Case Law Details

Case Name : Vijay Vs Meghani Vs DCIT (ITAT Mumbai)
Appeal Number : I.T .A. No. 5418 and 5419/Mum/2011
Date of Judgement/Order : 20/08/2014
Related Assessment Year :
Courts : All ITAT (7336) ITAT Mumbai (2110)

ITAT held in its order that ICAI CPE programmes might have failed to achieve the desired objectives with some of the Chartered Accountants. It further said that it  is hightime that the ICAI should take note of these practicalities and should take corrective steps in order to maintain/restore the high standards and quality expected from a C.A. professional.

In the instant case, we have noticed that the C.A. firm cited above has given an affidavit to the effect that it has given advice to the assessee to wait for the outcome of the appeal filed before the Tribunal and then to file rectification petitions. In paragraph 6 of the affidavit, the C.A. firm has stated that they have advised the assessee herein that he could file a rectification or review application before the AO, once the issue is settled by the ITAT.

We notice that the expressions “rectification” and “review” appear to have been used in the affidavit with the understanding that they are synonyms to each other. Under sec. 154 of the Act, mistakes apparent from record alone can be rectified and the question of “review” does not come within the ambit of that section. Further, we have already noticed that the question of filing rectification petition for assessment year 1996-97 does not arise at all, since the AO had actually allowed the deduction u/s 80-O of the Act in that year and it is the Ld CIT(A) who had  withdrawn the said deduction. Thus, it is seen that the advice claimed to have been given by the C.A firm has been given without analysing the facts prevailing in the instant case and also without clear understanding of the provisions of the Act and their implications. We have also noticed that a C.A firm could not give such kind of advice, since it cannot forecast the outcome of an appeal filed before the Tribunal. We have already noticed that the CPE programs have been designed by ICAI with the noble objective of enlightening the Chartered Accountants with current topics, current developments and such programs are also aimed to continuous updating or refreshing of the knowledge of Chartered Accountants. The advice claimed to have been given by M/s Rajesh Rajeev Associates, Chartered Accountants, if considered to have been really given, would create doubt about the efficacy of the CPE programmes, since such kind of advices is not expected from a Professional. Further these kind of advices claimed to have been given by a C.A firm clearly give signals that the CPE programmes might have failed to achieve the desired objectives with some of the Chartered Accountants. It is hightime that the ICAI should take note of these practicalities and should take corrective steps in order to maintain/restore the high standards and quality expected from a C.A. professional. We have also expressed the view that the above said C.A firm might have given the affidavit only to accommodate the assessee, which conduct is also not expected from a Professional. If it is considered that the C.A firm has colluded with the assessee for giving such kind of affidavit, then it only warrants disciplinary action against them. Even, if it is considered that the said C.A. firm has really given such advices, then also it may require disciplinary action against them for giving such kind of advices, without proper verification of facts and without proper consideration of law. In our view, strict actions and fast disposal of disciplinary proceedings would not only instill discipline among the C.A fraternity, but also help curtail these kind of undesired practices adopted by some of the Chartered Accountants

Since the assessee as well as the above said C.A. firm has given affidavits to substantiate their explanation, we feel it appropriate to refer to the decision rendered by Hon’ble Allahabad High Court in the case of Sri Krishna Vs. CIT (142 ITR 618)(All) with regard to the affidavits furnished in a proceeding. In the above said case, the assessee therein filed an affidavit stating that he did not receive demand notices from the Income tax department. However, since the relevant records were not available with the department, the Income tax officer was not able to show that the demand notices were served upon the assessee. The Hon’ble High Court examined the sequence of events and came to the conclusion that the affidavit given by the assessee could not relied upon. The relevant observations made by Hon’ble Allahabad High Court in the above cited case are extracted below, for the sake of convenience:-

