The Institute of Chartered Accountants of India (ICAI) imposed a 2.25 Lakh fine on Chartered Accountants (CA) for exceeding the limit of auditing in a financial year.
An action under Section 21B(3) of the Chartered Accountants (Amendment) Act, 2006 was contemplated against the Respondent and a communication was addressed to him thereby granting opportunities of being heard in person / through video conferencing and to make written & verbal representation before the Committee on 22.032023.
The Committee noted that on the date of the hearing held on 22.03.2023, the Respondent was present through video conferencing and the Respondent made his verbal submissions on the findings of the Disciplinary Committee. The Committee also noted that the Respondent has also sent details containing the list of audits done under Section 44AD/AE/AF of the Income Tax Act,1961.
The professional misconduct on the part of the Respondent is established, and the ends of justice would be met if reasonable punishment is awarded to the Respondent in this case. Accordingly, the Committee ordered that a fine of (Rupees Two Lakh Twenty-Five Thousand only) be imposed upon the Respondent i.e., CA. Subhra Kumar Kundu (M. No. 053515), to be paid within 90 days of receipt of the Order.
Section 15 of the Act enumerates the functions to be performed by the Council apart from the general functions to carry out the objects of the Act. Under Section 15(2)(j), it is one of the functions of the Council “to regulate and maintain the status and standard of professional qualifications of members of the Institute”.
Accordingly, each of these Notifications had been issued by the Council of the Institute after considering the report of the PDC; and the whole object thereof was to ensure efficiency, improve the quality of service, ensure maintenance of high standards of performance in the field of tax audit assignments, ensure timely completion of audits and filing of tax returns by the assessees.
In the process of regulating and maintaining the status of chartered accountants, the measures taken to put a cap on tax audit assignments are intended to maintain and improve the quality of work and cannot in any way be stated to be an unreasonable restriction. Such restrictions are necessary for maintaining the status of Chartered Accountants and also for ensuring the quality of work by Chartered Accountants.
As regard the objection relating to adherence to the time limit prescribed in the CA Rules, 2007, it needs to be clarified that the timelines prescribed in CA Rules are to expedite and ensure timely completion of the disciplinary proceedings and it is not the intent of the legislation to render any information/complaint defunct/invalid merely on the ground of procedural time lag, if any occurred. Therefore, this plea of the Respondent is not maintainable.
A Coram Comprising Aniket Sunil Talati, Shri Jugal Kishore Mohapatra, Shri Prabhash Shankar and Gyan Chandra Misra observed that being a member of the Institute, the Respondent was expected to adopt the highest standard of ethical behaviour and professional compliance of the Council General Guidelines, but he failed to do so.
The Committee held the respondent guilty of professional misconduct falling within the meaning of Clause (1) of Part Il of the Second Schedule to the Chartered Accountant Act, 1949.
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