ICAI: CA Guilty of Misconduct for Referring Clients in Fake Political Donation Scheme

A complaint was filed by the Income Tax Investigation Wing, Ahmedabad, following a search and seizure operation conducted in February 2021 on certain political parties and charitable institutions. During the investigation, CA Ajit Kumar Kantilal Gajera’s statement on oath was recorded under Section 131(1A) of the Income-tax Act.

The respondent later contended that his statement was wrongly recorded and that he merely referred clients without receiving any consideration. He also argued that the Income Tax Department carried out no reassessment and that similarly placed professionals were not proceeded against.

Issue Before Board: Whether the respondent CA’s admitted role in referring clients and earning commission in a bogus political donation arrangement amounted to “other misconduct” under Item (2) of Part IV of the First Schedule to the Chartered Accountants Act, 1949.

ICAI Board’s Ruling: The ICAI Board of Discipline held that the respondent’s statement on oath contained clear and categorical admissions of involvement in facilitating bogus political donations for commission. The Board found that the respondent failed to retract his statement within a reasonable time and that the later denial lacked credibility.

It was observed that disciplinary proceedings are independent of income-tax reassessment and that the absence of action against political parties did not dilute the misconduct. Holding the respondent guilty of “other misconduct” under Item (2) of Part IV of the First Schedule, the Board, considering his submissions and overall circumstances, decided to impose the penalty of reprimand under Section 21A(3) of the Act.

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