“The fact that the Department has not been able to make a definite assertion that the notices of demand were served on the assessee cannot help the assessee or the petitioners in this case. The failure of the respondents to make a positive assertion is not sufficient in view of the peculiar facts of the instant case, to lead to the conclusion that the assertion made by the assessee is true and worthy of reliance. It is neither a rule of prudence nor a rule of law that the statements made in an affidavit which remains uncontroverted, must invariably be accepted as true and reliable. Ordinarily, in the absence of denial, the statements may be accepted as true but if there are circumstances which suggest that the statements on affidavit should not be accepted as true, the absence of denial by the other side, would not by itself be sufficient to clothe the statements on affidavit with truthfulness and reliability. In view of the special facts and circumstances of this case, we are not inclined to accept the statement of the Karta made on oath in the affidavit that the notices of demand in respect of the assessment years in question were not served on him before the commencement of recovery proceedings. As said earlier, this statement is clearly an afterthought and was made when the deponent became sure that the Department is handicapped by the non-availability of the relevant records. The normal and natural course for the ITO is to send the assessment order along with notice of demand, and tender for deposit of the amount due in a treasury or bank, to the assessee. This course must have been followed in the instant case as well. There is no reason for us to think that the income-tax office would have departed from this well-known and well-established practice of the Department when an order of assessment was made and it was found that certain amount of income-tax was due from the assessee.”

In the instant case, we have observed earlier that a C.A. firm could not have given such kind of advices. Hence, we are constrained to reject the affidavit given by the C.A firm. The affidavit given by the assessee is also liable to be rejected since it gains strength only from the affidavit given by the C.A. firm.

In the instant cases, the discussions made by us in the earlier paragraphs would show that the assessee has failed to show that there was sufficient cause for the substantial delay occurred in filing these appeals. we have particularly noticed that

(a) an experienced C.A firm could not have given such kind of wrong/ absurd advice on the facts prevailing in the instant case.

(b) even if it is considered that his C.A firm has given such an advice, it is not believable that a prudent man would not have cross verified the same or applied his mind over it.

(c) the conduct of the assessee is beyond the comprehension of human conduct and probabilities.

(d) the assessee has failed to show the reasons for entire period of delay, i.e., no reason has been for the delay that occurred in between periods.

In view of the discussions made supra, we are of the view that no credence could be given to the letter and affidavit furnished by the Chartered Accountant and hence they will not come to the help of the assessee. We have already held that the affidavit given by the assessee is also liable to be rejected. Under the facts and circumstances discussed supra, we are constrained to reject the request put forth by the assessee to condone the delay in filing these two appeals. Accordingly we are not inclined to admit both the appeals filed by the assessee. We order accordingly.

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  1. adv. dr.g.balakrishnan says:




  2. bharat adesara says:

    Gujarati Kahevat “Chinde Chadyo te chor”
    ICAI should take action to motivate student to acquire knowledge in depth.I am consultant in the field of Accounting. I do work with proficiency. I keep myself in touch with latest development in the field. I come across fresh CA who has no primary knowledge of the IT Act,Tax Audit,C.Act even they could not pass book entry.
    I heard that in campus interview CA selected and after very few months they were rejected because of absence of knowledge.

    Its time to wake up ICAI & found solution.

  3. bharat adesara says:

    It right time to think ICAI for its education system.When i was article i suggested that institute should do for the student who get his training with keen interest to get knowledge.I found that its a mentality of student that “Get passed the exam first, we will get knowledge then”. Because of my articleship i acquired a good knowledge of Incometax, FEMA and COmpanies Act. Unfortunatly i could not complete CA. But i am doing all the work proficiently.

    Besides, we come accross the Officers at different departments with lacking of knowledge.Athority should not critisize whole profession in such a way .
    Gujarati Kahevat mujab”Chinde Chadyo Te Chor”

  4. Pradeep says:

    Enough Guys,
    Not even a single word criticizing the profession of Chartered Accountant will be bearable, the mistake is related to an Individual and not on the profession, if one ca has done a mistake that does not mean the entire fraternity is wrong, there are more than 99% of CA’s serving with Integrity, Independence and Ethically, the words CA stands for the trust.

