An Ahmedabad tax raid on three political parties turned up a client list. Twelve accountants on it were reprimanded.

An Income Tax raid on three political parties and two charitable trusts in Ahmedabad went looking for tax evasion and found, on the department's own search list, twenty-eight chartered accountants who had fed the scheme its clients.¹ Twelve of them answered to the Board of Discipline together, on facts none of them seriously disputed.²

What happened#

The mechanism ran through WhatsApp groups named for the party and the mediator bringing in clients — "KPI PD", "KPI FS", "KPI RT" — through which PAN cards, Aadhaar cards and bank screenshots moved from client to scheme.³ Commission ranged from a tenth of a percent to five percent of the amount donated, and at least one of the twelve had simply split it with another of the twelve under an oral partnership, taking half of whatever the other brought in.⁴ One member described his own admission plainly:

I accept that I was involved in Bogus Donation modus where entities used to make donation to a political party (Namely Kisan Party of India) and received the money back in cash after deduction of commission and claim the deduction in their Return of Income (para 15).

The department's own list wobbled. Several of the twelve pointed out that the original complaint named twenty-eight members, but a later status report listed only twenty-two, with no explanation for who was dropped or why — and asked, without success, why the same courtesy had not been extended to them.

The charge#

Item (2) of Part IV of the First Schedule — Other Misconduct — catches conduct that brings disrepute to the profession or the Institute, whether or not it happens in the course of practice.⁵ It is deliberately the wide clause, not the specific one: nothing in soliciting a client or running an audit describes arranging cash-back donations for a political party, because that is not accountancy work at all. It is conduct outside any engagement, which is exactly what Item (2) exists to reach.

All twelve were held guilty under this one clause and reprimanded. Nothing about the tax consequences to the clients, or the fate of the political parties and the two charitable trusts at the centre of the scheme, was decided in these proceedings — only what the twelve chartered accountants had done.

What the members said#

The defences varied member to member, but fell into a handful of shapes.

Several argued that their statement on oath had never been shown to them until the ICAI complaint arrived years afterward, and that once they saw it, they retracted it by affidavit within weeks — so the retraction should count as timely from the day they actually learned what they had supposedly said. A few went further and argued the statement itself was unreliable: it had been recorded under an assurance that "nothing would go against" them, making it inadmissible.

Others argued the evidence was thin at the source. The department's case leaned on WhatsApp chats retrieved from other people's phones, and one member's written statement invoked a Supreme Court remark that "anything can be created and deleted on social media these days" and that such chats deserve no evidentiary weight.

A recurring defence was distance: several members said they had only referred a client to someone else running the scheme, never personally arranged a donation or collected a fee, and that a referral cannot be solicitation. Two members took the opposite path and admitted the substance outright — one, a junior practitioner, said the admission before the tax department was truthful and asked the Board to read it as an honest mistake rather than guilt; another, appearing through counsel, admitted the transactions as unintentional, tied to financial pressure during the pandemic, and totalling roughly ₹65,000 over three years.

Across all twelve, one fact was undisputed: the Income Tax Department had not reassessed most of their income over these transactions, and had not proceeded against the political parties or the charitable trusts at all.⁶

What the Board held#

The Board treated a late retraction as worth nothing. A statement made on oath is admissible unless rebutted within a reasonable time, and in case after case the rebuttal came roughly two years later — timed, the Board observed, to the moment each member received the Institute's complaint rather than to any moment he or she actually discovered the statement was wrong. That timing "strongly suggests... that he stood by his original statement for an extended period and attempted to withdraw it only when confronted with the potential consequences of his own admissions through disciplinary proceedings" (para 16).

On the "mere referral" defence, the Board looked past the label to what each member had actually done — forwarding a client's PAN card and bank details, confirming a transfer, arranging for cash to come back — and held that this was direct participation, not an introduction. And on the missing reassessments, the Board was direct about what they did and did not prove:

The Board cannot negate its findings just upon the fact that the Respondent's case was not reopened by the Income Tax department after the alleged commission income, and keeping in view the statement on Oath recorded under Section 131(1A)/132(4) of the Income Tax Act, 1961, the Board found that Complainant has met the initial burden of proving the Guilt on the part of the Respondent (para 19).

Guilt, in other words, rested on what each member had admitted under oath — not on whether the tax department later chose to act on it.

The order#

Every one of the twelve orders reaches the identical operative line.⁷ The file this page follows states it plainly, and in eleven of the twelve orders it sits beside the same unresolved fact, recorded in the very paragraph that fixes the punishment:

upon consideration of the facts of the case where neither any re-assessment was done by the Income Tax Department, nor any action was initiated against the Political Parties involved in the instant matter... the Board decided to REPRIMAND him (punishment order, para 3).

A reprimand is the lightest punishment the Board can impose — no suspension, no fine.⁸

The department that brought the complaint had not gone back to tax the commission it described in detail. The parties that took the donations, issued the receipts and paid out the cash had faced no action at all. The twelve mediators who connected clients to that machinery were the only people made to answer for it — and the lightest available answer was thought sufficient.

Why it matters#

This section is ours, not the Board's.

A misconduct clause reaches you even outside an engagement. Arranging donations is not accountancy work, so no clause on soliciting or auditing fit; Item (2) of Part IV exists for exactly that gap. Your conduct as a private individual is fair game.

A late retraction reads as an afterthought, not a correction. All twelve retractions here arrived only after the Institute's complaint landed, years after the original statement. Challenge a wrong statement immediately, not once a notice forces your hand.

"I only referred the client" is not a defence. Forwarding a PAN card and a bank screenshot over WhatsApp was treated as active participation. Do not introduce a client to an arrangement you would not put your own name to.

A light punishment reflected weak enforcement, not a small wrong. The Board reprimanded all twelve while recording that the parties, the trusts and most members' own tax assessments went untouched. A reprimand here is not a verdict on how serious the scheme was.

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