Registration of Proprietary Firm to Evade Tax , Advocate not Liable to Verify Fake Documents Provided by his Client: Jharkhand HC [Read Order]

In a decision in support of the tax practitioner, the Jharkhand High Court observed that a lawyer cannot be held accountable for confirming documents his client filed to register a proprietary business for tax avoidance. Satya Prakash Singh, the applicant, was granted anticipatory bail by the court.

The petitioner apprehending arresset has moved for grant of privilege of anticipatory bail in connection with Telco P.S. Case No.104 of 2018 registered under sections 406/420/468/471/120B of the Indian Penal Code and under Section 132 (1) (b)/131 (1) (e)/132 (1) (1) of Jharkhand Goods and Services Tax (JGST).

According to the petitioner's attorney, the petitioner is accused of being a tax professional who, in collusion with the co-accused, helped to register a private company using fictitious and ambiguous paperwork in order to avoid paying hefty taxes to the government. It was also argued that all of the accusations made against the petitioner are untrue, and that the petitioner acknowledges in the case's FIR that he helped the co-accused register for GST under the name and style of P.K. Traders.

Achieve Success: Expert-Led Courses for Tax and Finance Pros, Click Here

It is further argued that the petitioner has no obligation or responsibility to confirm the documents provided to him by his client, and that Mr. Pankaj Singh, who was acting on behalf of P.K. Traders, left after removing all of the documents following the proprietary firm's registration. Then, it is argued that the co-accused is the one who is owed the Input Tax Credit (ITC), and the petitioner is not accused of owning any portion of it.

Since the petitioner is still a licensed tax professional and an advocate by profession, there is no possibility that he will evade prosecution.  It is then argued that the petitioner agrees to provide adequate security, including monetary security, and to assist with the case's investigation. Therefore, it is argued that the petitioner should be granted anticipatory bail.

The bench of Justice Anil Kumar Choudhary held that “it is a fit case where the above-named petitioner be given the privilege of anticipatory bail. Hence, in the event of his arrest or surrender within a period of six weeks from the date of this order, he shall be released on bail on depositing cash security of Rs. 50,000/-and on furnishing bail bond of Rs. 25,000/- with two sureties of the like amount each.to the satisfaction of J.M. 1st Class, Jamshedpur.”

The bench granted anticipatory bail to the advocate.

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates