ICAI clarifies person arrested is not CA in IT refund racket

Posted on    05 February 2018

The Institute of Chartered Accountants of India (ICAI) has come across a news-item titled ‘I-T busts B’luru CA’s tax refund racket with clients from top tech cos’ published in The Times of India dated January 26, 2018.

It was stated in the news item that

The Income Tax Department on Thursday busted a racket in which tax refunds running into crores were fraudulently claimed by employees of around 50 companies in Bengaluru, including Infosys, IBM, Biocon and Vodafone. I-T officials of Karnataka and Goa found the employees had availed the services of a Chartered Accountant in Bengaluru, who filed false returns for them and secured refunds amounting to Rs.18 crore. The CA, the employees told investigators, took a 10% cut on the refund.

On going through the aforesaid news-item, ICAI, being the regulator of the profession of Chartered Accountants has taken up the matter with concerned authorities. The representatives of ICAI immediately had a meeting with Director General of Income Tax (Investigation), Bengaluru seeking details in the aforesaid matter & requested Income Tax Department to share information about the accused i.e. Nagesh Shastry.

The Institute verified its records and found that Nagesh Shastry is not a Chartered Accountant as his name does not appear in the Register of members maintained by the ICAI. There are various fraudulent cases being reported wherein individuals/ Tax Consultants are falsely claiming to be Chartered Accountants and during preliminary investigations only it comes to the fore that the accused are not Chartered Accountants but are either Tax Practitioners/Accountants/ Commerce Graduates.

In view of the above, it is a matter of concern for ICAI that in the aforesaid matter neither Income tax department verified the credentials of the person in question with ICAI before issuing a statement to the media nor the Publication cross checked the validity of the statement with ICAI before publishing the story.

The news which has appeared in a section of media certainly has maligned the reputation of Chartered Accountants in the eyes of public and has thus lowered the image and credentials of CA profession.

The Institute has already taken up the matter with the concerned authorities of the Income Tax Department (Investigation), Bengaluru and has pointed out that such statement should not be considered to be issued to media before verifying the facts with ICAI. It would also be requested that in future, if any such case comes for their investigation wherein there is an alleged involvement of an individual claiming to be a Chartered Accountant, the matter may be referred to ICAI for cross verifying the credentials from its records.

The ICAI takes a strong exception to the contents of the news-item published in the newspaper which is incorrect and misleading in so far as the reference to a `Chartered Accountant’ was made. In such sensitive cases, the concerned Department and Publications ought to have verified the facts with the Institute before issuing any statement wherein the involvement of a Chartered Accountant is suspected.

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