The Disciplinary Committee of the Institute of Chartered Accountants of India ( ICAI ) has held the matter of professional misconduct against a Chartered Accountant for alleged.
The Disciplinary Committee, chaired by CA. Charanjot Singh Nanda, with members including Smt. Anita Kapur and Dr. K. Rajeswara Rao (participating via video conferencing), and CA. Piyush S. Chhajed, held a hearing on March 19, 2024.
The proceedings focused on professional misconduct charges against a CA, the statutory auditor of Alibaba Commerce Digital Solution Private Limited from FY 2015-16 to FY 2019-20.
The Committee’s findings, dated June 8, 2023, concluded that the CA was guilty of professional misconduct under Items (6) & (7) of Part I of the Second Schedule to the Chartered Accountants Act, 1949. The charges pertained to the certification of the company’s share capital as ‘subscribed and paid up’ in the audited financial statements and e-form AOC-4 for FY 2017-18, despite the share capital not being paid by the subscribers.
This misrepresentation continued in subsequent years, indicating gross negligence and failure to report known material facts.
During the March 19 hearing, the CA appeared via video conferencing, acknowledging his error in disclosures, denying any involvement of Chinese nationals in the company, and clarifying his disassociation from the company since the signing of the FY 2017-18 financial statements.
The Committee assessed the case’s facts, including the representations of the Chartered Accountant.
It determined that the share capital was never introduced, and the due amount was misclassified in the balance sheet as loans and advances to related parties, which were not disclosed.
Despite recognizing Chartered Accountant’s lack of malicious intent and the absence of public interest in the closely held company, the Committee noted his failure in due diligence and material fact reporting.
As a consequence, the Committee ordered the removal of CA’s name from the Register of Members for one month and imposed a fine of Rs. 10,000, payable within 90 days. Failure to pay the fine would result in an additional 30-day removal from the Register.
The decision was signed by CA. Charanjot Singh Nanda, Presiding Officer, along with government nominees Smt. Anita Kapur and Dr. K. Rajeswara Rao, and member CA. Piyush S. Chhajed.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
