The Karnataka High Court, in a significant ruling, held that a Chartered Accountant (CA), though not a public servant can be prosecuted under the provisions of the Prevention of Corruption Act.
Justice Ratnakala was hearing a petition filed by a Chartered Accountant, who was facing prosecution under the Act.
In the instant case, assessment proceedings under the Income Tax Act, 1961 was initiated against the complainant. During the course of the proceedings, the Assessing Officer demanded bribe for passing an order in favour of the complainant. However, the complainant refused to give bribe. The complainant lodged complaint with CBI/ACB and produced compact disc of the recorded conversation between him and the AO substantiating his allegations.
The complainant received telephone calls from the AO demanding bribe and was directed to hand over it to him. He was also informed that the assessment order has been handed over to the chartered accountant.
Later, the assessment order for one year was recovered from the office of the CA along with Rs. 5 lakhs. A trap was set up at the chamber of the CA where a cash envelope containing Rs. 5 lakhs was recovered from the table of the CA.
Before the High Court, the petitioner CA contended that the complainant himself met the petitioner seeking help to draft the objections to the income tax notices and the complainant appeared before the AO at his own without the assistance of the petitioner. The complainant was not allowing the AO to discharge his duties peacefully, therefore he was informed by the AO to collect the copy of the assessment order from the petitioner and pass on the acknowledgement. Further, the complainant offered to pay the taxes in instalment and offered to pay Rs. 5 lakhs cash to petitioner and asked him to pay the 1st instalment.
Most importantly, the petitioner argued that he was a chartered accountant and not a public servant and thus did not fall within the purview of the relevant sections of the Act.
The bench noted that as per the colleague of the petitioner CA, she was informed by the CA that complainant would visit to collect the assessment order and she was instructed to collect Rs. 20 lakhs from him to give the order. “On this instruction she contacted the complainant over phone and called upon him to come to the CA’s chamber. She also informed that the AO shall also be available at the office of the CA. Thus the statement of the colleague supports the cause of the prosecution.”
Further, no work was pending for demand of illegal gratification. It was therefore, observed that “the assessment order which was seized from the chambers of the CA was shown to have been passed on 6.9.2012. But the Investigating Officer had collected material that there was no proof from the official record that such an order was passed on the said date.”
The High Court opined that section 7 of the Prevention of Corruption Act does not contemplate specifically that the work must be pending on the date of registration of the case. “It is sufficient to make out an offence under Section 7 of the Act that he accepts or obtains or agrees to accept or admits to obtain from any person, for himself or for any other person, any gratification whatever, other than legal remuneration, as a motive or reward for doing or forbearing to do any official act. It is also possible that a public person having negotiated for the bribe amount and in anticipation of receiving bribe money despite passing the order waits for the compliance of illegal demand without disclosing that the order is already passed. The materials on record clearly showed that even after passing the Assessment Order, it was not recorded in the proceedings book and not sent to tappal section.”
“The words occurring at Section 8 of the Act “Whoever accepts or obtains, or agrees to accept, or attempts to obtain, from any person, for himself or for any other person, any gratification….” covers the persons other than the public servants contemplated by definition clause (c) of section 2 of the Act and that does not require much elaboration.”
Read the full text of the Judgment below.
