CA cannot be prosecuted for client submitting ingenuine documents: Madras High Court

CA cannot be prosecuted for client submitting ingenuine documents: Madras High Court

The petitioner was charged under the Prevention of Money Laundering Act

The Madras High Court has held that a chartered accountant (CA) is not required to go into the genuineness or otherwise of the documents submitted by his client.

The division bench of Justice PN Prakash and Justice G Chandrasekharan observed, "A panel advocate, who has no means to go into the genuinity of the title deeds and gives an opinion based on such title deeds, cannot be prosecuted along with the principal offender. Applying the same anomaly, we find that the prosecution of Murali Krishna Chakrala in the facts and circumstances of the case, cannot be sustained."

The petitioner, Murali Krishna Chakrala, a CA, was charged under the Prevention of Money Laundering Act, 2002 (PMLA).

Chakrala's client approached him for the issuance of Form 15CB, as he was required to pay for imports. On reviewing the information, the petitioner issued Form 15CB to his client.

Thereafter, the Enforcement Directorate (ED) investigated five persons alleging that they opened fictitious bank accounts, submitted forged Bills of Entry and parked huge amounts in those bank accounts. The money was later transferred abroad through the bank in order to make it a licit transaction.

An initial investigation revealed that Rs.8 crores were transferred out of India via seven banks to fictitious entities abroad. Though a complaint was filed, the ED continued its investigation and stumbled upon some Form 15CB issued by the CA and interrogated him.

The CA revealed that his client Kiyam Mohammed had approached him for the issuance of Form 15CB under the Income Tax Rules, 1962. He submitted documents in support of it. The CA perused the same and issued certificates stating that Form 15CB was not necessary for the overseas payment of imports.

Therefore, except for the State Bank of Travancore, all other nationalized banks had transferred the funds based on the import documents without insisting upon the form. The petitioner reiterated that if he were a part of the conspiracy, he would not have uploaded the certificates on the portal of the Income Tax Department.

He further said that the mere issuance of five forms at the request of his client did not make him party to a conspiracy of indulging in money laundering. He further apprised about receiving merely Rs.1,000 for a certificate.

Based on the facts, the court discharged the CA from prosecution and enlisted him as a witness.