In this case, the Respondent, while being in full-time practice and holding Certificate of Practice was alleged to be conducting coaching classes in a coaching institute and simultaneously acting as director in Private Limited Company. The Committee noted that Regulation 190A of the Chartered Accountants Regulations, 1988 prohibits a Chartered Accountant in practice from engaging in any business or occupation other than the profession of accountancy without prior permission of the Council. The Committee further observed that Appendix (9) to the Regulations permits teaching or coaching activities only subject to prescribed conditions and approval of ICAI. Though the Respondent contended that he had not undertaken any attest functions and that ICAI advisory did not specifically prohibit practicing members from conducting coaching classes, he failed to furnish any documentary evidence showing compliance with the prescribed requirements or obtaining specific permission from ICAI. The Committee also noted that despite opportunities granted, the Respondent neither submitted requisite documents nor appeared before the Committee to defend himself. With respect to the second charge, the Committee observed that though holding the position of director simplicitor is permissible for a practicing Chartered Accountant, the Respondent’s role in the company reflected active business involvement. The Committee noted that the Respondent was a director in the company during the relevant period and held more than 99% shareholding therein as per MCA records. It was further observed that after receipt of the complaint, the Respondent appointed his wife as director and subsequently resigned from the company, though the relevant e-forms were filed belatedly with MCA. In view of the Respondent’s substantial ownership and involvement in the company, the Committee rejected his contention that he was merely a director simplicitor. Accordingly, in absence of any substantive defence and considering the documents available on record, the Committee held the Respondent guilty of professional misconduct falling within the meaning of Item (11) of Part I of the First Schedule and Item (1) of Part II of the Second Schedule to the Chartered Accountants Act, 1949. [PR/89/2018-DD/103/2018-DC/1323/2020]

In this case, the Respondent, statutory auditor of LLP for FYs 2013-14 and 2014-15, was alleged to have improperly certified LLP records, failed to report statutory noncompliances and participated in forged documentation and money laundering activities. The Committee noted that though the deed of reconstitution reflected retirement of the Complainant from the LLP and admission of a new partner, Form 8 filed with ROC was digitally signed by the Complainant as partner and verified by the Respondent without raising any objection. The Respondent contended that the ROC records had not been updated and therefore Form 8 could not be uploaded without the Complainant’s signature. However, the Committee observed that the Respondent was aware of the changes in the LLP and failed to verify relevant records and forms, including Form 4 under the LLP Act, before certifying Form 8. Though no evidence was found to establish that the Respondent had illegally expelled the Complainant from the LLP, the Committee held that he failed to exercise due diligence while certifying Form 8. With respect to the allegation relating to forged documents used for opening a bank account, the Committee observed that the Respondent had merely signed the deed of reconstitution as a witness and no material was brought on record to establish that the document was forged. The Committee also noted the police closure report and dismissal of the writ petition relating to the allegation of forgery. Accordingly, the Respondent was exonerated from the said charge. The Committee further noted that despite substantial non-payment of service tax by LLP, the Respondent failed to qualify for his audit reports for the relevant financial years. Though the Respondent later sought clarification from the partners regarding service tax dues, such clarification was obtained after completion of audit, and no qualification was made in the audit report. The Committee also observed that payments made by the LLP to the Respondent’s wife regarding professional fees were not disclosed in the audit report and no documentary evidence was produced to substantiate rendering of such services. However, no evidence was found to establish involvement of the Respondent in money laundering or illegal gratification. Accordingly, considering the material available on record, the Committee held the Respondent guilty of professional misconduct falling within the meaning of Clause (7) of Part I of the Second Schedule to the Chartered Accountants Act, 1949. [PR/112/16/DD/152/2016/DC/1312/2020]