Shrikrishna (S) — Arjun, you are looking worried today.
Arjun (A) — Yes. This is September. Virtually a killing month for all CAs.
S — This is every year’s ‘crying’. Why don’t you plan well in advance?.
A — Very easy to say so. But in reality, every month there is some compliance or the other. And consequences of defaults are very harsh. You have to be on your toes constantly.
S — But the tax-audit date has been extended? Isn’t it?
A — T rue; but I am not sure whether the deadlines for filing returns will be extended. Then what is the use? I wonder why the Government does not clarify things well in time.
S — A ll CAs are sailing in the same boat. Granted that it worries you. But you are rather tensed up today. What is the matter?
A — A ctually, nowadays all the returns and other forms are to be submitted on-line. They are to be uploaded.
S — So what?
A — F or this, all the clients are keeping their digital signatures in our custody only.
S — Why?
A — Because all the returns are completed only in the last two days only. And when we are slogging, the clients are enjoying themselves abroad or at hill-stations.
S — Oh, I see. So you take all their tokens of digital signatures in your custody and use them! Is it not?
A — Exactly. And just now, my office informs me that two such signatures are misplaced. Not traceable!
S — O h! It is very risky. But why do you take such a risk? Is there any documentation for keeping it with you? Do you have any written instructions to use them? Otherwise, under the IT Act, it is an offence.
A — I didn’t come across any such provision in Income Tax Act. Is it in DTC?
S — N o Arjun. IT means Information Technology Act, 2000.
A — I have never read it.
S — Actually, using another person’s digital signature in his absence and without his specific consent is a serious offence. It is like a forgery. See section 42 of Information Technology Act. It says that the digital signature can be used only by the subscriber or person authorised by him to affix it.
A — O h, my God! Then what should we do?
S — E very time, you should take a letter from the client that he is handing over the token or the CD of digital signature to you. And there should be a specific instruction authorising you to use it. And when you return it, take his acknowledgement. It may be misused or wrongly used and the blame may come on you.
A — But now what should I do? Their returns are to be filed now. Fortunately, there is no proof that they have handed over to my office.
S — I t is embarrassing. Actually, you should have not only proper documentation but all signs should be kept under lock and key; under the control of a very responsible person.
A — What are the consequences under that Information Technology Act?
S — Penalty is in the form of compensation upto Rs. 25,000 to be paid to the affected person.
A — Baap Re!
S — N ot only that. But it amounts to negligence or lack of due diligence in discharging your duties.
A — I t is a double jeopardy.
S — Y es. And the tension that the misplaced digital signature may be misused is all the more disturbing.
A — I wonder how I will tell those clients that their digital signatures are not traceable! It is a question of my reputation.
S — That’s right. In Bhagavad Geeta also I told you the same thing. Loss of reputation is more harmful than even death. Now it is high time that you focus on systems in your office.
A — It is an eye-opener. Small lapses lead to heavy damage. Usually after our tax audits, we relax, and wake up only next year. But this year, I should change this. I must focus on housekeeping and get better organised. I am convinced that this is a serious professional misconduct and if I were in the client’s position, I would be very much upset.
S — Good. This is a lesson which should change your functioning. All the best to you.
Note: The above dialogue between Shri Krishna and Arjun is based on Clause (7) of Part I of Second Schedule which is reproduced below. This dialogue aims at bringing out those small things that we take for granted. Such small things and lack of documentation can lead to big problems in future. It thus becomes very important to inculcate a habit of documentation not only within us but also amongst our office staff.
Clause (7) of Part I of Second Schedule states that a CA in practice shall be deemed to be guilty of professional misconduct, if he –
“does not exercise due diligence, or is grossly negligent in the conduct of his professional duties”. Be very cautious and see to it that nothing is done in ‘good faith’ without proper documentation/safeguards.
