2017 (5) TMI 438 - HC - Indian Laws

Misconduct of Chartered Accountant - professional misconduct - He presented forged copies of income tax challans to partners of Assessees and collected/claimed amounts allegedly paid on behalf of Assessees. - Held that - The report of DC shows that during the course of examination of witnesses, when respondent was present, he was confronted with relevant facts and his stand has been noted by DC in its report. Learned counsel for respondent could not show anything so as to persuade us to form a view that findings recorded by DC are on account of misreading of fact or otherwise perverse. It is in these facts and circumstances, we are in agreement with the report as well as resolution of affirmance of Council and confirm that respondent is guilty of other misconduct , warranting appropriate punishment therefor. For the purpose of awarding punishment, we have heard learned counsel for parties and considered entire facts and circumstances. A Chartered Accountant is a person, who holds an office of confidence and not only his client, but even in Department in which Chartered Accountant represents the matter of his client, normally believe that he (Chartered Accountant) is performing his duties honestly. Confidence has been breached by respondent not only with the persons, who engaged him, but it has played fraud on the Department also. He is admittedly a person of having long-standing in the profession, still has shown such a conduct, which can never be expected of a Chartered Accountant. In the circumstances, ICAI has recommended removal of name of respondent from the register of Member for a period of two years. Looking to the conduct of respondent, and the tactics adopted by him in delaying proceedings, stretching it to almost one and half decade, in our view, appropriate punishment would be removal of his name from Membership of the Institute for a period of five years.

Summary

Issues Involved:
1. Allegations of professional misconduct by a Chartered Accountant.
2. The propriety of conducting disciplinary proceedings parallel to criminal proceedings.
3. Examination of evidence and adherence to principles of natural justice.
4. Determination of appropriate punishment for proven misconduct.

Issue-wise Detailed Analysis:

1. Allegations of Professional Misconduct by a Chartered Accountant:
The case involved a Chartered Accountant (CA) accused of depositing only the last digit of various amounts owed by clients to the Income Tax Department and then claiming full reimbursement from the clients. The CA was alleged to have forged challans to misrepresent the amounts deposited and collected the full amounts from the clients. The Institute of Chartered Accountants of India (ICAI) received this information and initiated disciplinary proceedings.

2. The Propriety of Conducting Disciplinary Proceedings Parallel to Criminal Proceedings:
The respondent argued that since criminal proceedings were pending, the disciplinary proceedings should be deferred. However, the Disciplinary Committee (DC) of the ICAI decided to proceed, noting that the criminal case and the disciplinary inquiry were separate matters. The DC found no legal or procedural obstruction in continuing with the inquiry.

3. Examination of Evidence and Adherence to Principles of Natural Justice:
The CA repeatedly sought adjournments, citing various reasons, including health issues and pending criminal proceedings. Despite multiple opportunities and adjournments granted by the DC and the Council, the CA often failed to appear or cooperate. The DC examined several witnesses and documents, and the CA was confronted with evidence, including his own handwriting on forged documents. The DC found that the CA had indeed manipulated documents and claimed reimbursements fraudulently. The CA's defenses were found unconvincing, and the DC concluded that the CA was guilty of "other misconduct."

4. Determination of Appropriate Punishment for Proven Misconduct:
The Council of ICAI, after considering the DC's report and the CA's representations, recommended removing the CA's name from the register of members for two years. However, the High Court, considering the severity of the misconduct and the CA's attempts to delay proceedings, decided that a more severe punishment was warranted. The Court ordered the removal of the CA's name from the register of members for five years, emphasizing the breach of trust and the fraudulent conduct demonstrated by the CA.

Conclusion:
The High Court confirmed the findings of the DC and the resolution of the Council, holding the CA guilty of professional misconduct. The Court ordered a five-year removal from the ICAI membership, highlighting the importance of integrity and trust in the profession. The judgment underscores the necessity for Chartered Accountants to uphold the highest standards of honesty and professional conduct.