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BOD 804/2025Removal

A police probe into a stalled redevelopment project traced diverted investor funds to a former group auditor's family.

8 min readJainam Shah

A police probe into a stalled redevelopment project traced diverted investor money into a chartered accountant's family accounts. The name left the Register for three months.

Held
RemovalGuilty of professional misconduct
Forum
Board of Discipline (First Schedule)
Clauses
Item (2) of Part IV of the First Schedule
Decided
punished
File no.
PR/G/381/2019/DD/150/2021/BOD/804/2025
Source
Original order (PDF)

A chartered accountant audited a group of property companies until 2013, then dropped the assignment. Years later, a police investigation into one failed redevelopment project inside that same group found investor money reaching the accountant's own family.1

What happened#

A developer sells flats in a Mumbai redevelopment project, collecting crores from investors on the promise of possession within a few years. Construction never begins.
The developer sells the project's development rights to a second company. It later emerges that the actual redevelopment agreement was signed directly between the second company and the housing society, bypassing the original developer entirely, and raising doubt over whether it ever had the flats to sell in the first place.
Both companies trace back to the same group of promoters, for whom a chartered accountant had worked as statutory auditor until some years before any of this happened. A forensic audit commissioned during the investigation finds that funds raised from investors moved through a chain of companies before part of it reached the accountant's own family, and that flats bought in a wife's name using group money were later resold at a profit, with the proceeds flowing back into the same group.
An investor's complaint over undelivered flats leads to an FIR against the developer and its partners. A police economic offences unit, investigating the wider group's finances, later adds the accountant to a revised charge-sheet once the money trail is traced to his account.
The Board hears the disciplinary case separately from the still-pending criminal one, finds the accountant's own account of the fund movements unconvincing, and holds that the conduct disgraced the profession regardless of how the criminal case eventually turns out. It orders removal from the Register for three months.

Two figures anchor the finding. Of roughly Rs 8.27 crore collected from investors by the original developer and routed through intermediary companies, Rs 2.5 crore reached the accountant's personal bank account and was passed on again, to a further entity (para 3). And Rs 2 crore moved from one of the group's companies into the account of the accountant's wife and was returned in 2013 — a transaction the accountant admitted to, while denying any wrongdoing behind it (para 11).

The wife's property dealings added to the picture: flats bought in her name and a sister-in-law's, funded by the group, were later sold on to the second company at inflated prices, with the proceeds moving back to the group once more — money running in a circle between a client and its auditor's own household (para 4).

The clause#

Item (2) of Part IV of the First Schedule catches "Other Misconduct" — any act or omission that, in the Council's opinion, brings disrepute to the profession or the Institute, whether or not it has anything to do with the member's professional work.2 It does not require a specific rule elsewhere in the Schedule to have been broken; it asks only whether the conduct is bad enough for the profession's own disciplinary body to say so.

The Board found the charge made out, and held that the conduct disgraced the profession regardless of what the still-pending criminal case eventually decides.

What the respondent said#

The defence began with distance: no professional or personal involvement in the original developer or the redevelopment project, no role as its auditor — audit records for the relevant years named other auditors — and no such thing, in any event, as a "Group Auditor" overseeing every company in a promoter group at once. The resignation from all the group's entities had come in March 2013, well before the transactions now in question (para 8).

On the money itself, the Rs 2.5 crore the forensic audit called "round-tripping" was, on this account, an independent business loan, unconnected to investor funds and fully repaid within the following financial year. The wife's property purchases were said to be legitimate and unrelated to the developer or the complainant. And on the case itself: the accountant had first appeared in the original charge-sheet only as a witness, and was added as an accused years later without any fresh evidence — supported by a bail order and a discharge application already filed in the criminal case — and disciplinary proceedings, it was argued, demand clear and conclusive proof of guilt, not suspicion drawn from a wider group's finances (para 8-9).

