--- title: A chartered accountant took a client's tax money and handed back a stamped receipt. The return did not exist. description: A client sent his chartered accountant money to deposit as income tax and got back stamped acknowledgements. The tax department said the returns did not exist. The Board fined him a lakh. case_number: BOD 640/2022 file_number: PR/135/2016/DD/163/2016/BOD/640/2022 forum: board-of-discipline institute: icai decided_on: 2024-02-02 punished_on: 2024-04-10 outcome: Fine clauses: Item (2) of Part IV of the First Schedule order_pdf: https://disc.icai.org/wp-content/uploads/2024/04/BOD-640-2022.pdf published: 2026-09-09 author: Jainam Shah keywords: bod 640 2022, other misconduct, item 2 part iv first schedule, section 22 chartered accountants act, fabricated income tax acknowledgement, unfiled income tax return, board of discipline fine source: /icai/board-of-discipline/bod-640-2022 --- # A chartered accountant took a client's tax money and handed back a stamped receipt. The return did not exist. A client sent his chartered accountant money every year to be deposited as income tax, and got back stamped receipts showing it had been paid. Years later, the tax department said the returns behind those receipts did not exist.[^parties] ## What happened ```timeline A client, a director of a real estate company, needs someone to file his personal income tax returns and handle his companies' paperwork. Another director of the company, himself a chartered accountant, recommends a Delhi-based chartered accountant for the work, and the client starts sending him the money due each year as tax. Over the following months the client transfers close to twenty-five lakh rupees to the accountant's account, understanding it will reach the tax department. He gets back income tax return acknowledgements, each carrying an official stamp, showing his tax for two assessment years paid in full. A dispute breaks out among the client's fellow directors, and criminal complaints are filed accusing the accountant of colluding with them in unrelated frauds against the company. Separately, the accountant's own firm writes to the tax department asking it to confirm those very returns, and gets back a one-line reply: no such return is on file. Years later the department reopens the client's assessment for one of the two years and issues a demand notice and a recovery proceeding for close to eighty lakh rupees, because the return had in fact never been filed. The client takes several allegations to the Institute. Only the one about the tax acknowledgements survives screening. After hearings running across the better part of a year, the Board of Discipline finds the accountant guilty, and a separate hearing on punishment fines him a lakh. ``` Two details decided the case, and a third cuts against the client's own account of it. The first was the acknowledgements themselves. Both were dated in 2010 — one for tax on assessment year 2009-10, dated 9th March 2010, the other for 2010-11, dated 29th September 2010 (para 6.1). The accountant pointed out that neither date could be right: the client's first payment to him did not arrive until May 2011, months after both receipts were supposedly issued (para 4.2). Whoever created them, the money and the paperwork did not line up. The second was what the tax department itself said when asked. The accountant's own firm wrote to the assessing officer in June 2011 asking it to verify the client's returns for those two years. The answer came back in a single line: "As per record no such ITR have been received in the Office" (para 6.5). A later letter from the department, and the reopened assessment order itself, said the same thing for one of the two years: no return had ever been filed (para 6.5). The third was where the paperwork ended up. A police officer investigating a separate criminal complaint against the accountant recorded, in a reply filed years before this hearing, that "Original income tax returns have also been taken into police possession from [the Respondent]" (para 6.3).[^bracket] Not from the tax department's files — from the accountant's own custody. ## The charge - **Item (2) of Part IV, read with Section 22** — the First Schedule's general clause for "other misconduct." It has no fixed list of acts; it catches whatever conduct discredits the profession, once the more specific items don't apply.[^item2] The client's complaint had gone further than this. He accused the accountant of complicity in a forged boardroom resignation that removed his wife and then him from the company's directorship, of misusing his digital signature to file fraudulent company documents, and of an embezzling staffer an audit missed. None of that was examined here. At the screening stage the Director (Discipline) found a case to answer only on the tax acknowledgements, and the Board's hearing proceeded on that single charge alone (para 2).[^screening] ## What the respondent said He argued, first, that the whole complaint belonged to a dispute between the client and his fellow directors that had nothing to do with him, and that the client was trying to drag him into it (para 4.1). On the acknowledgements, his defence was timing. Both receipts were dated in 2010; his first payment from the client did not arrive until May 2011. He said it made no sense to accuse him of depositing tax in March 2010 with money he would not receive for another fourteen months (para 4.2–4.3). Of the roughly twenty-four lakh rupees he did receive, he said, about eleven lakh was his fee for work already completed, and most of the balance went toward tax for later assessment years and toward handling a tax department investigation into the client — not toward the two returns now in dispute (para 4.4–4.5). He also pointed to his own initiative: it was his firm that had written to the department in mid-2011 asking it to verify these very returns (para 4.15). And he argued that the complaint against him was retaliation, since he had separately