I-T raids 10 CAs in Nagpur for TDS scam

The investigation wing of the Income-Tax department, which raided offices of ten chartered accountants (CAs) in the city on Monday in connection with the tax deducted at source (TDS) certificate scam, is learnt to have successfully extracted a confession from one of the accused.

Sources on Wednesday revealed that one of the accused CA had spilled the beans and admitted to having forged 15 TDS certificates. The damning admission was cross checked by the department with another accused and found to be true.

The chartered accountant is said to have admitted to making 15 counterfeit certificates to avail of refunds.

Sources said that the confession could be treated as admissible evidence during proceedings against the said chartered accountant. They, however, maintained that criminal proceedings were yet to be launched as the department wanted to complete its own investigations first.

Sources said that the certificates had been made out showing tax deducted by various companies apart from firms owned by clients of the particular accused. The accused himself had stake in some of these firms, few of which existed only on paper.

Sources said that no activity was carried out by these firms though formalities under relevant Acts for setting them up had been assiduously observed. The chartered accountant had also signed the balance sheets of these companies as an auditor, the sources revealed.

The addresses given on the TDS refund certificates also proved to be difficult as individuals whose names figured on the returns were not traceable.

Taxmen, sources said, were still to access the quantum of money siphoned off in the scam. The procedure to recover the amount claimed as refund would begin after taxmen deduce the amount swindled.

After the confession is recorded and affirmed as per procedure, all returns filed by the said chartered accountant would be considered as defective and scrutinised thoroughly. Clearance of pending refunds claimed by any assessee through the chartered accountant would also be suspended and the documents re-assessed.

Sources said that such a client would also be subject to action for filing inaccurate details in a tax return and thus be liable for prosecution.

Meanwhile, a statement by ICAI president Kamlesh Vikamsey to the effect that the institute would carry out its own investigations in the case, and if found guilty, charges of professional misconduct would be brought against the accused, has created a flutter in the fraternity.

Vikamsey told this to a local daily and said that action would be taken only after considering all the aspects of the case.

Vikamsey said that the ICAI was empowered to take action unilaterally under the ICAI Act and need not wait for the legal machinery to take any action.

Former president of ICAI, Ashok Chandak, recalled the case of Mukesh Shah of Ahmedabad which surfaced during his tenure as chief of the institute.

"The enquiry was conducted during my tenure in 2002," Chandak said, adding that Shah was permanently debarred from practicing by the ICAI. Shah had even approached the high court where ICAI decision had been upheld and later even the Supreme Court quashed his plea.