The Institute of Chartered Accountants of India ( ICAI ) has reprimanded a Chartered Accountant ( CA ) for engaging in non-professional activities, specifically for issuing invoices related to the supply of building materials to the complainant. The ICAI Board found the CA guilty of violating professional ethics as outlined in the Chartered Accountant Act, 1949.
The issue stemmed from the CA’s involvement in a real estate transaction where his family purchased an under-construction property from the complainant. It was alleged that the CA, leveraging his professional status, assured the complainant of a GST exemption on the purchase. However, the CA later refused to provide the GST exemption letter and also declined to pay the GST amount.
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Upon investigation by the Director (Discipline), the CA was found prima facie guilty of two main allegations. The first was the unauthorised marketing and advertisement of his firm on various portals like Just Dial and IndiaFilings.com, which violated Clause (6) of Part-I of the First Schedule to the Chartered Accountant Act, 1949.
The second allegation involved the CA engaging in business activities outside the scope of his profession, specifically by issuing invoices for the supply of building materials, thereby violating Clause (11) of Part-I of the First Schedule to the Chartered Accountant Act.
In his defense, the CA argued that the advertisement listings on Just Dial and IndiaFilings.com were not paid for or initiated by him. He claimed that these portals often collect and post information independently to enhance their databases.
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Regarding the invoices for building materials, the CA asserted that these were personal transactions billed in his firm’s name to fulfil GST reversal requirements, providing copies of original supplier invoices to support his case. He also referenced a Supreme Court judgment and a similar case involving his father, a Company Secretary, where the Board of Discipline found no misconduct.
Despite the CA’s defence, the Board concluded that the core issue of misconduct stemmed from the accountant’s involvement in activities beyond his professional duties. Specifically, he issued invoices for the sale of building materials under the name of his Chartered Accountant firm, which were later used for GST credit claims on goods intended for personal use.
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The Board took into account the CA’s explanation of the circumstances, including the supposed necessity to provide GST for materials purchased in a personal capacity and his subsequent attempts to rectify the situation by selling the goods to his father. However, the Board determined that, regardless of the CA’s justifications, such actions were inconsistent with the professional standards expected of a Chartered Accountant.
The CA’s participation in non-professional activities, particularly the issuance of invoices for building materials, not only tarnished the reputation of the profession but also violated the ethical standards and responsibilities established by the Institute, observed the board.
It also noted the Respondent’s admission of guilt and acknowledgment of the misconduct, which further supported the Board’s findings of professional misconduct.
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The Board found the Chartered Accountant guilty of professional misconduct under Clause (11) of Part-I of the First Schedule to the Chartered Accountant Act. Disciplinary measures were imposed to ensure the CA avoids similar actions in the future and strictly follows the code of conduct for Chartered Accountants.
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