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BOD 623/2022Reprimand

A chartered accountant passed a firm's tax login to a stranger. A fraudulent return followed, in a firm already shut.

9 min readJainam Shah

A closed firm's tax login reached a chartered accountant by email. He forwarded it to a stranger, who used it to file a bogus multi-crore return in the firm's name. The Board reprimanded him.

Held
ReprimandGuilty of professional misconduct
Forum
Board of Discipline (First Schedule)
Clauses
Item (2) of Part IV of the First Schedule
Decided
punished
File no.
PR-77/2018/DD/125/2018/BOD/623/2022
Source
Original order (PDF)

A chartered accountant was asked to pass on login details for a firm he had never worked for, to a man he had never met. He did, without asking why.1

What happened#

A trading firm in Patna uses an accountant for its sales-tax paperwork for several years. The firm shuts down.
Around a year later, a man looking for help with a sales-tax registration is referred, through a common acquaintance, to a chartered accountant in Kolkata. Sales tax is not the chartered accountant's line of work, so he puts the man in touch with the same accountant who used to handle the closed firm's filings. The two of them go on to deal with each other directly.
The accountant emails the chartered accountant the closed firm's tax ID and password, asking him to forward it to the man seeking sales-tax help. The chartered accountant does, without any enquiry of his own.
Using those credentials, the man files a sales-tax return worth several crores in the closed firm's name, for a trade the firm never carried out.
A tax department inspection turns up the fraud. Multiple police complaints follow, naming the chartered accountant among the accused. The former owner of the firm takes the matter to the Institute. The investigation into the underlying complaints is still pending years later; the Board's own proceeding runs to a finding of guilt, and then, at a separate hearing, a reprimand.

Two things decided the case.

The first was the email itself. On 25th May 2016, the accountant sent the chartered accountant the closed firm's tax ID and password, asking him to pass it on to the man seeking sales-tax work. The Board's own finding was that the chartered accountant did so "without conducting any enquiry/scrutiny," to someone the order calls "a totally unknown person" (para 6).

The second was what the tax department found when it went looking. An inspection team visited the firm's registered address and found a jewellery shop there instead. The family that had run the firm told the inspectors the readymade-garments business had closed and that they had never dealt in the goods the disputed return claimed to cover.2

The charge#

  • Item (2) of Part IV, read with Section 22 — the First Schedule's general clause for "other misconduct." It carries no fixed list of acts; it catches conduct that discredits the profession once none of the more specific items apply.3

The complaint had accused a partner at his firm of the same conduct.1 This order concerns only the chartered accountant himself; nothing on this page speaks to any case against anyone else.

What the respondent said#

His case was that the screening opinion had relied on a police complaint without ever explaining how he was supposed to be involved, and that a first information report is not evidence of anything — it is only an allegation, one that in this instance had sat under investigation for years without a single charge sheet being filed. He cited two Supreme Court rulings for the point: that a first information report can be used to discredit its own maker but not as substantive proof against anyone else, and that a disciplinary body cannot treat an unproven police complaint as evidence of guilt (paras 3.6–3.8).

On the substance, his account was that the accountant who used to handle the closed firm's filings was an acquaintance who worked independently of his practice; that he himself did only income-tax and company-law work, never sales tax; and that when the man seeking sales-tax help first approached him, he simply pointed him toward that accountant, since it was not his line of work. He admitted receiving the email with the closed firm's credentials and forwarding it, as the accountant had asked him to, to the man now accused of the fraud — but said he had no reason to expect anything from it beyond helping two acquaintances transact with each other. He called it "a mere and harmless error" that the complaint had "blown out of proportion," and said nobody had shown any gain to him or any evidence beyond the unproven police complaints (paras 3.1–3.11).

What the Board held#

The Board accepted that the accountant had handled the closed firm's sales-tax matters for years, and that he was the one who put the chartered accountant and the man seeking sales-tax help in touch with each other. It found, as fact, that the accountant emailed the chartered accountant the closed firm's tax ID and password on 25th May 2016 asking him to forward it on, that the chartered accountant did so without any enquiry of his own, and that the recipient then used it to file a return with false figures, at cost to the government (para 6).

It rejected the chartered accountant's separate claim that the former owner had himself signed away his credentials: there was no proof of that on record (para 7). It also noted that the accountant who had supplied the credentials had, in his own complaint to the police, said the request raised suspicion about the chartered accountant's conduct as a professional (para 7).

