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ITO vs. Bhagwan Agarwal (ITAT Agra)
August, 27th 2013

ICAI directed to initiate disciplinary proceedings against CA for suppressing information and obtaining order by fraud

The assessee bought and sold shares and claimed that he had earned capital gains which were exempt u/s 54F. When the AO alleged that the transactions were bogus and entered into for converting black money into white, the assessee surrendered the claim for exemption u/s 54F and offered the capital gains to tax. The AO levied penalty u/s 271(1)(c) on the ground that the surrender of income was not voluntary. This was upheld by the Tribunal. The assessee filed an appeal before the High Court which was dismissed. The assessee thereafter filed a Miscellaneous Application before the Tribunal on the ground that as the AO had not specified whether the penalty was for concealment or for furnishing inaccurate particulars, penalty could not be levied. The Tribunal allowed the MA and deleted the penalty (order included in file). The Department then filed a MA stating that as the first order of the Tribunal had merged in the order of the High Court, the subsequent MA was not maintainable. The assessee accepted that he was advised by his CA not to disclose the fact of dismissal of the appeal by the High Court in the MA so filed. The CA argued that though the fact of dismissal of the appeal was not stated in the MA he had not concealed the fact because it was known to the Department. HELD by the Tribunal allowing the MA:

In the last 40 years, a new creed of litigants has cropped up. Those who belong to this creed do not have any respect for truth. They shamelessly resort to falsehood and unethical means for achieving their goals. In order to meet the challenge posed by this new creed of litigants, the courts have, from time to time, evolved new rules and it is now well established that a litigant, who attempts to pollute the stream of justice or who touches the pure fountain of justice with tainted hands, is not entitled to any relief, interim or final. On facts, it was the duty of the assessee to disclose the decision of the High Court to the Tribunal while moving the MA and by not doing so, they did not come to the ITAT with clean hands. The assessee and his CA are guilty of fraud for deliberately suppressing the fact that the High Court had dismissed the assessee’s appeal and that the MA was not maintainable. The MA order is thus a nullity and non est in the eyes of law. The CA’s conduct amounts to professional misconduct and requires disciplinary action by the ICAI.

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