ICAI Board of Discipline Removes CA for Three Months Over Income Tax Refund Fraud

A disciplinary complaint was filed by the Income Tax Department against CA Kapil Kansai, alleging his involvement in a large-scale income tax refund fraud. The case originated from detection of fake PANs and bank accounts used to obtain fraudulent refunds, initially noticed in the case of one Ashish Goyal. Investigations revealed that multiple fictitious PANs and bank accounts were created using forged documents, with KYC records, photographs, handwriting analysis, email trails and IP addresses linking the respondent to the fraudulent activities.

An FIR was registered in November 2015, and the respondent was arrested in February 2016. During criminal proceedings, he agreed before the Magistrate to repay Rs. 1.30 crore to the Income Tax Department and partially complied.

Main Issue: Whether the conduct of the respondent Chartered Accountant, in connection with fraudulent income tax refund transactions and related financial irregularities, amounted to “Other Misconduct” under the Chartered Accountants Act, 1949.

Board’s Judgment: The ICAI Board of Discipline held that sufficient material existed to establish the respondent’s involvement in the fraudulent scheme. It rejected the defence that the acts occurred prior to enrolment, noting that arrest and admissions occurred after he became a member.

The Board also found that the forensic report relied upon by the respondent was inconclusive and did not exonerate him. The Board ordered removal of the respondent’s name from the Register of Members for a period of three months.

To Read Full Judgment, Download PDF Given Below