TaxTMI 
TaxTMI 
2016 (6) TMI 368
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.... that house of respondent No. 1 was found to be locked. The Process Server was informed that he had sold his house six/seven months ago and had gone to some unknown place. The application for substituted service was allowed. The service was effected by affixation and further by publication in two newspapers (English and Punjabi). Despite that, none appeared for respondent No. 1. 3. Learned counsel for the petitioner submitted that disciplinary action against respondent No. 1 was initiated on the complaint dated 1.2.2006 received from the Commissioner of Income Tax-II, Amritsar. The allegations against respondent No. 1 were that he was master-mind in a scam of providing accommodation entries to various concerns after charging commission ranging from 1% to 3%. The beneficiaries were shown partners in various exporting concerns by writing forged partnership deeds. Several bank accounts were opened using fake names, photographs and introducers. Respondent No.1 himself was operating all benami bank accounts. After receipt of the complaint, proceedings were initiated against respondent No. 1. Copy of the complaint was sent to respondent No. 1 vide letter dated 2.6.2006 for respo....
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....and, the process against respondent No. 1 was initiated with a complaint filed by the Commissioner of Income Tax- II, Amritsar on 1.2.2006, noticing fraud resulting in loss of lacs of rupees as revenue to the Government. The relevant parts of the complaint are extracted below: "1. Shri Vivek Kapoor who was a whole time practicing Chartered Accountant, practicing mainly at Amritsar, was engaged in the business of giving accommodation entries to various persons after charging commission ranging from 1 to 3% during the period 1997-98 to 2001-02. The said Chartered Accountant had opened, admittedly 15 bank accounts at Amritsar by using fake names, photographs and introducers. He used to operate all these bogus accounts through which the accommodation entries were routed. Cash was obtained from the beneficiaries and bank drafts/cheques were issued to beneficiaries. In most of the cases, the beneficiaries were shown as partners in various exporting concerns by writing forged partnership deeds. In such cases the drats/cheques received by the beneficiaries were claimed by them as share of profit from such exporting firms. In few other cases the entries were also given to the beneficiari....
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....de letter dated 2.6.2006 for his response. He did not submit any reply. The matter was referred by the Council to the Disciplinary Committee. Even before the Disciplinary Committee, respondent No. 1 could not be served as he left the country. The Disciplinary Committee submitted its report on 10.6.2010. The findings and the conclusions recorded by the Disciplinary Committee are extracted below: "FINDINGS 10. The Committee considered the submissions made by the complainant and the witnesses who had appeared before the Committee. The Committee also perused the documents placed on record by the complainant. 11. The complaint was received duly filled in Form 8 by the Commissioner of Income-tax-II, Amritsar and it was noted that the respondent has been in full time practice as a Chartered Accountant at Amritsar. The respondent has failed to submit his written statement inspite of regular reminders. The letters were returned undelivered with the postal remarks "Prapt karta desh chor kar chala gaya hai". 12. The Committee is of the view that the respondent has opened various bank accounts using fake names and photographs. He was also operating all these bogus accounts to route....
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.... Disciplinary Committee and accordingly held that the respondent was guilty of "Other Misconduct" under Section 22 read with Section 21 of the Chartered Accountants Act, 1949. 11. The Council also decided to recommend to the High Court that the name of the respondent be removed from the Register of Members for a period of ten years which shall run concurrently alongwith the same punishment recommended in other two cases i.e., [25-CA (G-11)/2004] and [25-CA(S-27)/ 2005] against the same respondent." 10. The case against respondent No. 1 was established on the basis of admissions made by him before Income-tax authorities. The allegations against him were not denied by him at any stage of the proceedings, either before the Council or the Disciplinary Committee. Even before this court, respondent No. 1 remained unrepresented despite service. Some of the admissions made by respondent No. 1 before the Income-tax authorities have been referred to by learned counsel for the petitioner, which are extracted below: "Statement of Sh. Vivek Kapoor recorded on 15.1.2002 Q.1 Pl. identify yourself. Ans. I am Vivek Kapoor and am working as Chartered Accountant since 1982. I am....
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....as follows: (1) OBC Putlighar in the nameof J K Enterprises Prop. Deepak Kumar, 52626 (2) OBC Civil Lines in the name of Shiv Kumar A/c No. 13105 (3) OBC Hall Bazar in the name of J K Enterprises Prop. Deepak Kumar 10350 (4) OBC Jallianwala Bagh in the name of J K Enterprises (5) CBI Civil Lines in the name of J K Enterprises A/c No. 943 (6) SBOP East Mohan Nagar in the name of A. G. Exports and M/s R. K. Overseas (7) State Bank of Bikaner and Jaipur, AG Exports, Rajan Arora HUF, Bee Gee International, Bani Exports (8) P. S. B. Sindhvidayalaya in the name of Bani Export (9) P. S. B. Tanda Talab in the name of Jac Bros. (10) In addition to the above it is also informed that as per my intimation Ashwani Mittal and his association have opened an account in the name of Jac Bros in Central Bank of India Yamuna Nagar or Jagadhri. In this acount along with the actual partners of Jac Brother whose photographs were prepared by me (without the knowledge of the actual partners of Jac Bros) Mr. SC Garg, Shallu Gupta, Atul Garg etc. were partners. I am supplying you the detail of the same. (11) Also it is intimated that the parties have not only taken bank entri....