  5. rajiv says:

    For any profession/job, it is just about managing the Law by all means, which is mostly outdated and neither serving the desired purpose nor acting tough on corruption and incompetence in all professions whose only objective and goal is super fast track to making buck. ethics and character are only on paper and good to listen in speeches of our netas, when it comes to implementation all are falling flat. all know it is not feasible to do business in current competition and low margins by following all the applicable laws of the land. Lapses are inevitable and hence the need for managing professional brokers in all professions by
    corrupt and unethical practices. socieity should show examples of people earned huge money by following all laws of the land and by honest means.
    the need is mother of calibre of kausalya to produce maryada purushottam and simplicity personified lord sri rama or jeeja mata to produce great chatrapthi shivaji maharaj,but, for them income tax laws were non-existant.

  6. Srihari Beldona says:

    Each individual is unique, consider identical twins their intellectual levels are different in my opinion sample outcome can not be concluded to the population of particular profession, no one is perfect, one can try to attain perfection

  7. nagesh kini says:

    Looking at the sad state of affairs the expanded form of “ACA” interpreted as “Adha CA” and “FCA” for “Faltu CA” ring truth more particularly when they routinely attest statements that are neither true nor fair, nor fairly true nor truly fair!

  8. vijaykumar says:

    Most of CAs have not practical experience now a days. They dont know even what is trading,profit & loss a/c & Balance sheet.Bank Reconceliation etc.

    Some CAs dont know the advance tax payments dates, return filing date,TAR, did it file electronicaly with digital signature or manually?

    Last years CA result is very low percentage. Approx 30 thousand wrote exam and 1500. qualified. Did any moderation pass method adopted? doubt on new generation CAs work. It creating a serious problem to IT department and also clients who needs their account audited.

    1. ca student says:

      balance sheet and profit and loss account is part of CA cpt syllabus without knowing basics we cant pass CA exams.. pl dont make stories.. u sure your auditor is CA and has CA certificate of practice ?

  9. CA Suniiel R Karbhari says:

    Dear All,
    Such exemplary remarks by an Institution like ITAT , which are un fortunate but equally shows the need for Introspection.

    What is highly appreciated by all corners ,of Immediate past C AND AG , are Intellectual Independence, Moral Intelligence , Ethical Transparency. Thats Professionalism.

    May I mention some of the words of Wisdoms ,

    by CA P N Shah Past President of ICAI reported in MAY 2005 ICAI Journal :

    “Not only do unethical practices need be checked but need to be curbed with stringent implementation of the Code of Conduct,….The Continuity of the Trust that the society has in our profession depends on us members, Individually as well as collectively “.

    by Narayan Murthy ,

    ” Professionalism requires intellectual independence ….We need to overcome the attitude and think independently ,if we are to be true professionals,Remember that different circumstances may require different approaches , but not different standards of ethics”

    by CA G Ramaswamy ,Past President of ICAI ,in Dec 2011 ICAI Journal
    ” We are constantly reminded of our Conviction about consciousness that we must possess while carrying out our professional responsibilities”.

    Lastly by Late Adv Nani Palkhiwala ,

    ” When you lose a case, nothing is lost, when you lose a client,again nothing is lost , even you lose as judge ,still nothing is lost but when you lose your Conscience then every thing is lost “

  10. CA Vyankatesh Somalwar says:

    It is wrong to curse the profession. Whatever corrective steps are needed should be implemented by all the stakeholders associated with the CA profession. People who are cursing CA’s & CA profession should remember that there are huge number of CA’s who hold highest posts in the industry. Also there are huge number of CA’s & CA firms who are doing quality work in their practice. These examples are much more than the examples which show degradation in the profession.

  11. Kumar Mohan Kar says:

    CA profession, if today it’s a dignified profession is because of trust and integrity and knowledge of the person who holds such qualification. Sometimes Trust and Intergrity is even top of Knowledge. If these three things are not there with a CA then it’s not even equal in the field of simillar qualification. Our Institute is well aware of this and also take necessary corrective action instatly whenever comes to notice but still some areas institute needs to re-look like articleship trainning ( should be tighten more) / stringent action on members in fault , etc., by which such type of instances can be controld.

