RAVI PANDIT Vs. GOPAL DIGAMBAR APTE

JUDGEMENT

(1.) This appeal is preferred by the Chartered Accountant Sri S. B. Pandit, partner in M/s. Kirtane and Pandit, Chartered Accountants having their office at Pune, against the order of the District Forum, Satara in Complaint No.129 of 1995. As per the decision of the District Forum, the appellant is directed to pay Rs.4,39,600/-, further amount of Rs.50,000/- towards mental torture, etc. and cost of Rs.10,000/-. This liability is imposed by the District Forum on account of the established negligence on the part of the appellant to render incorrect legal advice, which landed the complainant into payment of the Capital Gains Tax to the tune of Rs.1,89,000/- and further deprived the complainant from his property namely building, land, machinery, etc. belonging to the complainant under the name of M/s. Apte Plastic Industries at Karanje, District - Satara. The complainant contended that he was put to double jeopardy on account of the wrong advice given by the appellant and that he was required to pay the Capital Gains Tax about which advice was given by the appellant that by following a particular method of disposal of the assets, the complainant would be totally exonerated from the liability of the Capital Gains Tax. Even if the payment is required to be made, it will be of a small and negligible amount. This was countered by the appellant on the ground that he had given the advice which was in keeping with the provisions of the Income-tax Act and also the ratio laid down by various High Courts and the Income-tax Appellate Tribunals and in that light the advice on no reckoning can be said to be insufficient or inefficient or even incorrect.

(2.) In order to resolve this controversy, it is imperative on us to go through the salient facts canvassed in the complaint and the salient contentions raised by the appellant in his written statement.

(3.) The complainant is engaged in the business of manufacturing Plastic Moulds and other allied plastic products for last many years and that in the course of his business activities, he was required to raise loans for working capital and cash credits from the Bank of Maharashtra. The complainant was running the small scale unit under the name and style of "apte Plastic Industries". Out of loans, he had acquired land, building, machinery, plant, etc. for the purpose of business. The complainant had obtained credit facility from the Bank of Maharashtra, Satara Branch in or around the year 1978 and had deposited Title deeds in regard to the above property with the same Bank. It was mortgaged by way of deposit of Title deeds with the Bank and the Bank had a charge thereon towards the repayment of the loan by the complainant. In the year 1985-86, the complainant was under the liability of Rs.9,37,085/-. On account of the persistent labour problems in the said unit, the complainant found it difficult to run the unit in a satisfactory or profitable manner, although the performance of the complainant, vis-a-vis the Bank was satisfactory and he was not in serious arrears of the Bank dues. The Bank also never pressed the complainant for repayment of the principal and the interest.