ICAI Board of Discipline Crackdowns Chartered Accountant Involved 8.27 Crore Redevelopment Fraud Case

The Institute of Chartered Accountants of India (ICAI) Board of Discipline has taken this present disciplinary action against a Chartered Accountant (CA), Naresh Kishore Singh Rajpurohit, following a complaint filed by Mr Parag Manere, Deputy Commissioner of Police, Economic Offence Wing (EOW), Mumbai.

The case concerns an alleged financial fraud in a redevelopment project called “CANVAS” in Mumbai, where investors were misled into buying flats from a developer who did not have legal authority to sell them. The matter began from an earlier complaint and FIR registered against J.V. Developers and related entities in 2017. An investigation was initiated in regard to the same, which uncovered convoluted financial transactions involving Kamla Landmarc Group and its associate companies. A forensic audit was conducted in 2021, which unearthed convoluted financial linkages among the parties.

The audit further revealed that about Rs. 8.27 crores were collected by J.V. Developers from investors and routed through multiple intermediary companies, among which Rs. 2.5 crores were also transferred to the personal bank account of the respondent, and after that, passed on to another entity, Kunda Ankur Developers. Property transactions were also carried out in the names of the respondent’s wife and sister-in-law, funded by group companies and later sold at excessively higher prices, indicating circular movement of funds.

When interrogated with Respondent CA, he explicitly denied these claims and claimed that he was not linked to J.V. Developers and had resigned from Kamla Group entities in 2013. The funds received in his bank account were honest business loans that were repaid in FY 2013-14 and not sourced from investor money.

When the board examined the relevant facts and documents related to the case, it noted that the respondent had accepted receiving funds from companies for which he was serving as the statutory auditor. Despite being treated as loans, such transactions contravene auditor independence and professional ethics.

In conclusion to the aforesaid findings, the board held the respondent guilty of “Other Misconduct” under the Chartered Accountants Act, 1949, and removed his name from the Register of Members for a period of three months.