Summary: The Bombay High Court, in the case of Principal Commissioner of Income Tax Versus M/s Buniyad Chemicals Ltd, directed the Institute of Chartered Accountants of India (ICAI) to investigate non-practicing Chartered Accountants (CAs) engaged in illegal activities. The case involved Mukesh Choksi, the director of Buniyad Chemicals, who admitted to surrendering his Certificate of Practice (COP) in 1993 but later operated an accommodation entry business, aiding tax evasion through shell companies. Despite multiple search actions by tax authorities, he continued such activities. The court questioned whether ICAI could take disciplinary action against individuals who, while no longer holding a COP, misuse their professional background for fraudulent activities. It emphasized that professional accountability should extend beyond active practice and instructed ICAI to examine whether Choksi’s actions constituted professional misconduct under the Chartered Accountants Act, 1949. This directive highlights concerns about regulatory oversight over former professionals engaged in financial misconduct and reinforces ICAI’s role in maintaining professional integrity within the accounting community.
Extract from the case laws are as followings:
40. Before we conclude, we will be failing in our duty as a Court of law if we do not comment on the accommodation entry provider, Mr. Mukesh Choksi through his web of shell companies and various admissions made by the counsel for the respondent-assessee. It is also important to note that Mr. Mukesh Choksi, director of the respondent-assessee in his answer to question No.14 of the statement has admitted that he was a practicing Chartered Accountant but has surrendered the Certificate of Practice (COP) in 1993 and thereafter is only engaged in the business of providing accommodation entries. He has also stated that search action has been taken against him/his companies more than once.
Question No. 14: How many years since you are doing the activity and how many times were you searched:
Answer No 14: I was Practicing chartered accountants from 1978 to 1993, I surrendered my COP as chartered accountants in 1993 after receipts of NSE stock membership card. I conducted business as a share broker upto 1998 when I surrendered my NSE membership card due to huge loss incurred on account of bad deliveries. Since I had already surrendered my certificate of practice as a chartered accountants as well as NSE membership, I started doing this activity of accommodation entry since 2000. I was surveyed in the years 2002, 2006 and searched on 25.11.2009.
41. We are rather surprised that a Chartered Accountant who may not be holding a COP but, if involved in illegal activities, as to whether any action is or can be taken by the Institute of the Chartered Accountants of India against such a person. Suppose no action is taken against such a person. In that case, we hereby direct the Institute of Chartered Accountants of India to inquire whether such a person is liable for any professional misconduct as per the Chartered Accountant’s Act, 1949.
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