TaxTMI 
TaxTMI 
2016 (9) TMI 714
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.... Respondent used to collect the amount of Service Tax in Cash/Pay Orders on behalf of the Complainant's Company i.e. Nirvan Services and Nirvan Travels to deposit in the Service Tax account for both the companies at Punjab National Bank, Lawrence Road, Delhi in the Service Tax Account No.DL-1/ST/M&R/35/NS2003 (Nirvan Services) and DL-1/TO/648/ST//2001) (Nirvan Travels) at the end of the month. The Respondent also used to file returns of the Complainant on behalf of the Company. It was alleged that he always used to give photocopies of the Challans deposited in the Bank. The complainant had been demanding the Original Challans from the Respondent, which he never gave on one pretext or the other. On becoming a little suspicious, the Complainant insisted upon payment of entire Service Tax amounts through DD/Pay orders. The Respondent advised the Complainant to give the Service Tax amount in form of DD/Pay Order favouring PNB, Lawrence Road for which he used to give the service tax challans' copies of the same amount as deposited in PNB, Lawrence, Road. Thereafter, on repeated demand of the originals the respondent handed over the original challans, in October 2004. After seeing th....
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.... stated that no compromise has been reached with the Respondent in respect of the instant complaint lodged with the Institute, although a Memorandum of Understanding has been signed mutually in order to recover the embezzled amount from the Respondent. The Complainant along with the said reply dated 22.08.2005 also enclosed a letter issued from the office of the Assistant Commissioner of Service Tax, which clearly stated that the Respondent has committed similar fraudulent activities with other parties as well. The said letter from the Office of the Assistant Commissioner of Service Tax dated 02.04.2005 has been written to the Station House Officer, Police Station, Gurgaon wherein inter-alia it has been stated that the Respondent has cheated two other Companies which were registered with the Service Tax Department by not depositing the proper Service Tax amounting to Rs. 86,550/- during the period 01.07.2002 to 31.03.2003. The reply was sent to the Complainant for his rejoinder. The Complainant in reply gave certain additional submissions along with documents/papers, which was forwarded to the Respondent on 07.02.2006; they were followed up with reminders dated 31.08.2006, 17....
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....s of the service tax challans of the same amount as deposited. As per the Complainant, the DD/ pay orders were made favoring PNB Lawrence Road, Delhi on the advise of the Respondent. On receiving the original challans ,it was noticed that in the original service tax challans, the actual tax of much lower amount was paid and the same were tampered with by additions/amended figures and overwriting .The forged copies of the said original challans were given to the Complainant to justify the heavy amount so collected wrongly in form of cash/pay orders to cheat him .The said act of cheating and forgery is clearly evident on comparing the challan copies as actually deposited and the forged copies as handed over to the Complainant. On the other hand, the DD/pay orders so received from the Complainant were credited in the Current account of M/s Shakti Agencies (CA no 44667) with unlawful assistance of the PNB Lawrence Road employees. The Complainant has provided on record the copies of the various demand drafts given to the Respondent along with their corresponding pay in slips whereby the same was deposited in the account of M/s Shakti Agencies (CA no 44667) whose proprietor was the broth....
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....lf and thus he needed time for preparation. The Committee apprised him of the M.O.U entered into by the Respondent with the Complainant stating that it leaves no room for further arguments. The Committee, however, offered the Counsel of the Respondent time till evening to study the papers and prepare the case, which he declined. Thereafter, the Committee directed the Counsel for the Respondent to give his defence in writing; to reach the Office of the Institute which shall be considered by the Committee while preparing its report in the matter. However till date nothing has been received from his end which itself speaks about the casual and disrespectful approach adopted by the Respondent in dealing with the Institute. 14. The Committee, however, is of the opinion that the role of the Respondent in the alleged forgery has been clearly observed which was done with the sole purpose of the embezzlement of funds of the Complainant given for the purpose of depositing service tax- modus operandi adopted by the Respondent has been explained in preceding paras. The Committee also observed that the Respondent thus not only failed miserably to work honestly and diligently as a professiona....
