---
title: A client sent GST money to a chartered accountant for years. The accountant used tax credits to pay less, kept the rest.
description: A chartered accountant kept billing the same GST amount even after input tax credit cut what was owed, and pocketed the gap. He was removed for three months and fined a lakh.
case_number: BOD 731/2024
file_number: PR/400/2022/DD/400/2022/BOD/731/2024
forum: board-of-discipline
institute: icai
decided_on: 2024-06-12
punished_on: 2024-09-25
outcome: Removal
clauses: Item (2) of Part IV of the First Schedule
order_pdf: https://disc.icai.org/wp-content/uploads/2024/10/29.-BOD-731-2024.pdf
published: 2026-09-09
author: Jainam Shah
keywords: bod 731 2024, misappropriation of gst payments, input tax credit misuse, item 2 part iv first schedule, section 22 chartered accountants act, board of discipline removal, gst return chartered accountant, other misconduct
source: /icai/board-of-discipline/bod-731-2024
---

# A client sent GST money to a chartered accountant for years. The accountant used tax credits to pay less, kept the rest.

A chartered accountant filed a power-sector company's GST returns for years, using tax credit the
company did not know it had to cut what it actually owed. He kept billing it the full amount
regardless, and admitted as much when asked.[^parties]

## What happened

```timeline
A chartered accountant is engaged to audit a power-sector consultancy company and handle its
income tax and GST filings, a role he holds for several years.

A new tax credit becomes available once GST is introduced, letting a business offset tax already
paid on its purchases against what it owes. The company's director keeps sending money for GST as
before, unaware the credit exists. The accountant uses the credit when filing the returns but does
not mention it, and keeps collecting the same amount from the client regardless.

The director eventually learns about the credit and asks the accountant to explain, and to hand
back the company's GST portal login. Neither happens. A legal notice follows, demanding a refund.
The accountant admits wrongdoing but does not return the money, and instead produces an
unregistered rental deed to justify keeping it.

Only the misappropriation allegation survives the Institute's screening; a forged-deed allegation
and a fake-invoice allegation are dropped before the hearing begins. At the hearing, asked what
became of the surplus, the accountant admits he used it for himself. The Board finds him guilty.

Notified of the finding, the accountant first denies having received it, then simply stops
appearing before the Board despite repeated notices over several months. The punishment hearing is
eventually held without him, and he is removed from the Register for three months and fined.
```

The money told its own story. Over roughly two financial years the director transferred
₹3,73,950 to the accountant, in six instalments, believing all of it went toward GST (para 5.1,
6). The actual tax payable for those years came to ₹3,60,250 — and the accountant had, on his own
admission, set off ₹2,24,818 of input tax credit against it while filing the returns (para 5.2–5.3).
None of that credit belonged to him; it was the company's own, earned on tax the company had
already paid on its purchases. He never told the client it existed.

Two of the six transfers did not go to the accountant's firm at all. Rs 72,000 and Rs 1,15,200,
paid for GST periods in 2017, went instead to his wife's personal account — she too was a
chartered accountant. The Board noted that at the time of the first of those two payments, she was
not yet a partner in his firm (para 8).

## 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.[^item2]

The complaint had alleged two further charges: that the accountant raised fake invoices from bogus
companies to claim tax credit that was not genuinely his to claim, and that the rental deed he
produced to justify keeping the client's money was itself forged. Neither charge went to a hearing
— the Director (Discipline) found no case to answer on either, and the Board proceeded on the
misappropriation charge alone.[^screening]

## What the respondent said

The findings record no defence beyond what came out under questioning. Asked directly at the
hearing why the amount he had collected exceeded what the returns show as paid, the accountant
confirmed he had used the balance for himself (para 9). Nothing in the findings disputes the
transfers, the tax figures, or the credit he had claimed — his own account of the underlying facts
matched the complainant's.

