2019 (3) TMI 1360 - HC - Indian Laws

Enhancement of punishment of debarment from the profession of Chartered Accountant - Act of misconduct - Held that - Perusal of the order impugned, more particularly Paragraphs 11 and 12, clearly shows that considering the facts of the case, the consequent misconduct on the part of the respondent No.2 and upon consideration of the written and oral submissions, the Board of Discipline has taken a view that the ends of justice shall be met if reasonable punishment is awarded to the respondent No.2. Accordingly, the punishment of reprimand and imposition of fine of ₹ 1,00,000/is considered to be reasonable by the Board of Discipline in exercise of its power under Section 21A(3) of the Chartered Accountants Act - We are not sitting in appeal over the decision of the Board of Discipline and, therefore, on merits also, we do not find that a case is made out for claiming debarment of the respondent No.2 from practising the profession of Chartered Accountant. Petition dismissed.

Summary

Issues:
1. Imposition of punishment on a Chartered Accountant by the Institute of Chartered Accountants of India.
2. Request for enhancement of punishment by the Department of Income Tax.
3. Alleged procedural irregularities in imposing the punishment.
4. Classification of misconduct under the Chartered Accountants Act, 1949.
5. Jurisdiction of the Department of Income Tax to challenge the punishment.
6. Board of Discipline's authority to impose punishment.
7. Judicial review of the decision of the Board of Discipline.
8. Potential debarment of the Chartered Accountant in case of conviction.

Analysis:
1. The respondent, a Chartered Accountant, was reprimanded and fined by the Institute of Chartered Accountants of India for misconduct in proceedings before the Income Tax Department. The Department of Income Tax sought to enhance the punishment to debarment from the profession.

2. The Department contended that the prescribed procedure for punishment was not followed, and the misconduct was erroneously classified under the First Schedule instead of the Second Schedule of the Chartered Accountants Act, 1949, warranting permanent debarring of the respondent.

3. The High Court noted that if the prescribed procedure was not followed, the order must be set aside for fresh consideration. The classification of misconduct and the proportionality of punishment were disputed issues. The Department's locus standi to challenge the action was questioned, as being the complainant did not automatically confer aggrieved status.

4. Misconduct by professionals is governed by Chapter V of the Chartered Accountants Act, 1949. Section 21A(3) empowers the Board of Discipline to reprimand, suspend, or impose fines on members found guilty of misconduct listed in the Act.

5. The Court reviewed the impugned order and found the Board of Discipline's decision to reprimand and fine the respondent reasonable based on the facts and submissions. It declined to interfere with the Board's decision, stating that no grounds existed to support debarring the respondent from practicing as a Chartered Accountant.

6. However, it was acknowledged that a conviction in the Department's prosecution would lead to automatic debarment. The Court dismissed the writ petition, emphasizing that its decision would not hinder the Department's prosecution or potential conviction of the respondent.

This detailed analysis covers the key issues and the Court's reasoning in the judgment.