--- title: An accountant's sworn statement was the only evidence in an accommodation-entries case. Retracted, it proved nothing. description: An income-tax probe produced a chartered accountant's sworn admission of running shell firms for pre-arranged capital gains. He retracted it, and no other evidence was ever produced. case_number: BOD 548/2020 file_number: PR/G/197/2017-DD/199/2017-BOD/548/2020 forum: board-of-discipline institute: icai decided_on: 2024-05-07 outcome: Not guilty clauses: Item (2) of Part IV of the First Schedule order_pdf: https://disc.icai.org/wp-content/uploads/2024/05/8.-BOD-548-2020.pdf published: 2026-09-09 author: Jainam Shah keywords: bod 548 2020, accommodation entries, long term capital gains, pre-arranged ltcg, item 2 part iv first schedule, other misconduct, section 22, board of discipline, retracted statement, not guilty source: /icai/board-of-discipline/bod-548-2020 --- # An accountant's sworn statement was the only evidence in an accommodation-entries case. Retracted, it proved nothing. A Kolkata chartered accountant told an income-tax investigator, under oath, that he had helped arrange pre-planned long-term capital gains through companies he controlled. Years later, before the Institute's Board of Discipline, that statement turned out to be the only evidence anyone had ever produced against him.[^parties] ## What happened ```timeline The Income Tax Department is investigating a scheme of pre-arranged long-term capital gains, run through a listed company and a number of other shell and paper entities, said to have helped in large-scale tax evasion. It suspects a Kolkata chartered accountant of controlling some of those entities, through employees and close associates who sit as directors on paper, in return for a commission. Questioned on oath, the accountant is asked about two brokers who dealt in the shares of one such company and who are said to have named him as the person controlling it. He agrees with what the brokers are recorded as having said, and states that he introduced clients and instructed the sale and purchase of those shares on their behalf. He later signs an affidavit repeating the admission. The investigating officer complains to the Institute, alleging that the accountant ran shell entities to generate fake capital gains for a family of beneficiaries in return for commission, falsifying books of account and helping large-scale tax evasion. Before the case comes up for hearing, the accountant retracts the statement before the department's own official. He also points out that the brokers' own statements, which the charge leans on, have never been shown to him, and that the tax department's assessment order made no addition to his income. After two adjournments, the Board of Discipline hears the case and finds that, beyond the retracted statement, the department has produced nothing to make the charge stand. ``` The admission at the centre of the case was an answer to a single question. Asked about the two brokers, the accountant said: > Q.15 All the above-mentioned persons have sold the shares of M/s BSR Finance and Construction > Ltd. through brokers M/s Bikash Sureka and M/s M. Bhiwani Wala and Co. and claimed LTCG. Shri > Bikash Sureka and Shri M. Bhiwaniwala in their respective statement has stated that M/s BSR > Finance and Construction Ltd. is a company controlled by you and in instance case you have > instructed the brokers to sale and purchase the shares of M/s BSR Finance and Construction Ltd. > on behalf of the persons mentioned in question No. 6 and on behalf of M/s Siddhi Commodeal Pvt. > Ltd. Please offer your comments. > > Ans. I agree with the statement given by Shri Bikash Sureka and Shri M. Bhawani Wala in r/s > shares of M/s BSR Finance and Construction Ltd. and M/s Siddhi Commodeal Pvt. Ltd. I agree with > their statement that I have introduced the clients and instructed them to sale and purchase the > share of M/s BSR Finance and Construction Ltd. on behalf of the persons of Rajkot and on behalf > of M/s Siddhi Commodeal Pvt. Ltd. (para 6.2) That answer was later retracted before the department's own official (para 6.5). Nothing about it was ever corroborated afterwards: the statements of the two brokers it relies on were never produced for the accountant to see (para 6.3), and the assessing officer, after the statement was recorded, made no addition to the accountant's own income (para 6.4). ## The charge The charge never sat under a specifically named item of misconduct. The complaint described conduct — false entries, and helping in tax evasion — without picking a clause, and no clause was recorded against the accountant in Form-I. The case proceeded, in the end, on Item (2) of Part IV of the First Schedule, read with Section 22 of the Chartered Accountants Act, 1949. - **Item (2) of Part IV of the First Schedule** covers a member found guilty of "other misconduct" — conduct that discredits the profession without fitting any of the specifically listed grounds. It exists for exactly this situation: a complaint that describes wrongdoing without naming a clause. Item (2) is not about the accuracy of an audit or a return; it catches conduct outside the professional grounds itemised elsewhere in the