Weighing the multiple police complaints together with these findings, the Board held:

Pursuant to noting as above and perusing the records available besides hearing the parties; the Board upholds the views of the Director (Discipline) that the Respondent is 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 (para 9)

The Board added that the chartered accountant should have exercised due care and professional scepticism instead of passing the credentials on unchecked, whatever stage of practice he was at, and that a profession the public trusts as much as this one owed the former owner more care than he received (para 9).

The order#

At the separate hearing on punishment, the Board held:

Thus, upon consideration of the facts of the case, oral as well as written submissions, the consequent misconduct of [the Respondent], the Board without commenting on the merits of the issues involved of the civil or criminal nature and looking into the limited extent of the Respondent's requirement of acting into the professional manner decided to 'Reprimand' [the Respondent] (para 3)4

A reprimand is the lightest sanction the Board can impose under Section 21A(3) — lighter than a fine, and far lighter than removal from the Register.5 The finding of guilt was recorded on 30th May 2024; the reprimand followed just under three months later, once the chartered accountant had been heard on punishment.6

Why it matters#

This section is ours, not the Board's.

Forwarding credentials is not a neutral act just because you did not create the fraud. The chartered accountant here never touched the disputed return, and was reprimanded anyway, for passing on login details without asking why a stranger needed them. If you are handed access to someone else's account, stop and ask questions before you relay it as a favour.

An acquaintance's request is not verification. He forwarded the email because the accountant who sent it asked him to — not because he had any reason to think the closed firm had authorised it. Check the source of a request for sensitive credentials, not just who is asking you to pass it on.

A pending police complaint neither convicts you nor protects you. The Board went past the unresolved complaints to what the email and the surrounding facts actually showed. Keep your own record of what you did and why — that is what a hearing will ultimately weigh.

This summarises a public order and links the primary source. It is general information, not legal or professional advice.

Footnotes#

  1. The complainant was Shri Jagdish Kumar Jain, proprietor of the Patna trading firm M/s Sri Tulsi. The respondent was CA. Rahul Kumar (M. No. 303823), a partner at M/s Kumar Agrawal & Associates (FRN 019052C), Kolkata. The underlying complaint had also accused his partner, CA. Amit Kumar Agarwal, of the same conduct; this order and this page concern only CA. Rahul Kumar. The man whose accountant supplied the credentials, and the man who used them to file the disputed return, were not chartered accountants and are referred to here by role rather than by name. ↩ ↩2

  2. This account draws on First Information Report No. 233/2017, dated 18th May 2017, lodged by an Assistant Commissioner of Commercial Taxes, Patna, and quoted in the Board's findings (para 5). The same FIR recorded that the accountant had told investigators he had supplied the closed firm's identification, password and Aadhaar details to the respondent and his partner, who "may file return of 2015-16 with wrong intention" — the text naming the respondent in the Institute's own transcription of the FIR is not legible in the source document, so this page does not reproduce that portion. ↩

  3. Item (2) of Part IV of the First Schedule to the Chartered Accountants Act, 1949, read with Section 22 of the Act, covers "other misconduct" — conduct that discredits the profession but is not captured by the more specific items listed elsewhere in the Schedule. ↩

  4. The order's operative paragraph twice names the respondent directly, as "CA. Rahul Kumar (M. No. 303823)". This page substitutes "[the Respondent]" for the name each time, to keep the same anonymisation used throughout; nothing else in the quotation is altered. ↩

  5. Section 21A(3) of the Chartered Accountants Act, 1949 gives the Board of Discipline a graduated set of punishments, of which a reprimand is the lightest, ahead of a fine and removal of the member's name from the Register for a limited period. Check the current sub-section before relying on any figure — the amounts have been amended over time. ↩

  6. The findings, dated 30th May 2024, were signed by CA. Rajendra Kumar P (Presiding Officer), Ms. Dolly Chakrabarty (Government Nominee) and CA. Priti Savla (Member), after a final hearing on 20th March 2024 at ICAI Bhawan, Kasba, Kolkata, following earlier part-heard hearings from May 2023 onward. The punishment order, dated 27th August 2024, was signed by a two-member Board of the same Presiding Officer and Government Nominee, without CA. Priti Savla, after a hearing the respondent attended by video conference. ↩

Written by Jainam Shah. Found guilty under Item (2) of Part IV of the First Schedule; the Board ordered a reprimand. General information, not legal or professional advice — read the order itself before relying on it.

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