ICAI Reprimands CA for Role in Bogus Political Donation Scam Facilitating Tax Evasion

ICAI Reprimands CA for Role in Bogus Political Donation Scam Facilitating Tax Evasion

The Income Tax Department conducted search and seizure operations on three political parties and two charitable institutions based in Ahmedabad, uncovering large-scale tax evasion through bogus political donations. During the investigation, several professionals, including CA Fenil Rajeshbhai Shah, were found to have acted as intermediaries.

The Department alleged that the respondent solicited clients seeking to reduce taxable income, routed donation amounts to political parties, and ensured cash was returned to donors after deducting commission. Statements recorded on oath revealed that the respondent admitted sharing clients’ PAN, Aadhaar, and bank details via WhatsApp groups, collecting cash, and earning commission. He also admitted involvement in issuing bogus bills without actual supply of goods.

Issue Raised Before Board: Whether the conduct of the respondent Chartered Accountant in facilitating bogus political donations and related commission-based arrangements amounted to “Other Misconduct” under the Chartered Accountants Act, 1949.

ICAI’s Ruling: The ICAI Board of Discipline held that the respondent had unequivocally admitted his involvement in the bogus donation scheme and failed to retract or rebut his sworn statement within a reasonable time. The Board rejected his defence that the statement was coerced or incorrectly recorded, noting prolonged silence and absence of supporting evidence.

While no reassessment proceedings were initiated by the Income Tax Department and no action was taken against the political parties, the Board concluded that sufficient material existed to establish misconduct. The Board decided to reprimand the respondent under Section 21A(3) of the Chartered Accountants Act, 1949.

To Read Full Judgment, Download PDF Given Below