Assessee is not liable to suffer due to fraudulent and negligent conduct of CA.

Jayshree Bhardwah v. Deputy Commissioner of Revenue W.B. State Tax & Ors. [WPA 1504 of 2023 dated August 7, 2023]

Facts:
◾ Jayshree Bhardwah is the proprietor of a business operating under the name and style of Annapurna Caterer.
◾ She entrusted a Chartered Accountant (“CA”) with handling the bookkeeping, income tax, GST, and GST registration for her business.
◾ She continued to provide the CA with cash and make payments of taxes and other financial expenses through bank transfers.
◾ When she visited her bank, she was informed that her account had been blocked by the Revenue Department (“Respondent”) for recovery of GST liability.
◾ She also discovered that the registered address, phone number, and email ID provided to the authorities were those of the CA, not hers.
◾ She made several attempts to contact the CA, but her efforts were unsuccessful.
◾ She later learned that the CA had cheated many clients, including herself, and was absconding.
◾ She met with the Respondent’s authorities and learned that the Respondent had raised a demand for an amount that the CA had not deposited.
◾ The Respondent issued an order directing her to pay the tax, interest, and penalty.
◾ She filed an appeal against the order and an application for condonation of delay under the Limitation Act, 1963.
◾ The Respondent dismissed her appeal on the grounds of limitation.

Issue:

Whether the Assessee (Jayshree Bhardwah) is liable to suffer due to the fraudulent and negligent conduct of the CA?

Held:

⬛ The Hon’ble Calcutta High Court ruled in favor of Jayshree Bhardwah.

⬛ The Court relied on the judgment in Rafiq & Anr. v. Munshilal & Anr. (1981) 4 TMI 255, in which the Supreme Court held that a person who selects and briefs an advocate, pays their fees, and trusts them to handle the rest should not suffer injustice merely because the advocate defaults.

⬛ The Court found that Jayshree Bhardwah was entitled to a hearing by the Respondent authority on merits before the final disposal of her appeal.

⬛ The Court set aside the Impugned Order and directed the Respondent authority to reconsider Jayshree Bhardwah’s appeal on merits and afford her a reasonable opportunity to be heard.

Key Points:
◼ An assessee should not be made to suffer due to the fraudulent and negligent conduct of a Chartered Accountant.
◼ An assessee is entitled to a fair hearing before an appellate authority.
◼ The Respondent authority should reconsider Jayshree Bhardwah’s appeal on merits and afford her a reasonable opportunity to be heard.