What the Board held#

The Board took the admission on its own terms. Money had moved from a company under the accountant's audit into a family member's account, and the fact that it came back later changed nothing:

Even if the amount was subsequently repaid, such a transaction constitutes a clear violation of auditor independence and professional ethics (para 12)

A forensic audit report from August 2021 had already flagged round-tripping transactions running through the accountant's own account, and the Board found the explanation offered for it — a genuine, independent investment — unconvincing against that financial trail and the accountant's position as the group's statutory auditor (para 12).

On the pending criminal case, the Board drew a clean line between the two proceedings:

while the issue of criminal conspiracy under Sections 34 and 120B Indian Penal Code, 1860 is yet to be adjudicated by the competent court, the professional and ethical dimensions of the Respondent's conduct are distinct and within the purview of this Board (para 13)

It concluded that involvement in personal financial dealings with audited companies, and the use of relatives' names for those dealings, amounted to conduct unbecoming a member of the profession.3

The order#

the Board hereby resolves to remove the name of [the Respondent] from the Register of Members for a period of three (3) months.4

Three months' removal sits above a reprimand or a fine on the Board's punishment scale, though well short of a permanent strike-off.5 The finding stands regardless of what happens in the criminal case against the accountant, which remains open.6

Why it matters#

This section is ours, not the Board's.

Repaying the money does not undo a conflict of interest. Funds moved from an audited company to the auditor's own family and came back a year later, and the reversal made no difference to the finding. Treat any financial dealing with, or through relatives of, a client you audit as off-limits, whatever the intended terms.

A disciplinary case does not wait for the criminal one. The Board decided the ethics question years before any court would rule on the FIR, and said so in as many words. A pending criminal matter is not a reason to expect a professional complaint to sit still.

Buying property through a relative does not put distance between you and the transaction. Flats bought in a wife's and sister-in-law's name, funded by client money and resold back into the same group, were treated as the accountant's own dealing. Whose name is on the paperwork does not change where the money came from.

An "independent loan" claim needs its own paperwork. A claim of an unrelated business loan, repaid within a year, went nowhere without documents to set against a forensic audit's contrary trail. Keep loan agreements and repayment records for any personal dealing with a client, however informal it feels at the time.

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

Footnotes#

  1. Mr. Parag Manere, Deputy Commissioner of Police, Economic Offence Wing, Mumbai, was the complainant. CA. Naresh Kishore Singh Rajpurohit (M. No. 106013), Mumbai, was the respondent, auditor of the Kamla Landmarc Group of companies until 2013. The developer at the centre of the underlying dispute was M/s J.V. Developers; the company that later acquired its development rights was M/s Woodstock Realties Pvt. Ltd. The redevelopment project was called "CANVAS". ↩

  2. Item (2) of Part IV of the First Schedule to the Chartered Accountants Act, 1949 holds a member guilty of "Other Misconduct" if they are, in the opinion of the Council, guilty of any act or omission that brings disrepute to the profession or the Institute, whether or not it arises out of professional work. It is the general clause, catching conduct that no more specific item in the Schedule describes. ↩

  3. The findings are not fully consistent about which of the group's companies the respondent personally audited at the time of the disputed transactions. Para 11 records that Rs 2 crore was transferred from the original developer, described there as "an auditee firm," to the respondent's wife's account, while the respondent's own submission (para 8) denied ever auditing that developer and pointed to audit records naming other auditors for the relevant years. The Board's operative finding at para 12 rests on the broader point — money moving from companies under the respondent's audit to a family account — without resolving which specific entity is meant. ↩

  4. The order's operative line names the respondent in full; the quotation above substitutes "[the Respondent]" for that name. Nothing else in the quoted text was altered. ↩

  5. Section 21A(3) gives the Board a graduated set of punishments — a reprimand, a fine, or removal of the member's name from the Register for a period it fixes. Removal for a fixed period sits above a fine on that scale; only a much longer or permanent removal goes further. ↩

  6. CA. Rajendra Kumar P (Presiding Officer), Ms. Dolly Chakrabarty (Government Nominee) and CA. Priti Savla (Member) signed both the findings and the punishment order. ↩

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

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