Due diligence in statutory tax certification is mandatory; failure to verify Form 10DA eligibility conditions amounted to professional misconduct.

A statutory certificate supporting a tax deduction must be issued only after obtaining sufficient appropriate evidence and exercising due diligence and professional skepticism. The authority found that the chartered accountant failed to verify the foundational eligibility conditions for Form 10DA under section 80JJAA, including reorganisation restrictions, employee-count increase, exclusion of certain government-funded EPF employees, prescribed banking-mode payment, and the salary ceiling. Reliance on management representations and incomplete sample checks was held insufficient. Professional misconduct was therefore proved, and a monetary penalty was imposed.

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Issues: Whether the chartered accountant committed professional misconduct by issuing Form 10DA certificates under section 80JJAA without verifying the statutory conditions and without obtaining sufficient appropriate evidence.

Analysis: The Order held that certification under Form 10DA required close verification of the conditions governing deduction under section 80JJAA, including whether the business involved any reorganization, whether employees whose EPF contribution was borne by the Government were excluded, whether there was actual increase in employee strength, whether emoluments were paid through prescribed banking modes, and whether the salary ceiling was satisfied. The working files did not support the accountant's assertions, and the authority found that reliance on management representations and incomplete sample checks did not meet the standard of professional diligence expected for a statutory certificate affecting tax claims.

Conclusion: The charge of professional misconduct was proved, and the failure to exercise due diligence and to obtain sufficient information was held against the chartered accountant.

Final Conclusion: The statutory authority concluded that the accountant's certification was defective and imposed monetary penalty for proved professional misconduct.

Ratio Decidendi: A statutory certificate supporting a tax deduction must be issued only after obtaining sufficient appropriate evidence and exercising due diligence and professional skepticism; failure to verify the foundational eligibility conditions constitutes professional misconduct.

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