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TMI Blog2013 (3) TMI 304X X X X Extracts X X X X X X X X Extracts X X X X ..... n visiting card/business card which was affixed on an application form for loan. - it is proved from the visiting/business card that he had offered to perform his services as chartered accountant and had held himself out to the public as accountant. - Therefore, as per section 2(2), under these circumstances, he was deemed to be in practice. The facts of the present case reveal that the respondent has proved himself to be capable of infamous conduct. The recommended punishment of removal of his name for two years would, be a mockery of the proceedings in view of the serious nature of misconduct. - Taking into consideration his age as 58 years as per documents submitted before the income-tax office, in our opinion, the interest of justice will be met if the respondent is removed forthwith from the membership of the Institute for a period of five years. - CHAT. A. REF. NO. 1 OF 2007 - - - Dated:- 18-11-2010 - A.K. SIKRI AND SURESH KAIT, JJ. Rakesh Aggarwal for the Petitioner. Gunjan Kumar and Pankaj Batra for the Respondent. JUDGMENT Suresh Kait, J. This reference under section 21(5) of the Chartered Accountants Act, 1949 (hereinafter referred to as "th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provided to the respondent. Thereafter, the respondent submitted his representation dated nil on July 6, 2005, against the final report of the disciplinary committee. 4. After considering the representation of the respondent, the Council decided to recommend to this court that the name of the respondent be removed from the register of members for a period of two years. Hence, the present reference. 5. As already narrated in the foregoing paragraphs, the complaint against the respondent was that the complainant-bank sanctioned a loan of Rs. 1.84 lakhs on the request of the respondent relying on the bona fides and the authenticity of the income-tax returns submitted to the complainant-bank of three years, i.e., 1996-97, 1997-98 and 1998-99, which were forged and fabricated. It was alleged, that the respondent intentionally submitted the forged and fabricated returns to induce the complainant-bank to extend loan to him. On confirmation, the income-tax authorities informed that the said income-tax returns had not been filed at all. 6. During the hearing on the aforesaid complaint, the complainant's representative Shri Sanjay Dhull and the respondent were present on November 5, 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icate of membership, ration card, etc., but denied enclosing the income-tax return acknowledgement forms. He denied that he did not fill up the loan application form but admitted affixing of his signatures on the blank form, which according to him, must have been filled up subsequently by the agent who might have enclosed fabricated acknowledgement forms. 10. As submitted by the respondents, he qualified in the year 1980 and was in employment upto 1987 during which period he was assessed to tax and he was also a member of the Institute holding COP (certificate of practice). However, the same certificate was cancelled from August 1, 1987, due to non-payment of annual fees and his name from the list of members was also removed with effect from October 1, 1998 and continued to be deleted till April 30, 2002, due to non-payment of fees. As submitted, from 1987 to 2002 he was carrying on the business of an electronic showroom and was not in the profession at all. His certificate of membership of practice was restored with effect from May 1, 2002 and, thereafter, he commenced practice as a chartered accountant. The respondent conceded to the extent that he was not assessed to tax from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h is annexed at page 66 of the paper-book. Furthermore, the respondent has admitted his ration card and signature on the income-tax return for the years 1996-97, 1997-98 and 1998-99. 15. Learned counsel for the Council further argued that the respondent has made concocted story and his afterthought that the application form was filled up by the DSA and he simply put his signature thereon, cannot be believed for the reason the respondent is a qualified chartered accountant and holding certificate of practice. 16. Further, learned counsel appearing for the Institute contended that the Council has found the respondent guilty of misconduct other than the professional misconduct on the basis of the material on record gathered during the inquiry conducted by the disciplinary committee, which has been statutorily constituted. The Council has upheld the finding of the disciplinary committee that the respondent's conduct was unbecoming as a member of the Institute. 17. It was contended that the professional body was entitled to take disciplinary action against the member who acted against professional ethics violating the principles of integrity and truthfulness. He referred to the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons, books, accounts or records, or the preparation, verification or certification of financial accounting and related statements or holds himself out to the public as an accountant ; or" 21. On bare reading of the aforesaid section 2(2) of the Act, if any member of the Institute engages himself in the practice of accountancy or offer to perform or performs services involving the auditing or verification of the financial transactions, etc., holding himself out to the public as an accountant. We have no material on record whether he actually had performed any service to this effect. However, it is proved from the visiting/business card that he had offered to perform his services as chartered accountant and had held himself out to the public as accountant. Therefore, as per this section, under these circumstances, he was deemed to be in practice. 