CA not expected to check genuineness of documents submitted by client while issuing Form 15CB – High Court

Facts of the Case:

Petitioner, a Chartered Accountant, was approached by his client for the issuance of Form 15CB. The client was required to make payments for imports. The petitioner issued Form 15CB on his client’s request after going through all the required information.
Subsequently, an investigation was carried out on the client and found that it was involved in money laundering. The allegations indicated opening fictitious bank accounts, forged bills of entry, parking huge funds in the bank account and transferring funds to various overseas parties. During the investigation, the Enforcement Directorate (ED) discovered the petitioner’s involvement as Form 15CB was filed in his name and overseas payments were made through bank accounts using such forms.
After the investigation, the Enforcement Directorate filed a supplementary complaint on the petitioner, contending his involvement in the generation of proceeds of crime.
Aggrieved by the order of the Enforcement Directorate, a petition was filed before the trial court but with no success. Thereafter, a petition was filed before the Madras High Court.

Decision:

The Court held that all the nationalized banks transferred the money without Form 15CB except a particular Bank. If the petitioner had been part of the conspiracy, the certificates would not have been uploaded in his name. The petitioner has only received the remuneration for issuance of such Form 15CB and nothing more.
Further, it was held that Chartered Accountant is only required to examine the nature of remittance and nothing beyond that. There is no requirement to dig deep into the genuineness of the documents submitted by his clients.

Our Opinion:

Since the petitioner issued Form 15CB after scrutinising the documents furnished to him by the client, there was no reason for the petitioner to suspect the genuineness of such import transactions. He discharged his duties following the professional behavior expected from him.
Therefore, the Court discharged the petitioner from the prosecution and enlisted him as a witness.

Sahil Goyal, Article Assistant, Audit, SW India

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