ICAI Ends 17-Year-Old Misconduct Case Linked to Alleged Corruption of Income Tax Investigation Report

A disciplinary action was initiated against a chartered accountant as a consequence of an RC filed by the CBI that was related to the allegation of corrupting the Income Tax Investigation report, and the charge sheet was submitted on 30/11/2012 to the Special Judge, Patiala House, who then mentioned the Senior Income Tax Department officer and also the Respondent, along with several others. It was charged in the case that from the year 2007 to 2008, the accused had colluded and had changed the report in such a way that the businessman, along with his associates, came up in a more favourable position. Later, the investigation disclosed that the accused had been having meetings on several occasions in February and March 2008, the last one being on 08/03/2008, the day they were caught. A three-hour-long conversation recorded on 04/03/2008 was a discussion of illegal payments, diluting the findings, and an estimated bribe amount of Rs. 10,00,000 was mentioned.

The respondent denied all charges through a written statement dated 15/03/2025 and, in his support, referred to the findings of the Special Court that no evidence was found to prove that any change had been made to the appraisal report at his direction. He also argued that the disciplinary proceedings were started after an unreasonably long delay of about 17 years from the time of the alleged events. The first correspondence from the Institute was, he claimed, not received till 2018, almost ten years after the incident, and hence there was a loss of evidence, and his defense was prejudiced. Relying on Rule 12 of the Chartered Accountants (Procedure of Investigations of Professional and Other Misconduct and Conduct of Cases) Rules, 2007, he urged that the proceedings be dropped as time-barred and contrary to principles of natural justice.

Issue Raised: Whether disciplinary proceedings could continue after an unexplained and inordinate delay of about 17 years, in light of Rule 12 of the Chartered Accountants (Procedure of Investigations of Professional and Other Misconduct and Conduct of Cases) Rules, 2007, and the principles of natural justice.

Board’s Decision: After considering the Respondent’s written submissions and granting an opportunity of being heard, the Board examined the objection under Rule 12. It was observed that the incident forming the basis of the charge sheet pertained to 2008, whereas the first communication from the Institute was issued only in 2018, indicating a delay of nearly ten years even in the initiation of proceedings. The total lapse from the occurrence of events to the present stage amounted to approximately seventeen years. The Board remarked that such a considerable and unaccounted-for delay had a significant negative effect on the Respondent’s right to a fair defense, thus making the continuation of the proceedings against the principles of natural justice.

The Board ruled that further proceedings were not justified. It therefore granted the Respondent’s request and terminated the case, acquitting him of Other Misconduct classified under Item (2) of Part IV of the First Schedule to the Chartered Accountants Act, 1949. The Board clarified that its ruling was related only to the issue of limitation and did not mean to rule on the merits of the underlying allegations or the ongoing criminal proceedings.

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