22. First of all, section 2(2)(i), (ii) qualifies his services as deemed to be in practice. Secondly, by depositing the fee for the previous years on May 1, 2002, also attract the action by which an order for enquiry was initiated by the decision taken in the 233 meeting of the council held on April 7 and 8, 2003 and continued on April 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng disentitled to continue as a member of the professional body. In any event, it has a great deal of practical value insofar as it proclaims to the public that the members of the profession will carry on their duties and responsibilities, having regard to the public interest. This, in turn, will give an assurance to the public that in the event of a member straying away from the path of duty, he would be suitably dealt with by the professional body. Human nature being what it is, a man can be selfish "to place his personal gain above service. Therefore, persons who as individuals and as a class are willing to place public good above their personal gain deserve praise and honour. This is the main reason why professional men have enjoyed prestige and honour. But such a relationship can be maintained or enhanced only if the professional body would interpret the concept of public interest and the necessity for the professional man to watch it as broadly as possible. It is also necessary for it to guide and compel the members to live up to these high standards." 25. The contention canvassed on behalf of the respondent that such "other conduct" should be a conduct notified in the G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 22 itself purports to be an inclusive definition and as the section itself in its latter portion specifically preserves the larger powers and jurisdiction conferred upon the Council to hold inquiries by section 21 of sub-section (1), it would not be right to hold that such disciplinary jurisdiction can be invoked only in respect of conduct falling specifically and expressly within the inclusive definition given by section 22. Section 8 sub-sections (v) and (vi) support the argument that the disciplinary jurisdiction can be exercised against the chartered accountants even in respect of conduct which may not fall expressly within the inclusive definition contained in section 22. It was held that if a member of the Institute was found, prima facie, guilty of misconduct which, in the opinion of the Council, renders him unfit to be a member of the Institute, even though such conduct may not attract any of the provisions of the Schedule, it would still be open to the Council to hold an inquiry against the member in respect of such conduct and a finding against him in such an inquiry would justify appropriate action being taken by the High Court under section 21(3). (b) There is yet an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nfringes such norms or standards, and it can be regarded as misconduct". The Supreme court held that an advocate abusing the process of court is guilty of the misconduct. (d) The decision of the Mysore High Court in H.A.K. Rao v. Council of the Institute of Chartered Accountants of India AIR 1965 (Mys.) 112, refers to the proposition that, failure to conform to the statutory requirements may lead to disciplinary action being taken against the concerned member, and that may result in interference with his right to carry on as a chartered accountant; but this result is merely incidental to his being a member of the Institute. If a member does not wish to conform to the requirements of the Institute, it would be open to him to relinquish his membership of the Institute. 28. We may further recall that the International Federation of Accountants, of which Institute of Chartered Accountants of India and Institute of Cost and Works Accountants of India are members, "recognising the responsibilities of the accountancy profession as such, and considering its own role to be that of providing guidance, encouraging continuity of efforts, and promoting harmonisation, has deemed it essential ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and attempting to commit crime ; offences in relation to direct and indirect taxation (including value added tax and excise duties). A professional accountant cannot be an accessory to the commission of such offences nor can he incite the taxpayers to adopt illegal means to evade taxes when it is his professional duty to make clear to the person engaging him. 31. The code of conduct issued by the Institute of Chartered Accountants of India records that it is necessary for the Institute "to guide and compel the members to live upto these high standards. The prestige and confidence enjoyed by a profession, to a great extent, is dependent on strictness and scrupulosity with which such a code is interpreted and not necessarily by legislation or regulations as much by self-discipline". It is also stated that the Council in addition to "professional misconduct" as defined in section 22 of the Act has been given power to inquire into the conduct of any member of the institution under the circumstances other than those specified in the Schedules to the Act. The Council is not debarred from inquiring into the conduct of any member of the Institute under any other circumstances, as assert ..... X X X X Extracts X X X X X X X X Extracts X X X X
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