The Order issued by the Disciplinary Committee of the Institute of Chartered Accountants of India (ICAI) pertains to a case involving CA. Akash Gajanan Jadhav, a member of the institute, who has been found guilty of professional misconduct. The case revolves around allegations of negligence and failure to exercise due diligence while certifying Form 8 and reporting financial transactions accurately.
The Committee’s findings indicate that Jadhav was charged with professional misconduct falling within the ambit of Item (7) of Part I of the Second Schedule to the Chartered Accountants Act, 1949. This finding prompted the Committee to initiate disciplinary action against him under Section 21B(3) of the Chartered Accountants Act, 1949.
Jadhav was provided with an opportunity to present his case before the Committee, which he did through video conferencing on March 19, 2024. During the hearing, Jadhav requested the Committee not to classify his actions as gross negligence. He provided verbal and written representations, highlighting various points including his limited duty as a chartered accountant, the submission of relevant documents, lack of communication from the Registrar of Companies (ROC), and discharge of liabilities by the Limited Liability Partnership (LLP) towards service tax.
The Committee deliberated on Jadhav’s defense along with the evidence and submissions presented. It acknowledged Jadhav’s representations but concluded that his actions constituted professional misconduct. The Committee observed that Jadhav had failed to exercise due diligence while certifying Form 8, as he did not adequately verify the partners of the LLP at the time of certification. Additionally, Jadhav failed to qualify his audit report for the LLP’s non-payment of service tax and neglected to report transactions related to the payment of professional fees to his wife in the audit report.
Based on its assessment of the case, the Committee determined that disciplinary action was warranted. Consequently, it ordered Jadhav to be reprimanded and imposed a fine of Rs. 25,000/- (Rupees Twenty-Five thousand only) to be paid within 60 days from the date of receipt of the Order.
In summary, the Disciplinary Committee’s Order emphasizes the importance of adhering to professional standards and exercising due diligence in the performance of auditing duties. It underscores the responsibility of chartered accountants to accurately certify financial documents and report transactions in accordance with regulatory requirements. The disciplinary measures imposed serve as a reminder of the consequences of professional misconduct, aiming to maintain the integrity and trustworthiness of the accounting profession.
भारतीय सनदी लेखाकार संस्थान
(संसदीय अधिधनयम द्वारा स्थाधित)
THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA
(Set up by an Act of Parliament)
PR/112/16/DD/152/2016/DC/1312/2020
[DISCIPLINARY COMMITTEE [BENCH-II (2024-2025)]
[Constituted under Section 21B of the Chartered Accountants Act, 1949]
ORDER UNDER SECTION 21B (3) OF THE CHARTERED ACCOUNTANTS ACT, 1949 READ WITH RULE 19(1) OF THE CHARTERED ACCOUNTANTS (PROCEDURE OF INVESTIGATIONS OF PROFESSIONAL AND OTHER MISCONDUCT AND CONDUCT OF CASES) RULES, 2007
[PR/112/16/DD/152/2016/DC/1312/2020]
In the matter of:
Shri Susheel Kumar Puri
Flat No. 143C, Kalapataru Gardens
Ashok Nagar, Kandivali (East)
Mumbai – 400 101.
…. Complainant
Versus
Akash Gajanan Jadhav (M. No.135319)
Partner, M/s V J Shah & Co (FRN No. 109823W)
Chartered Accountants,
….Respondent
Members Present:-
Mrs. Rani S. Nair, IRS (Retd.), (Government Nominee), Presiding Officer (through VC)
Shri Arun Kumar, IAS (Retd.), (Government Nominee) (in person)
CA. Sanjay Kumar Agarwal, Member (in person)
CA. Cotha S Srinivas, Member (in person)
Date of Hearing: 19th March, 2024
Date of Order: 7th May, 2024
1. That vide Findings under Rule 18(17) of the Chartered Accountants (Procedure of Investigations of Professional and Other Misconduct and Conduct of Cases) Rules, 2007, the Disciplinary Committee was, inter-alia, of the opinion that Akash Gajanan Jadhav (M. No.135319) (hereinafter referred to as the ‘Respondent’) is GUILTY of Professional Misconduct falling within the meaning of Item (7) of Part I of the Second Schedule to the Chartered Accountants Act, 1949.
2. That pursuant to the said Findings, an action under Section 21B (3) of the Chartered Accountants (Amendment) Act, 2006 was contemplated against the Respondent and a communication was addressed to him thereby granting an opportunity of being heard in person / through video conferencing and to make representation before the Committee on 19th March 2024.
3. The Committee noted that on the date of the hearing held on 19th March 2024, the Respondent was present through video conferencing and made his verbal representation on the Findings of the Disciplinary Committee, inter-alia, requesting not to classify his act as gross negligence. The Committee also noted that the Respondent in his written representation on the Findings of the Committee, inter-alia, stated as under:
(a) As a Chartered Accountant, he affirmed only the solvency and the financial statements and referred to them as true and fair. The duty to verify accuracy of persons verifying the Form is not cast on the auditors.
(b) The LLP can submit Form 4 at any time after paying the necessary ROC fees.
(c) He had already submitted the consent of incoming partner to become a partner and other relevant documents by his letter dated 04th December 2023.
(d) The Respondent had not received any letter/ notice from ROC till today on the withdrawal of his Audit Report. There are no ongoing proceedings against him under Service Tax.
(e) The LLP has discharged its liability towards Service tax.
(f) He requested the Disciplinary Committee not to classify his act as gross negligence under the provision of the CA Act, 1949.
(g) Neither he nor his wife has control or significant influence over the LLP.
4. The Committee considered the reasoning as contained in the Findings holding the Respondent Guilty of Professional Misconduct vis-à-vis written and verbal representation of the Respondent. The Committee also held that due consideration to the submissions and documents on record had been given by the Committee before arriving at its Findings.
5. Keeping in view the facts and circumstances of the case, material on record including verbal and written representations on the Findings, the Committee was of the view that Respondent’s duty was limited to certification of Form 8 based on the verification of relevant record / documents. However, the Respondent did not appear to have taken sufficient steps to check as to who were the partners of the LLP at the time of certification of Form 8. Thus, the Respondent did not exercise due diligence while certifying Form ‘8’. Further, the Respondent not only failed to qualify his audit report for non-payment of Service Tax by the LLP but also failed to report the transaction relating to payment of professional fees to his wife in his audit report. Hence, professional misconduct on the part of the Respondent is clearly established as spelt out in the Committee’s Findings dated 7th February 2024 which is to be read in consonance with the instant Order being passed in the case.
6. Accordingly, the Committee was of the view that ends of justice will be met if punishment is given to him in commensurate with his professional misconduct.
7. Thus, the Committee ordered that CA. Akash Gajanan Jadhav (M.No.135319), Mumbai be reprimanded and also a Fine of Rs. 25,000/- (Rupees Twenty-Five thousand only) be imposed upon him payable within a period of 60 days from the date of receipt of the Order.
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(MRS. RANI S. NAIR, IRS RETD.)
GOVERNMENT NOMINEE CUM PRESIDING OFFICER
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(SHRI ARUN KUMAR, IAS RETD.)
GOVERNMENT NOMINEE
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(CA. SANJAY KUMAR AGARWAL)
MEMBER
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(CA. COTHA S SRINIVAS)
MEMBER