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....s arranged randomly and I do not know who is the person. Also in the account of J K Enterprises Prop Deepak Kumar in CBI (Central Bank of India) Civil Lines, Amritsar the photograph is of somebody else, and was arranged randomly. However again the account was operated by me by signing as Deepak. In the Jee Bee International also the signature of Deepak Kumar are done by me but the photograph of Ajay Kumar who is working as an accountant with Sanjay Weaving Co. Verka. Q.5 Pl tell who is Sameer Arora signing the cheques of AG Exports in SBOP East Mohan Nagar, Amritsar and who is signing as Vicky in the RK Overseas. Ans. In RK Overseas account with SBOP the account was opened as a proprietary concern and I used to sign as Vicky on the cheques and operate the same. The photocopy of the cheque No. 0292563 dated 12.11.98 from account No. 1344 of RK Overseas shown to me has been assigned by me and on the reverse of the cheque the application for the issue of demand draft favouring Sushil Gupta has also been written by me. It is submitted that now I recollect that this concern was opened as partnership concern with Kuljit Singh as partner and Vicky. Kuljit Singh was a sham name....
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....ndari Bridge, Amritsar 6. M/s Gaurav Arora, 62- Bhandari Bridge, Amritsar 7. M/s Kiran International, Tarn Taran Road, Amritsar 9. M/s Parveen Suneja, Bagh Ramanand, Amritsar 1.2 As already stated the financial position of the applicant was quite weak and the added illness of his old parents 1.3 During the financial year 1997-98, the applicant met Shri Ashwani Mittal and a chartered Accountant Shri Raj Kumar Gupta both of Yamuna Nagar, who coerced and prevailed upon him to enter into the business of giving accommodating entries. The modus operandi suggested by them was that applicant would provide them with true copies of the Trading, Profit & Loss A/c and Balance Sheets of the genuine exporters for which the applicant was the Audition on the basis of the actual balance sheets of such genuine exporters, one of them would prepare duplicate profit & loss account, balance sheets and partnership deeds with deferent set of partners and locate persons interested in buying accommodation entries of tax free export profits. The applicant would then open bank accounts in various banks especially in the bank/ branches where the bank accounts of genuine exporters existed.....
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....certain accommodating entries to the parties in Amritsar, which were known to him only. The applicant also earned commission by using his contracts without various clients for arranging sales turnover. The cash received by way of sale proceeds was remitted to the sellers through cheques issued from the aforesaid bank accounts. A few parties were also given accommodating entries by way of Share application money. 1.9 The applicant had employed staff for handling cash and for getting drafts prepared. The applicant also incurred various expenses of the nature of conveyance, stationary, photocopying, bank account opening expenses etc. 1.10 The applicant invested the savings cut of commission earned in fixed deposits and also gave private cash loans. The interest earned on the said movements is also being offered for tax. Assessment Years Involved Assessment years 1998-99 to 2002-03 Previous Years 1.4.1997 to 31.3.2002 Status Individual MANNER IN WHICH INCOME HAS BEEN DERIVED The applicant has been providing accommodating entries in the form of export profits, loans, creating turn over and share application money. Most of the time, the two persons of ....
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....D 1. Determination of the ownership of the benami bank accounts and the nature of the deposits and withdrawals therein. 2. Determination of the income in respect of each of the assessment years from 1998-99 to 2002-03. TERMS OF SETTLEMENT 1. Interest under various sections of the income tax act should not be levied or may kindly be waived as the case may be. 2. Penalty under various sections of the Income Tax Act 1961 should not be charged and should be waived, as the case may be. 3. Immunities from prosecution under the relevant provisions of the Income Tax Act, related sections of the IPC and Central Acts, as may be applicable, may kindly be granted. 4. Grant of installments for the payment taxes as a consequence of the settlement. 5. Permission to bring the undisclosed income in the books of account. 6. Such other relief to the applicant as may be deemed fit by the Hon'ble Commission having regard to the facts and circumstances of the applicant's case may kindly be allowed. LEAVE TO MODIFY APPLICATION The applicant craves leave to add, amend or modify this application or any part thereof. REVISED STATEMENT OF AFFAIRS Th....
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.... notice of the date so fixed to be given to the member of the Institute concerned, the Council and to the Central Government, and shall afford such member, the Council and the Central Government an opportunity of being heard, and may thereafter make any of the following orders namely: (a) direct that the proceedings be filed, or dismiss the complaint, as the case may be; (b) reprimand the member; (c) remove him from membership of the Institute either permanently or for such period as the High Court thinks fit; (d) refer the case to the Council for further inquiry and report. (7) ............................................. (8) For the purposes of any inquiry under this section, the Council and the Disciplinary Committee shall have the same powers as are vested in a civil court under the Code of Civil Procedure, 1908, in respect of the following matters, namely: (a) summoning and enforcing the attendance of any person and examining him on oath; (b) the discovery and production of any document; and (c) receiving evidence on affidavit." 13. As per the scheme of the Act, after following due procedure as laid down, the Council can take action against its m....