K. Murali Krishna Vs Deputy Director (Supreme Court of India)
Issuing Form 15CB Bona Fide Not ‘Assisting’ Under PMLA: Supreme Court Upholds Madras HC Order- Professional Duty ≠ Criminal Liability – SC Affirms Madras HC Relief to Chartered Accountant
Background
Petitioner, K. Murali Krishna Chakrala, a practicing Chartered Accountant, was prosecuted by the Directorate of Enforcement (ED) under the Prevention of Money-Laundering Act (PMLA), 2002. The allegation was that he had issued five Form 15CB certificates to a Chennai-based entity, M/s B.K. Electro Tool Products, which allegedly engaged in bogus import transactions & illegal outward remittances through fictitious accounts. The CA had certified those remittances under Rule 37BB of the Income-tax Rules, 1962, based on the documents & declarations furnished by his client. ED contended that such certification amounted to “knowingly assisting” in the process of laundering, attracting Section 3 PMLA.
High Court Decision (08-08-2024 – Madras HC – 457 ITR 579 (Mad.))
The Madras High Court examined the scope of a CA’s obligation while issuing Form 15CB & drew a sharp distinction between professional certification & active complicity.
Key findings:
- The CA’s role under Rule 37BB is confined to verifying the taxability & applicability of TDS on the remittance.
- He is not expected to investigate the genuineness of the underlying commercial transaction or the authenticity of import documents.
- Unless the CA had knowledge or intent that the documents were forged, no offence under Section 3 PMLA could be made out.
- The High Court therefore discharged the Petitioner, holding that issuing Form 15CB in the ordinary course of professional duty does not constitute “assistance in laundering”.
Proceedings Before the Supreme Court
