BlueEdge Consulting Private Limited, engaged in the business of consulting services, remitted substantial amounts to Australia as per the…

CA Final · Direct Tax Laws and International Taxation · MTP · September 2025
BlueEdge Consulting Private Limited, engaged in the business of consulting services, remitted substantial amounts to Australia as per the information collected by the Income-tax Department from ISB Bank. The department collected documents from ISB Bank, which included Form 15CB issued by the chartered accountant, list of foreign clients, copies of consultancy agreements, email correspondences, and invoices raised by the foreign service providers. On enquiry with the alleged foreign clients and verifying the email trails, it was found that no actual consultancy services were rendered by or to the parties on the dates mentioned in the documents. In fact, the supposed clients denied having any business transaction with BlueEdge Consulting Private Limited. The Income-tax Department concluded that the amounts were remitted by the company on the basis of fictitious consultancy agreements and fake invoices, and that the foreign remittances were made under false pretenses. This pointed towards violations under FEMA, and Form 15CB issued by the chartered accountant was considered a critical document in facilitating these remittances. During the six-month period in question, the chartered accountant had issued 78 Form 15CB certificates involving total remittances of 35 crores for BlueEdge Consulting Private Limited. A representation was submitted by the concerned CA stating that he had issued the Form 15CB based solely on the invoices and documents submitted by the company, and by verifying the KYC details of the signatory to those documents. He contended that since he was not the statutory auditor of the company, he neither examined the company's books of account nor conducted any due diligence of its business activities prior to issuing the certificates. He had charged - 3,300 per certificate, with most of the fees collected in cash, and a portion credited to his bank account. Is Chartered Accountant's contention, correct? Examine the ethical implications in this case with the relevant clauses of the Chartered Accountants Act, 1949.

Suggested Answer and Working Notes:

Form 15CB is a certificate of an accountant wherein he certifies that he has examined the agreement between the remitter and the beneficiary requiring such remittance. He has to also examined the relevant documents and books of account required for ascertaining the nature of remittance and for determining the rate of deduction of tax at source. The Chartered Accountant certifying the Form 15CB undertakes to have verified the agreement between the remitter and the beneficiary as well as the relevant documents and books of account to ascertain the nature of remittance and determine the rate of TDS. In this case, however, the Chartered Accountant mentioned that he had only verified KYC of signatory to invoice and the invoices thereof. He had not only failed to justify as to how verification of invoices was considered as sufficient compliance for certifying the forms but also failed to bring on record the said invoices. Thus, he failed to provide any basis on which he relied for issuing Form 15CB certificates to the company, hence Chartered Accountant's contention was not correct. On account of such failure, clauses (7) and (8) of Part I of the Second Schedule to the Chartered Accountants Act, 1949 for failure to exercise due diligence in discharging his professional responsibilities and failure to obtain sufficient information may be invoked.

Topics: Tax Audit and Ethical Compliance

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