CA can be held liable for deficiency in service

By | August 3, 2015
(Last Updated On: August 3, 2015)

A chartered accountant (CA) who duped his client was dragged to the consumer court. In a significant ruling, the forum held that negligence in discharge of professional duties constitutes an unfair trade practice.

Fernandes received a summons from the income tax (I- T) department to appear at its Ballard Estate office. He engaged the services of Singh, a CA from Nalla Sopara, to appear before the IT officials. Singh also undertook to prepare his income tax returns to clear the dues.

Fernandes, who was under considerable mental stress and pressure, trusted Singh, and was ready to abide by his advice. Taking advantage, Singh informed Fernandes that the IT authorities had now started collecting tax online through the CA who prepared the returns. Under the guise of payment of tax, Singh collected money in three installments, all by cheque, totalling Rs. 2,32,863.

Singh pocketed the money and did not carry out the work, except prepare the returns for two years, which were also incorrect. Ultimately, Fernandes had to get the work done thorough another CA. Fernandes filed a complaint before the South Mumbai Consumer Forum, alleging Singh had been negligent and indulging in unfair trade practice in the discharge of his professional duties. Fernandes sought a refund of the amount misappropriated by Singh. In his defence, Singh questioned the jurisdiction of the Forum, as he resided in Nallasopara in Thane District.

Singh also claimed that the amount paid to him was not for depositing the tax payable, but towards his fees.

To falsify this contention, Fernandes applied to the Forum to direct Singh to produce his own IT returns, which would reveal whether this amount had been disclosed as his fees.

Singh, when ordered to produce his returns, appears to have panicked, has stopped appearing in order to avoid producing these.

The forum noted a part of the cause of action had arisen within its territorial jurisdiction, as Singh had been engaged to appear in the I- T proceedings at Ballard Estate in South Mumbai. So the Forum concluded that the complaint was maintainable before it.

On merits, the Forum observed, Singh had failed to show what work he had carried out, or how he had charged his fees. Singh had also failed to produce his own I- T returns to support his contentions.

In contrast, Fernandes had substantiated his contention by producing the receipts issued by another CA who was subsequently engaged to carry out the entire work. In its order of July 10, 2015, delivered by S M Ratnakar for the Bench along with S G Chabukswar, the forum indicted Singh of rendering deficient services and indulging in unfair trade practices.

It ordered Singh to refund the entire amount of Rs. 2,32,863, along with nine per cent annual interest from July 17, 2009, the date Fernandes demanded a refund.

The Forum also directed Singh to pay compensation of Rs. 5,000 for causing mental agony, and Rs. 3,000 towards costs.

Any professional is expected to behave prudently. If he fails to do so, or acts in a reckless or negligent manner, he can be hauled up before a consumer forum. –

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