Tax fraud: Chartered Accountant found guilty 


The City Court of Egmore, Chennai found the  CA and former Madras Race Club Staff guilty of tax fraud and sentenced 4 years of imprisonment, after 35 years of a long trial.

Facts of the case:-

The case arose out of a complaint been filed by the complainant, the Chief Commissioner of Income Tax (Administration) and Commissioner of Income Tax at the instance of the Commissioners of Income Tax of wages Division in Tamilnadu, Bombay, and Trivandrum, in whose Jurisdiction the offence under the Income Tax Act have been committed.

The specific case of the prosecution is the Horse race and intervenue races could be held by Madras Race club at Madras and Ooty and the Jackpot winners would be paid at a deduction of TDS. Initially, a temporary T.D.S certificate will be issued to the winner and subsequent remittance in the Central Government Account, original TDS certificate would be sent through Registered Post with acknowledgement due by entering the particulars in a register maintained in this regard. In case the TDS certificate is lost an application has to be made for issuance of the duplicate certificate to the Jackpot winners

The accused Mohnot, the Chartered Accountant along with other accused entered into a conspiracy between January 1979 to June 1981 and obtained duplicate as well as original TDS certificates from the Madras Race Club with the aid of other accused and also with the aid of other accused have created false, fake and fabricated documents and had filed return of income to several Jackpot winners with false statements and declaration before various Income Tax officers in Tamilnadu, Trivandrum and Bombay and also cheated them by personation. The officials were deceived and induced to pass assessment orders granting a refund.

Search warrants were issued by the Commissioner of Income Tax to search residential and official premises of the CA and the Bank Locker of another accused for which he was the ostensible agent. Several incriminating documents were seized during the search.

It is the further case of the prosecution that the CA on the strength of duplicate TDS and in some cases with original TDS conspired with other accused and had filed return of income in the name of jackpot winners/assessee by forging the signatures and fabricating documents creating bogus firms, fake certificates, filing an affidavit and represented before the Income Tax officials with the fake Power of Authority and deceived the officials by cheating them induce them to past assessment orders and in several cases got refund orders which were encashed by creating spurious accounts in various Banks with fictitious address and thereby impersonating depositors.


The Additional Chief Metropolitan Magistrate (E.O.I), Egmore, Chennai found the CA, Mohnot, and other accused Sundarraj guilty for the commission of an offence under section 277 of Income Tax Act read with Section 120 (b) of IPC and Sentenced him to undergone rigorous imprisonment for 4 years each and shall pay a fine of Rs. 1,00,000 each and in default to undergo imprisonment for 3 months each.

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