CA providing accommodation entries debarred from practice

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 response, however, the notice was received back undelivered with postal remarks “left country”. The matter was considered in the meeting of the Disciplinary Council in its meeting held in November, 2008. Respondent No. 1 was found guilty of professional and other misconduct. The matter was referred to the Disciplinary Committee for enquiry. Even during the course of enquiry before the Disciplinary Committee, despite best efforts, respondent No. 1 could not be served. The Disciplinary Committee submitted its report on 10.6.2010, which was forwarded to respondent No. 1 as well as the complainant. They were informed that the report shall be considered by the Council in its meeting. They were at liberty to file any response thereto. After considering the submissions of the complainant, the Council accepted the report of the  Disciplinary Committee. Respondent No. 1 was held guilty of other misconduct under Section 22 read with Section 21 of the Act. The Council, vide order dated 14.7.2011, decided to recommend to this court for removal of the name of respondent No. 1 from the register of members for a period
of 10 years.

The submission of learned counsel for the petitioner is that respondent No. 1 having been found guilty of misconduct and he having failed to avail of the opportunity of hearing afforded at different stages, not only the recommendations made by the Council be accepted, but seeing the conduct of respondent No. 1, he deserves to be penalised by removing his name from the register of members for life. He being a Chartered Accountant was bound to discharge his duties strictly in accordance with law, however, he not only violated the provisions but caused loss of revenue to the State to the tune of lacs of rupees for his undue benefit. He further submitted that respondent No. 1 had, in fact, admitted his guilt before the income-tax authorities later on. After committing the fraud, he left the country.

Learned counsels appearing for Union of India and Income-tax  Department supported the case of the petitioner.

Code of Ethics was introduced for Chartered Accountants, the introduction of which reads as under:

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