## What the Board held

The Board set what had been transferred against what had actually been due, crediting the
accountant with the tax credit he himself admitted using, and found a gap he had not accounted for:

> after taking into consideration all the transactions, the amount paid towards GST
> (Rs. 3,73,950/-), total tax payable (Rs. 3,60,250/-) and Total Input Tax Credit (Rs. 1,34,012/-),
> it is clear that after equating the said transactions, Respondent utilized the balance amount for
> himself without informing the Complainant (para 9)

It went on to record the admission that closed the case:

> During the hearing, the Board enquired from the Respondent about the utilization of balance
> amount which the Respondent admitted/ confirmed that he has used the same amount for himself
> (para 9)

On that basis the Board held that collecting more than was owed, and keeping the surplus without
telling the client, was conduct a chartered accountant should not engage in, and found him guilty
of other misconduct under Item (2) of Part IV of the First Schedule (para 10, 12).

## The order

Getting a punishment order out of the Board took over three months and four separate hearing dates
after the finding of guilt, none of which the accountant attended. Notified of the findings by
email and speed post, he told the Board in person that he had never received them; the Institute
resent everything by hand delivery, and he still did not appear at the next hearing, or the one
after, or the one after that — one of which had to be pushed back a fortnight only because the
Presiding Officer fell ill. The Board eventually went ahead without him:

> the Board decided to remove the name of [the Respondent] for a period of 03 months from the
> Register of Members and to impose a Fine of Rs. 1,00,000/- (Rs. One Lakh only) upon [the
> Respondent] (para 8)[^bracket]

A three-month removal from the Register, combined with a fine, sits at the top of the Board's
punishment scale — heavier than a reprimand or a fine standing alone.[^removal] The Board's own
stated reason was deterrence: the conduct, it said, had "wiped out the trust of the public" that
clients place in chartered accountants, and the punishment was meant to be severe enough to
discourage others from the same thing (para 6–8).[^coram]

## Why it matters

*This section is ours, not the Board's.*

**A tax credit that belongs to the client belongs to the client's bill, not to you.** Input tax
credit reduces what a business actually owes the government. If you use it when filing a client's
return, the amount you collect from them for that filing should fall too — collecting the old,
higher amount regardless is what this order punished.

**"He admitted it" ended the case.** There was no forensic reconstruction here — the accountant
confirmed under questioning that he had kept the difference. Keeping careful, honest answers ready
for a client's own questions is cheaper than answering them for the Board.

**Ignoring the Board does not slow down the punishment; it only removes you from the room while it
is decided.** Four hearings, three months, and the accountant appeared at none of them. The
punishment was fixed exactly as if he had.

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

[^parties]: The complainant, styled *Smt. Malar Kadi* in the punishment order and *Smt. Malar Kodi*
    in the Board's Findings — the record does not reconcile the two spellings — was a director of
    M/s Rainbow Power International Private Limited, a Delhi-based engineering and power-sector
    consultancy, and was not herself a chartered accountant. The respondent was *CA. Ranjit Kumar
    Yadav (M. No. 525751)*, of New Delhi.

[^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 had also alleged that the accountant raised fake invoices in the name
    of bogus companies to claim input tax credit that was not genuinely available to the company,
    and that he forged an unregistered rental deed, dated October 2021, to justify retaining the
    money he had collected. The Board considered the Director (Discipline)'s Prima Facie Opinion at
    its meeting of 8 March 2024 and agreed the Respondent was "Not Guilty" on both of those charges,
    proceeding to a hearing only on the misappropriation allegation (para 2–3).

[^bracket]: The order's operative paragraph names the respondent directly, twice. This page
    substitutes "[the Respondent]" for the name both times; nothing else in the quotation is
    altered.

[^removal]: Section 21A(3) gives the Board a graduated set of punishments — reprimand, a fine, and
    removal of a member's name from the Register for a limited period, in ascending order of
    severity. This order imposed a three-month removal together with a fine of Rs 1,00,000, so the
    page records the severer of the two. Check the current sub-section before relying on any
    figure — the amounts have been amended over time.

[^coram]: The Findings, dated 12 June 2024, followed a final hearing on 7 May 2024 at which the
    respondent was present in person; they were signed by CA. Rajendra Kumar P (Presiding Officer)
    and Ms. Dolly Chakrabarty (IAAS, retd.), Government Nominee. The same two-member Board, sitting
    through video conferencing, passed the punishment order on 25 September 2024 after the
    respondent failed to appear at hearings on 27 August and 17/25 September 2024, despite notices
    sent for each.