Facts of the Case

A case bearing RC AC1 2008A 0001 was registered by the Central Bureau of Investigation on 08.03.2008 based on source information against Shri Ashutosh Verma, then Deputy Director (Investigation), Income Tax Department, New Delhi; Shri Suresh Nanda and Shri Sanjeev Nanda; and CA Bipin Babubhai Shah, along with other unknown persons. The allegations related to conspiracy during 2007–2008 to manipulate an Income Tax Investigation report to favour Shri Suresh Nanda and his associates. A charge sheet was filed on 30.11.2012 before the Court of the Special Judge, Patiala House, New Delhi.

The disciplinary proceedings before ICAI arose much later, with the Respondent receiving the first communication in relation to the matter only in 2018. The Board of Discipline conducted the final hearing on 29.07.2025 at ICAI Tower, Mumbai, where the Respondent appeared in person.

Issues Involved

Whether disciplinary proceedings initiated after an inordinate and unexplained delay were sustainable under Rule 12 of the Chartered Accountants (Procedure of Investigations of Professional and Other Misconduct and Conduct of Cases) Rules, 2007, and whether such delay violated principles of natural justice, warranting closure of the case without examination of merits.

Petitioner’s / Authority’s Allegations

It was alleged that during 2007–2008, the Respondent colluded with a senior Income Tax official to dilute and manipulate an investigation report to minimise tax liability of Shri Suresh Nanda, including meetings, recorded conversations, alleged illegal gratification, and destruction or withholding of incriminating material, as detailed in the CBI charge sheet.

Respondent’s Arguments

The Respondent denied all allegations in his written statement dated 15.03.2025 and relied on findings of the Special Court, which observed that the prosecution failed to establish that any alterations were made to the investigation report at the instance of the Respondent. Crucially, the Respondent raised a preliminary objection of limitation, contending that the disciplinary proceedings were initiated after an unexplained delay of nearly 17 years from the alleged events and about 10 years from the charge sheet, causing serious prejudice to his right to a fair defence due to loss or deterioration of evidence. He sought closure of proceedings under Rule 12.

Court / Authority Order and Findings

The Board of Discipline examined the objection on limitation as a threshold issue. The Board noted that the incident forming the basis of allegations pertained to 2008, whereas the Respondent received the first communication only in 2018, followed by continuation of proceedings up to 2025. The Board accepted that such inordinate and unexplained delay was prejudicial to the Respondent and contrary to principles of natural justice.

The Board further noted the Respondent’s reliance on the Special Court’s observations that no evidence was found to support alteration of the report at the Respondent’s instance. However, the Board expressly confined its decision to the issue of limitation and did not enter into adjudication on merits. Applying Rule 12 of the 2007 Rules, the Board held that continuation of disciplinary proceedings after such prolonged delay was not sustainable.

Important Clarification

The Board clarified that closure of proceedings on the ground of limitation does not amount to an adjudication on the merits of the allegations, nor does it express any opinion on factual or evidentiary aspects of the criminal proceedings pending or adjudicated before competent courts.

Final Outcome

The ICAI Board of Discipline held CA Bipin Babubhai Shah (M. No. 016862) Not Guilty of “Other Misconduct” under Item (2) of Part IV of the First Schedule to the Chartered Accountants Act, 1949, solely on the ground of limitation. By order dated 26 September 2025, the Board closed the disciplinary proceedings under Rule 15(2) read with Rule 12 of the 2007 Rules.

Source Link- https://www.mytaxexpert.co.in/uploads/1768892205_CA.BipinBabubhaiShahM.No.016862MumbaiinRe.pdf

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