Madras HC: Chartered Accountant Can’t be Held Liable for Money Laundering if Clients Submits Ingenuine Documents for Form 15CB

Aastha Thakur

Published on: 05 December 2022 at 19:49 IST

The Madras High Court ruled that the there is no need for the chartered accountant (CA) to check the genuineness or otherwise of the documents submitted by his clients.

The Division Bench of Justice PN Prakash and Justice G. Chandrasekharan opined that, “A Panel Advocate, who has no means to go into the genuinity of title deeds and who 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 at hand, cannot be sustained,”

The petitioner was chartered accountant by profession, charged under the Prevention of Money Laundering Act, 2002 (PMLA). The petitioner was dealing with his client’s issuance of Form 15CB required to pay for imports. After reviewing the necessary information, the petitioner issued Form 15CB at his client’s request.

The Enforcement Directorate completed the investigation in the concerning matter.  According to the allegations, the individual people decided to open fictitious bank accounts, submitted false Bills of Entry, parked significant sums of money in those accounts, and then had money transferred to numerous parties abroad through the bank to make the transaction appear to be legal for the purported purpose of importation.

The investigation revealed that amount of Rs. 8 crores were transferred out of India via seven banks to fictitious entities abroad. During in its investigation ED came across the Form 15CB that was issued by the CA. They zeroed in on him, and during interrogation.

The petitioner gave detailed version of incident of accused approaching him for issuance of Form 15CB under Rule 37-BB of the Income Tax Rules, 1962, and submitted documents in support of his request. The CA perused those documents and issued certificates to the effect that it is not necessary to issue Form 15CB in respect of overseas payment of imports.

The petitioner contended that, Form 15CB for making overseas payments towards import is not required even under the law aside from the State Bank of Travancore, all other nationalised banks had transferred the cash based on the import paperwork without insisting on a Form 15CB. Murali Krishna Chakrala wouldn’t have uploaded the certificates to the Income Tax Department portal on the same day if he had been involved in the conspiracy.

The petitioner stated that merely issuing five Form 15CBs at the client’s request would not, by itself, bring the CA in the crosshairs of a plot to assist in money laundering and justify acceptance. The CA had merely received Rs. 1,000 for a certificate without anything more.

Noting, all the relevant evidences the court discharged the petitioner from the prosecution and enlisted him as a witness.

Case Title: Murali Krishna Chakrala v/s Deputy Director

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