    Moreover in the above case institute should immidiately try to find the fact and if the affidavit is done the way it’s told in the decision of ITAT, then immediate action should be taken against such members and firms.

  12. SAHIL KUMAR says:

    its assure that this will be happen, rather it is just starting of Some one Big Scam, because C.A Examination System is Lack of Transparency. where only the person who has booking knoweldge get sucess in their Life & Even no Single Chunk of Peaces of Sucess is Given to Candidates Who Has more knoweledge than a C.A.
    even there are some Friends Who are C.A, But They Does Not Know How To Prepare Balance Sheet From Trial Balance in Practices.
    in above it does not mean that they have expertise in other field. rather its Result of Dummy Training

  13. Rajiv says:

    This seems to be an isolated instance and should not construe to reflect the quality of entire CA fraternity. The concerned CA should be penalized for incorrect advise.

  14. Sidharth says:


    Ex Facie comment!!!

    What I am getting the impression that it is a very high profile co-operation (to corrruption) at the top level.

    It is obvious that CBDT and ICAI are in hand in hand to collect the tax payer’s money (is it to satisfy their purpose??) to enhance the economic growth (really!!!) of our country (should you read it as politicians!!).

    It can be said that corruption (in monetary terms only) originates where money is collected and the channel (the institute members) is through whom it is collected (directly or indirectly). Thank the almighty that RBI is not a caged parrot otherwise, we would be nowhere.

  15. Mohan S says:

    The Examination system is at fault. A student who has superior memory only can succeed. He must remember everything till he writes the examination and get high marks and he will come out as a successful CA but lacks in knowledge and capacity to understand any law much less Income tax act. Whereas a student who will be good in understanding the law and quick in grasping the subject may not be able to reproduce in the examination as to what is expected by the CA Institute but nevertheless his answers will be alright.
    therefore very bright students when asked to take the CA course they turn down the suggestion. Unless the Institute change their examination system we will not get CA professionals with good quality. Many CA Professionals when asked for some clarification they would often say that they will come back with the solutions and they go on shopping for the solutions from their friends in their profession or to the company secretaries.

  16. Anand says:

    CAs should not be expected to know each and everything in the commercial terminology. There are specialization also. This is just like an Orthopaedic Doctor and a Cardiologist. Both are MBBS Doctors but their areas of specialty are different. Just like this, a CA in Income Tax Practice may or may not know certain terminologies which are peculiar to the Excise Act or Financial Services.

  17. Ravi says:

    Somany Member CA’s are not having much knowledge about the updates and at least they don’t know how to train their articled students. Now a days 75% of CA students are follow Cut & Past. They are studying examination point of view. Even coaching centres are also teaching in a blind way rather analytical study by giving false advertisements and inducing the students. The ICAI institute should take rigorous actions on such coaching institutes.

  18. Sidharth says:

    True….. I have come across many CA friends who I really doubt. Once one of my friend CA asked me what is a ‘Bank Guarantee’.

    It was really surprising and indicates there is something seriously gone wrong. At times, I have seen even a commerce graduate dominating a CA over technicalities of Tax!!!

  19. KAYPEEYESS says:

    can you kindly advise can an NRI husband can give money to NRI wife (not employed) by tansferring money from NRI husband’s NRE / NRO account to his NRI wife’s NRE/NRO account. if so how this will be treated for Income Tax purposes for the NRI husband and NRI wife. will the income derived by the NRI wife from such receipt of money from her NRI husband will be clubbed with NRI husband’s income for determining tax purposes.
    kind regards

  20. Umesh Singh says:

    The main reason behind the deteriorating condition of profession is that many of our professional are not updated.I have met so many CAs who are even not able to tell the somewhere ICAI need to come with some policies to revive back the profession. Some steps like taking yearly exams regarding updates should pe compulsory for every CA if not qualified then his COP should be cancelled. It need to be done else we will be treated like nothing.

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