11 Ahmedabad CAs found guilty in bogus political donations case; ICAI lets them off with reprimand

AHMEDABAD: The Board of Discipline of the Institute of Chartered Accountants of India (ICAI) has held 11 chartered accountants of Ahmedabad guilty of professional misconduct in connection with an alleged bogus political donations racket flagged by the income tax department.

In recent orders, the board held the CAs guilty of ‘Other Misconduct' under the First Schedule to the Chartered Accountants Act, 1949, and contemplated action under Section 21A (3) of the Act. However, after hearing their representations, the board decided to reprimand them.


In its order, the board noted that no reassessment proceedings were carried out by the income tax department against the political parties involved, nor was action initiated against them. Considering the submissions made by the CAs, who sought a sympathetic view and assured that such conduct would not be repeated, the board ordered a reprimand.

"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, along with the consequent misconduct of CAs and keeping in view his/her representation before it, the board decided to REPRIMAND him/her," the orders stated.

The board also observed that the CAs retracted their 2021 statements only in 2023 through affidavits — nearly two years later. It noted that they had stood by their original statements for a considerable period and sought to withdraw them only when faced with possible disciplinary proceedings.

The case stems from a search and seizure operation conducted in Feb 2021 under the Income Tax Act, 1961, in respect of three political parties and two charitable institutions based in Ahmedabad. The department had alleged large-scale tax evasion practices.

According to the I-T department, some 28 chartered accountants were found to have solicited clients in what it described as a ‘bogus donations scheme'. In statements recorded on oath under Sections 132(4) and 131(1A) of the Act, the CAs had allegedly admitted their role.

The department alleged that the professionals colluded with key persons linked to certain political parties to facilitate tax evasion and `fraudulent electoral funding'. Clients seeking to reduce taxable income were allegedly persuaded to route ‘donations' to designated bank accounts of political parties.

After the transfer, donor details including name, PAN, address, bank account details and transaction references, were shared with party functionaries via WhatsApp, who generated donation receipts. The funds were then allegedly returned in cash to the original donors after deducting commissions for intermediaries, including the respondent CAs.