ICAI Reprimands CA for Role in Bogus Political Donation Scam

A complaint was filed by the Income Tax Investigation Wing, Ahmedabad, alleging that CA Naman Jatinkumar Shah was involved in a bogus political donation racket. During search and seizure operations conducted in February 2021 on certain political parties and charitable institutions, the Department claimed that several professionals, including the respondent, admitted to facilitating tax evasion.

It was alleged that the CA solicited clients willing to make cheque donations to political parties, arranged for donation receipts, and ensured that the amounts were returned in cash after deducting commission. The case primarily relied on statements recorded on oath under Sections 131(1A) and 132(4) of the Income-tax Act.

Main Issue: Whether the CA’s admitted involvement in arranging bogus political donations for commission amounted to “other misconduct” under Item (2) of Part IV of the First Schedule to the Chartered Accountants Act, 1949.

ICAI Decided: The ICAI Board of Discipline held that the CA’s statement on oath, admitting involvement in the bogus donation modus operandi, was credible and that the later retraction made after nearly two years lacked reliability.

The Board noted that disciplinary action is independent of whether the Income Tax Department reopened assessments or initiated proceedings against political parties. Holding the CA guilty of “other misconduct” under Item (2) of Part IV, the Board took a lenient view considering the surrounding circumstances and imposed the penalty of reprimand.

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