CA Sansaar
ICAI reprimands 11 Ahmedabad CAs over irregular political donation entries
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The Board of Discipline of the Institute of Chartered Accountants of India (ICAI) has found 11 chartered accountants from Ahmedabad guilty of professional misconduct in a matter linked to an alleged bogus political donation network that was earlier flagged by the Income Tax Department.
In a set of recent orders, the Board concluded that the CAs were liable for “Other Misconduct” under the First Schedule of the Chartered Accountants Act, 1949, and it also considered action under Section 21A(3). However, after considering their submissions and hearing their representations, the Board ultimately decided to issue a reprimand.
While recording its reasoning, the Board noted that the Income Tax Department did not carry out reassessment proceedings against the political parties concerned, and no action was initiated against those parties. The CAs sought a sympathetic view and assured the Board that such conduct would not be repeated; in that context, the Board ordered reprimand as the disciplinary outcome.
The Board also took note of the timeline of statements: it observed that the CAs attempted to withdraw their 2021 statements only in 2023 through affidavits, nearly two years later. According to the orders, they had stood by the earlier statements for a significant period and moved to retract them only when the prospect of disciplinary action became real.
The matter traces back to a search and seizure operation in February 2021 under the Income Tax Act, 1961, involving three political parties and two charitable institutions in Ahmedabad, where the department alleged large-scale tax evasion practices.
As per the department’s allegations, 28 chartered accountants were said to have approached clients as part of what it described as a bogus donations scheme. Statements were recorded on oath under Sections 132(4) and 131(1A), in which the department claimed the CAs acknowledged their role.
Investigators alleged that the professionals worked with key individuals linked to certain political parties to enable tax evasion and questionable electoral funding. Clients looking to reduce taxable income were allegedly guided to route “donations” to specific political party bank accounts. After transfers, donor details—such as name, PAN, address, bank information and transaction references—were allegedly shared (including via WhatsApp) with party functionaries, who then issued donation receipts.
The department further alleged that the donated amounts were subsequently returned in cash to the donors after deducting commissions for intermediaries, including the respondent CAs.
In a set of recent orders, the Board concluded that the CAs were liable for “Other Misconduct” under the First Schedule of the Chartered Accountants Act, 1949, and it also considered action under Section 21A(3). However, after considering their submissions and hearing their representations, the Board ultimately decided to issue a reprimand.
While recording its reasoning, the Board noted that the Income Tax Department did not carry out reassessment proceedings against the political parties concerned, and no action was initiated against those parties. The CAs sought a sympathetic view and assured the Board that such conduct would not be repeated; in that context, the Board ordered reprimand as the disciplinary outcome.
The Board also took note of the timeline of statements: it observed that the CAs attempted to withdraw their 2021 statements only in 2023 through affidavits, nearly two years later. According to the orders, they had stood by the earlier statements for a significant period and moved to retract them only when the prospect of disciplinary action became real.
The matter traces back to a search and seizure operation in February 2021 under the Income Tax Act, 1961, involving three political parties and two charitable institutions in Ahmedabad, where the department alleged large-scale tax evasion practices.
As per the department’s allegations, 28 chartered accountants were said to have approached clients as part of what it described as a bogus donations scheme. Statements were recorded on oath under Sections 132(4) and 131(1A), in which the department claimed the CAs acknowledged their role.
Investigators alleged that the professionals worked with key individuals linked to certain political parties to enable tax evasion and questionable electoral funding. Clients looking to reduce taxable income were allegedly guided to route “donations” to specific political party bank accounts. After transfers, donor details—such as name, PAN, address, bank information and transaction references—were allegedly shared (including via WhatsApp) with party functionaries, who then issued donation receipts.
The department further alleged that the donated amounts were subsequently returned in cash to the donors after deducting commissions for intermediaries, including the respondent CAs.
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