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....espondent stating that the latter was absolved of all allegations of wrongdoing and that the complainant withdrew such allegations. 10. It is urged that the Council fell into error in holding that the burden of proving innocence was placed on the respondent, which is contrary to established canons of procedure. It is also argued that the charges alleged against the respondent were not proved beyond reasonable doubt. Being quasi criminal proceedings the result of which can severely affect the professional reputation of a chartered accountant, the higher burden of proof was required. Here reliance is placed on H.V. Panchaksharappa v K.G. Eshwar, AIR 2000 SC 3344 and Council of The Institute of Chartered Accountants of India vs. C.H. Padliya and Another, 1977 MPLJ 722. 11. The findings of the Council are that the respondent's attitude was casual and he did not take the burden to defend himself. It is submitted that even if the Respondent did not produce some material evidence to defend himself, that would not lead to the inference that the charges against him were proved. Reliance is placed on the Institute of Chartered Accountants of India H.S. Ghia, 2005 [107(1)] Bom LR 297 an....
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....any professional or other misconduct, the Council shall refer the case to the Disciplinary Committee, and the Disciplinary Committee shall thereupon hold such inquiry and in such manner as may be prescribed, and shall report the result of its inquiry to the Council. (2) If on receipt of such report the Council finds that the member of the Institute is not guilty of any professional or other misconduct, it shall record its finding accordingly and direct that the proceedings shall be filed or the complaint shall be dismissed, as the case may be. (3) If on receipt of such report the Council finds that the member of the Institute is guilty of any professional or other misconduct, it shall record a finding accordingly and shall proceed in the manner laid down in the succeeding sub-sections. (4) Where the finding is that a member of the Institute has been guilty of a professional misconduct specified in Schedule 1, the Council shall afford to the member an opportunity of being heard before orders are passed against him on the case, and may thereafter make any of the following orders, namely,- (a) reprimand the member; (b) remove the name of the member from the ....
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....deposited) were less and that he abstracted or misappropriated, for his own purposes, the balance amounts. These, according to the complainant, were to the tune of Rs. 47,34,278/-. 16. This court would first deal with the respondent's objection as to maintainability of the complaint, on the ground that the disputes were settled between him and the complainant. He relies on two judgments. In the first, K.K. Sindhwani, the Punjab and Haryana High Court observed that: "It is seen that the complainant did not appear either before the disciplinary committee or before the Council. Thus, the allegations contained in the complaint have remained unsubstantiated. The disciplinary committee and the Council have failed to disclose on what basis the charge against the contesting respondent was said to have been proved. It is rather amazing to note that the complainant having settled the dispute with the contesting respondent before the Company Law Board, did not appear before the disciplinary committee and the Council. The Company Law Board, however, conveyed to the petitioner that in view of the settlement between the complainant and the contesting respondent nothing survived in the comp....
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....egations. These facts, i.e. the parties appearing to have entered into another MOU on 16.04.2012 were material and had to be investigated. The impugned order does not take that into consideration at all. Whatever the truth of that document, the Council should have gone into it and called the complainant to depose before it, in the light of the later development. This, in the Court's opinion, is a serious infirmity with the impugned order. 18. The next question is whether in the circumstances of the case, particularly having regard to the nature of evidence and the materials placed before it, the Council could have concluded that the respondent was guilty of cheating or indulging in fraud, causing loss to the complainant. No doubt, the complaint does mention the relative amounts, the challans, the amounts allegedly collected as due, and the amounts paid. However, the relative or corresponding demands from the Service Tax authorities or the assessment orders, or even the service tax returns, are not on the record. These would have substantiated to a large measure the complainant's allegation. Likewise, there is no material to suggest that the amounts were deposited in some other c....