Allegation on Converting Black Money Post-Demonetisation: Appellate Authority asks to reconsider Disciplinary Proceedings against CAs [Read Order]

Black Money - CA - Taxscan

The Appellate Authority has asked the Board of Discipline of the Institute of Chartered Accountants of India ( ICAI ) to reconsider the disciplinary proceedings against two Chartered Accountants allegedly indulged in converting Black Money Post- demonetisation.

The proceedings were initiated on the basis of a sting operation conducted by Aaj Tak News Channel aired on 14 th November, 2016 wherein the appellants were shown discussing with some individual about the manner of converting black money into white money after charging a cost / charge of 30% to 40%.

Following this a complaint was lodged against the two Chartered Accountants as the aforesaid act on the part seems to have caused grave disrepute to entire fraternity and to the Institute.

The Apex body of the Chartered Accountants (ICAI) has initiated disciplinary action against the Charered Accountants for “misconduct” with respect to offering advice on exchanging old currency notes.

After the completion of the proceedings, the Board of Discipline imposed a punishment of removal of their name from the Register of Members for a period of three months and also imposed a fine of Rs.1,00,000/-.

On appeal, the appellate authority found that the Appellants have not denied their appearance in the sting operation but from the very beginning they are denying the contents and the manner in which it was presented to the Institute.

“The raw footage which was the basic evidence in these Appeals should have been made available to the Appellants and reasonable time should have been given to them to controvert the same. Admittedly, in both these Appeals, the raw footage of the video was given to them after the Board of Discipline had issued the Report of holding them guilty. It is also not understand why the final Order was passed so hurriedly and more so in the case of Shri Bansal, whose father expired on 15th April, 2017 which is a very valid ground for giving him more time of defence. It is relevant to note here that after receipt of the raw footage, the Appellants have submitted detailed objections which need to be properly examined, which Board of Discipline could have done, had raw footage of the video of sting operation given in time to the Appellants,” the AA observed.

The authority further noted that most of the objections taken before us were filed before the Board of Discipline well within the time given by them but the Board of Discipline has not even dealt with the same in its Report.

“In fact, there is not even a mention of the same in the Report. We fail to understand why the same were not considered in the Impugned Report,” it said.

With regard to the admissibility of evidence of sting operation, the authority noted that one witness namely Mr. Puneet Jain was examined but it is not on record how he verified the veracity of raw footage of the video recorded based on which news were telecasted.

“The request of the Appellants to cross-examine him was also not acceded, which, in our considered view is not justified,” it said.

On the basis of the above findings, the appellate authority remanded the matter back to the Board of Discipline for re-consideration with a direction to provide adequate opportunity of being heard to the appellants and to follow procedure as per law to admit the evidence of sting operation.

To Read the full text of the Order CLICK HERE