Calcutta High Court slams CAs who sign a false Report & SEBI fined ID ...

or Estimates or Provisional Figures to help his
client to obtain bank loans or Credit Facilities.

In the latest judgement in Binod Kumar Agarwala vs.
CIT, the Hon’ble Calcutta High Court has signaled a zero-tolerance policy
towards the alleged nefarious practice of CAs.

The High Court slammed the CAs for certifying bogus
loans and misleading lenders, which in turn has led to the colossal NPAs.

The assessee business committed fraud on the bank
and obtained credit facilities by misrepresenting its financial position.

To aid him in the criminal act, a firm of chartered
accountants named ‘Roy Ghosh and Associates’ issued a certified balance sheet
containing bogus figures.

The CA firm boldly issued a disclaimer stating that
the figures “have no relation with the actual figures”.

The High Court seethed with anger at the blatant
temerity of the Chartered Accountant in certifying the bogus balance sheet.

The High Court came down heavily on the practice of
painting a rosy picture as to the financial position of the applicant seeking
credit facilities while at the same time slipping in another balance-sheet and
P&L A/c in the income-tax records indicating a less robust financial
position of the constituent.

The High Court also held that the accounts cannot
be “tailor-made to suit a particular purpose or window-dressed to make it
attractive for bankers to rely thereupon and all the gloss and sheen removed
thereafter when it was the time to pay tax.”

ITAT also noted that Schedule II and Part 1 holds a
chartered accountant Act guilty of professional misconduct if he permits his
name or name of his firm to be used in connection with the audit based on
estimate.

ITAT hauled up for not reporting the CA to the ICAI
by the High Court.

Ultimately, the Hon’ble High Court directed that a
copy of the order be sent to the ICAI for appropriate steps, if thought fit, to
be taken against Roy Ghosh and Associates in accordance with law and upon due
notice to such firm of CAs.

Whether the ICAI has taken any steps pursuant to
the directions of the High Court is not known as of date.

SEBI Slaps fine on a non-executive Independent Director for a fraudulent and deceptive  GDR issue

Sebi said that Beckons at the time of
signing of the pledge agreement, the company was clearly aware that Vintage had
acquired a loan only to subscribe to the GDR issue.

The company had come out with its GDR issue in June 2010 for an amount of
$10.54 million. With respect to the issue, Vintage had
signed a loan agreement with EURAM Bank for payment of $10.54 million.

At the same time, Beckons opened its account
with the bank for the purpose of credit of proceeds of the GDR issue.

It was also found that the GDRs were converted into equity shares and
were sold in the Indian capital market. Cancellation of GDRs started from
September 17, 2010 and continued till March 7, 2011 and all the GDRs were
converted, as per the order.

According to the regulator, the noticee was associated with Beckons as a
non-executive independent director and was present during the board meeting in
February.

At the meeting, a unanimous resolution was passed to open account with
EURAM Bank for receiving subscription money in respect of the GDRs, proposed to
be issued by the company.

"It is particularly evident from the established facts that the
entire proceedings of GDR which was transferred in the EURAM's account of
Beckons served as collateral to the loan taken by Vintage in subscribing GDR
and such amount was ultimately transferred to the Beckons' Indian bank account,
only as and when Vintage repaid the loan to EURAM," the order said.

According to the regulator, the manner in which the entire scheme of
fraudulent and deceptive scheme was planned and executed demonstrates beyond
reasonable doubt the manipulative intent to deliberately withhold critical
information from investors.