₹849 Crore Remittance Allegations Fail: ICAI Finds No Lapse by CAs in Form 15CB Issuance [Read Order]
The ICAI’s Disciplinary Committee dismissed two companion complaints linked to ₹849.83 crore in foreign remittances, as both chartered accountants met the requirements for Form 15CB certification.
The Disciplinary Committee of the Institute of Chartered Accountants of India (ICAI), ruled that no professional misconduct was established under Item (7) of Part I of the Second Schedule to the Chartered Accountants Act, 1949 while examining two connected proceedings alleging improper issuance of Form 15CB certificates for high-value foreign remittances
The complaints were filed by the Deputy Director of Income Tax (Investigation), Chennai, against both Chartered Accountants (CAs), alleging that they issued Form 15CB certificates without examining requisite supporting documentation.
In the first case, CA had issued 470 certificates between 2017 and 2018, covering remittances of about ₹141 crore. In the second case, CA had issued 1,053 certificates between 2016 and 2018, involving remittances of ₹282.64 crore and USD 44.30 million. Both complaints were based on statements recorded under Section 131 of the Income Tax Act, 1961, where the respondents acknowledged relying on client-provided documents such as invoices, passenger lists, and bank statements.
The complainant alleged that inadequate verification of these records facilitated foreign remittances totalling approximately ₹849.83 crore. Both complaints claimed that lack of due diligence enabled outward remittances collectively approximating ₹849.83 crore without adequate tax examination.
The complainant contended that both CAs failed to verify critical documents such as agreements with foreign service providers, authentic travel itineraries, ticket details, hotel bookings, and other material required to establish the legitimacy of the transactions. Further, argued that certification based merely on pro-forma invoices constituted a failure to exercise due diligence, falling within Item (7) of Part I of the Second Schedule to the Chartered Accountants Act, 1949. Reliance was placed on admissions made by the respondents to demonstrate non-verification and lack of familiarity with the companies involved.
The respondents through S. Anand, argued that Form 15CB requires a CA only to determine the nature of the remittance and the applicability of tax deduction at source under the Income Tax Act, 1961. Subsequently, they filed an affidavit outlining the verification undertaken. Further, submitted that the periodic examination of documents confirmed the operational status of the entities. Additionally,the foreign travel operators had no permanent establishment in India, thereby tax deduction at source did not apply.
The disputes were decided by CA Charanjot Singh Nanda, Jiwesh Nandan, Dr. K. Rajeswara Rao, CA Piyush S. Chhajed, and CA Abhay Chhajed, constituting the ICAI Disciplinary Committee Bench. The Committee observed that Form 15CB, issued under Rule 37BB of the Income Tax Rules, 1962, requires a CA to verify the nature of the remittance and determine whether tax deduction at source applies, based on the documents presented.
The bench held that the form does not require verification of the genuineness of invoices, underlying travel documents, or the actual provision of services, nor does it mandate a written agreement in every case, as the form itself states “wherever applicable.”
The Bench noted that both respondents had examined the documents made available to them. Therefore, the Committee stated that a CA is not liable for any subsequent wrongdoing by clients when the certification is based on documents reasonably verifiable at the time of issuance. Further, no evidence indicated any involvement by either respondent in any impropriety.
Accordingly, the Committee held that neither case established professional misconduct under Item (7) of Part I of the Second Schedule to the Chartered Accountants Act, 1949, and ordered closure of both matters under Rule 19(2) of the Chartered Accountants (Procedure of Investigations of Professional and Other Misconduct and Conduct of Cases) Rules, 2007.
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