flagged, in his capacity as the company's statutory auditor, that the client himself had siphoned ₹17 crore from it (para 4.13). ## What the Board held The Board weighed the acknowledgements against what the department itself said about them, and against the money that had actually moved. The client's own bank records showed the payments reaching the accountant; the accountant's own written submission admitted receiving them (para 6.2). Set against that was the department's flat denial that any return existed for either year, obtained at the accountant's own request, and the fact that the original returns had last been seen in his possession rather than the department's (para 6.3, 6.5). A witness for the client was heard and cross-examined at the final hearing, but the Board gave his evidence little weight — he had only become the client's authorised representative in 2018, well after the conduct in question (para 6.4). Weighing the fund movement, the acknowledgements, and the accountant's own role auditing the client's company and holding his other paperwork, the Board held: > Thus, on a detailed perusal of the submissions and documents on record especially the fund > movement between the Complainant and the Respondent and the connect of the Respondent firm in > auditing the accounts of the company and providing other ancillary services and having regard to > the preponderance of probabilities, the Board was of the view that the role of the Respondent in > the alleged provisioning of forged and fabricated acknowledgement receipts of payment of income > tax filing of income tax return of the Complainant which depict not only payment of income tax but > also filing of Income Tax returns for the AY 2009-10 and 2010-11 cannot be ruled out (para 6.7) And concluded: > Thus, in conclusion, in the considered opinion of the Board, 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 7) ## The order At the punishment hearing, the accountant did not contest the finding. He confirmed he had received the Findings and concurred with them, and asked only that the Board take a lenient view (para 2). The Board then held: > Thus, upon consideration of the facts of the case, the consequent misconduct of [the Respondent] > and keeping in view his representation before it, the Board decided to impose a Fine of > Rs.1,00,000/- (Rs. One Lakh only) upon him (para 3)[^bracket2] A fine sits in the middle of the Board's punishment scale — heavier than a reprimand, lighter than having his name removed from the Register.[^fine] The finding was recorded on 2nd February 2024; the fine followed just over two months later, once the accountant had been given the chance to be heard on punishment.[^coram] ## Why it matters *This section is ours, not the Board's.* **A stamped acknowledgement is not proof the money reached the government.** Both receipts here looked complete and carried an official stamp, and the department still said neither existed. If someone else is depositing tax on your behalf, verify the filing yourself on the department's own portal rather than accept the paperwork you're handed. **Money handed over for a statutory payment should be traceable to an actual deposit, not just a fee note.** Ask for the challan or payment reference the deposit itself generated — not only a receipt for the return. **Handing your digital signature and years of paperwork to one professional concentrates risk in one place.** The client here had authorised the firm to hold his signature credentials for filings across ten companies. Keep copies, and know what is being filed in your name. This summarises a public order and links the primary source. It is general information, not legal or professional advice. [^parties]: The complainant, Shri Sanjay Jain of Chandigarh, was not a chartered accountant. The respondent was *CA. Kapil Dev Aggarwal (M. No. 082908)*, of *M/S B Aggarwal & Co. (FRN 004706N)*, New Delhi. [^bracket]: The order's own quotation of an investigating officer's letter names the respondent directly: "Original income tax returns have also been taken into police possession from CA. Kapil Agarwal" (the spelling in the quoted letter itself). This page substitutes "[the Respondent]" for the name to keep the same anonymisation used throughout; nothing else in the quotation is altered. [^bracket2]: The order's operative paragraph names the respondent directly before switching to "him." This page substitutes "[the Respondent]" for the name; nothing else in the quotation is altered. [^item2]: 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. [^screening]: The complaint as originally filed also alleged that the respondent had conspired to forge the resignation of the client's wife, a fellow director, and later have the client himself removed from the board on fabricated papers; that he had used the client's digital signature to file fraudulent forms with the Registrar of Companies; and that a staff member deputed by his firm had embezzled over seventy lakh rupees from an audit he conducted. The Director (Discipline)'s Prima Facie Opinion found a case to answer only on the tax-acknowledgement allegation, and the Board's examination proceeded on that basis alone (para 2). [^fine]: Section 21A(3) gives the Board of Discipline a graduated set of punishments — reprimand, removal of the member's name from the Register for a limited period, and a fine — of which this order used the fine. Check the current sub-section before relying on any figure; the amounts have been amended over time. [^coram]: The findings, dated 2nd February 2024, were signed by CA. Rajendra Kumar P (Presiding Officer), Ms. Dolly Chakrabarty (Government Nominee) and CA. Priti Savla (Member). The punishment order, passed on 10th April 2024 after a hearing conducted by video conferencing, was signed by a two-member Board of the same Presiding Officer and Government Nominee, without CA. Priti Savla. The final hearing on the merits had been held on 11th January 2024, after earlier hearings from May 2023 onward.