Shrikrishna: Arjun, you are looking very worried today. I’m sure the compliance pressure of tax deadlines keeps you under stress.
Arjun: Yes, Bhagwan. That stress is always there. We are now quite used to it. But there is something else.
Shrikrishna: Really? And what’s that?
Arjun: That my friend, Ritesh…
Shrikrishna: Yes. I know him. His office is adjoining yours. Right?
Arjun: Yes. He is in deep trouble.
Shrikrishna: What happened?
Arjun: A girl closely known to him got married into a business family.
Shrikrishna: Very good. When?
Arjun: About 15 years ago.
Shrikrishna: Oh! Then what is the problem now?
Arjun: Her in-laws are Ritesh’s clients. The entire group.
Shrikrishna: Good.
Arjun: At their request, Ritesh suggested ideas of tax planning. He built up a good amount of capital in her name. Actually, she was only a home-maker. Not even a graduate! She was shown to be earning some salary over the years.
Shrikrishna: So, where’s the problem?
Arjun: Now, she is separating from her husband.
Shrikrishna: Oh! After 15 years? This is kaliyug. No relations are permanent.
Arjun: And she is claiming a big amount in alimony. A good amount of capital stands in her name. She says she is a housewife and has no source of income.
Shrikrishna: So what? There must be some documentation. Some evidence of employment.
Arjun: No, Bhagwan. Ritesh had shown her as his employee. And her salary was ‘paid’ in cash. Later, she was shown to be in employment with some group company.
Shrikrishna: Oh! Interesting.
Arjun: There is no documentation whatsoever. All returns of the family members including her return were filed through Ritesh’s office; and she is demanding the tax records from him.
Shrikrishna: He has to give them to her – Isn’t it?
Arjun: True. But that will bring the family into trouble. She has great nuisance value.
Shrikrishna: It’s better to settle it amicably.
Arjun: She has threatened that she will approach the Institute if the CA refuses to give the file. Now, he is in a dilemma.
Shrikrishna: Arjun, I have always been telling you to give up the short-sighted approach. There are many instances of separation of spouses even after 30 to 40 years of married life. Social life is now vitiated.
Arjun: I agree. You have been warning me – not to do anything in good faith.
Shrikrishna: Due to the inevitable dispute between any two persons, the things done with good intentions are viewed maliciously afterwards. The context in which a thing is done is conveniently forgotten.
Arjun: Anything can misfire. So, careful and timely documentation is essential.
Shrikrishna: Yes. There are instances where two of the Directors sign the financials; meetings are not held. Secretarial record is lacking. And when there is a dispute among Directors, they disown everything. They say, they were never shown any balance sheet, no meetings were ever called. And the two Directors are in collusion with the auditor. They have manipulated the accounts with the help of the auditor.
Arjun: True. I have heard of such cases. Then, what is the remedy?
Shrikrishna: Documentation! Working papers! Secretarial records, minutes. The faintest of inks is stronger than the strongest of memories! And, preferably, keep a balance sheet copy signed by all Directors or partners or trustees, managing committee members… and so on.
Arjun: Very good advice. An eye-opener.
Shrikrishna: This is not a complete solution. It only protects you from allegations that they were kept in the dark. After all, every small thing should be properly documented with signatures of the persons concerned.
Arjun: Thank you, Bhagwan. I will always keep this in mind. Please bless me.
Shrikrishna: Tathaastu!
!! OM SHANTI !!
(This dialogue is based on the common experience of loose documentation, weak tax planning, breaking relationships in the society and the consequences on the profession.)
