone.

However, due to his severe heart condition, he was unable to proceed with the venture. The assessee further revealed that he did not file income tax returns for the assessment year 2014-15. Shockingly, he alleged that his partners and the Chartered Accountant colluded to file an Income Tax Return (ITR) fraudulently, utilizing his PAN number, bank details, license, and counterfeit documents.

Assessee also produced the proceedings of the ICAI before the tribunal bench. By order dated 06/01/2020, ICAI found that the Chartered Accountant with the connivance of one Mr Abbineni Srinivasulu Goud, prepared and filed ITRs of the assessee in this case without his knowledge on the basis of fake supporting documents.

It was noted that “This order clearly reads that for such an act of misconduct, the Chartered Accountant was found guilty. The assessee further filed a copy of the charge sheet based on his complaint against Mr Abbineni Srinivasulu Goud and others including the Chartered Accountant before the Judicial First Class Magistrate, Dhone for the offences punishable under sections 418, 419, 420, 468, 471 and 477A IPC.”

The Departmental Representative supported the orders of the authorities below and submitted that the assessee has to pay the taxes and he may collect the same against the perpetrators of the fraud and he cannot have any relief in these proceedings.

The income tax appellate tribunal bench, taking note of the above, remanded the matter to the file of the Assessing Officer for a fresh decision in accordance with the outcome of the criminal case filed by the assessee.

The single-member bench of Judicial Member K Narasimha Chary also noted that “The finding by the Board of Discipline of ICAI is 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. It prima facie creates any doubt as to whether there is any income in the hands of the assessee for this year or not?”

It was also observed 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 a professional Body. The said findings lend any amount of support to the contention of the assessee.”

In the pendency of the criminal proceedings closely related to the matter of the assessee, the tribunal bench allowed the appeal of the assessee for statistical purposes.

To Read the full text of the Order CLICK HERE

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