The Disciplinary Committee of the Institute of Chartered Accountants of India ( ICAI ) has held a Chartered Accountant ( CA ) guilty for certification of e-form INC-22 without physical verification of place of business of the company.
This order concerns a disciplinary action against Chartered Accountant for alleged professional misconduct.
The complaint originated with the Registrar of Companies, Telangana, who accused the Respondent of certifying a change of registered office address for a company (M/s Onion Credit Private Limited) without verifying its validity.
The Respondent was charged with violating Item (7) of Part I of the Second Schedule to the Chartered Accountants Act, 1949, which states:
A chartered accountant in practice shall be deemed to be guilty of professional misconduct, if he- … “(7) Does not exercise due diligence, or is grossly negligent in the conduct of his professional duties”
The respondent-chartered accountant submitted that he was denied visiting the registered office in person but claimed verification through a video call (no evidence provided) and questioned the applicability of the aforementioned Act clause to the case.
He also claimed to have verified attachments like a lease agreement and membership agreement and argued that the Company had a valid permission to use the address at the time of certification.
He also contended that he considered virtual visits acceptable due to the prevalence of virtual offices.
The Respondent admitted not having any record of the claimed video call.
It was noted that, while verifying documents, the Respondent failed to identify discrepancies such as the membership agreement only allowed receiving mail/faxes, not establishing a functional office and that the NOC from the service provider only permitted using the address for registration, not actual operations.
It was noted that the Respondent did not exercise due diligence in verifying the legitimacy of the registered office.
In result, the Respondent was found guilty of professional misconduct by the Disciplinary Committee of Presiding Officer CA. Charanjot Singh Nanda, Government Nominees Anita Kapur and Dr. K. Rajeswara Rao with Member CA. Piyush S Chhajed.
For the misconduct, a punishment of removal from the Register of Members for two months and a fine of Rs. 20,000 was imposed. The fine needs to be paid within 90 days, or the removal period will be extended by 30 days.
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