Schedule. The Board held the accountant not guilty of it, for want of evidence beyond the retracted statement (para 7). ## What the respondent said The accountant disputed the conclusion the Director (Discipline) had reached, saying it had been formed without proper regard to the facts or the law (para 5.1). On the charge itself, his objection was procedural: he had never been charged under Item (2) of Part IV in Form-I, and he had not been given a copy of the Council's opinion without which, he argued, the Director (Discipline) could not have formed a prima facie opinion at all. The complaint's own narrative, he said, described conduct under Clauses (6) and (7) of Part I of the Second Schedule — not the residual "other misconduct" clause the case was ultimately run on (paras 5.2–5.3). On the evidence, he said that the allegation rested on a statement recorded at the tax department's own office, where a question had named two brokers whose statements had never been disclosed or shown to him. He had asked the department for copies of the statements it had recorded from the scheme's beneficiaries, and for any other evidence backing the claim that he had provided accommodation entries for a commission. None of it was provided (para 5.4). ## What the Board held On the procedural objection, the Board held that a complainant's failure to name the exact clause of misconduct is, at most, a technical defect — it does not by itself deprive the Director (Discipline) of jurisdiction to proceed, or the Board of jurisdiction to decide the case on whatever clause the facts actually disclose. It quoted the Supreme Court's observation in *Uday Shankar Triyar v. Ram Kalewar Prasad Singh*: > Non-compliance with any procedural requirement relating to a pleading, memorandum of appeal or > application or petition for relief should not entail automatic dismissal or rejection, unless > the relevant statute or rule so mandates. Procedural defects and irregularities which are curable > should not be allowed to defeat substantive rights or to cause injustice. Procedure, a > handmaiden to justice, should never be made a tool to deny justice or perpetuate injustice, by > any oppressive or punitive use. (para 6.1) Having cleared that objection, the Board turned to the merits and found very little to weigh. The complainant department's evidence began and ended with the accountant's own statement of 28 May 2014 — a statement he had since retracted before the department's own official. Beyond it, despite the opportunities given to the department to make its case, nothing conclusive was produced to show that the accountant had formed shell companies to provide accommodation entries in lieu of commission. On that basis, the Board held the accountant "NOT GUILTY" in respect of the charge alleged (para 6.5). ## The order > the Respondent is 'NOT GUILTY' of Other Misconduct falling within the meaning of Item (2) of Part > IV of the First Schedule to the Chartered Accountants Act, 1949 read with Section 22 of the said > Act. Accordingly, the Board passed Order for closure of the case in terms of the provisions of > Rule 15 (2) of the Chartered Accountants (Procedure of Investigations of Professional and Other > Misconduct and Conduct of Cases) Rules, 2007. (para 7) A not-guilty finding under the First Schedule ends with the Board closing the case outright — there is no separate punishment hearing to follow, because there is nothing left to punish. ## Why it matters *This section is ours, not the Board's.* **A statement given to a tax officer is not, on its own, proof of professional misconduct.** The only evidence here was the accountant's own words, recorded years earlier in an income-tax inquiry, and later withdrawn. If a regulator wants to rely on a retracted admission, it has to bring something else to stand it up. **Ask for the material the charge is built on, and keep asking.** The two brokers' statements were never shown to the accountant, and the department itself later confirmed on record that it had never produced them. Their absence became part of why the charge failed — a gap a complainant department leaves unfilled is not yours to fill for it. **A missing clause in the complaint will not get a case dismissed.** The Board treated the complainant's failure to cite Item (2) of Part IV as a technical defect, not a jurisdictional one. Defend a complaint on the facts, not on how it was pleaded. **A clean assessment is evidence, not decoration.** The tax department's own order made no addition to the accountant's income after the statement was recorded. Keep and produce that kind of official record — it did real work here. This summarises a public order and links the primary source. It is general information, not legal or professional advice. [^parties]: Shri Sudhanshu S. Gautam, Deputy Director of Income Tax (Investigation), Kolkata, was the complainant. The respondent was *CA. Bijay Kumar Dokania (M.No. 054412)*, of Kolkata. The findings were signed by CA. Rajendra Kumar P (Presiding Officer), Smt. Dolly Chakrabarty, IAAS (Retd.) (Government Nominee) and CA. Priti Savla (Member), on 7 May 2024. The final hearing was held on 20 March 2024, after the matter had earlier been adjourned on 3 May 2023 and 28 July 2023.