Disciplinary Committee (Bench-IV) of the Institute of Chartered Accountants of India (ICAI) found CA Narinder Singh guilty of professional misconduct under Item (7) of Part I of the Second Schedule to the Chartered Accountants Act, 1949. The misconduct relates to improper verification of Income Tax Returns (ITRs) for two bank clients. Singh admitted to the error during the hearing on 28th March 2024 and pleaded for leniency, citing a long-standing engagement with the bank since 2005 and asserting that such mistakes were isolated.
In his defense, Singh highlighted the transition from manual to electronic ITR filing and stated that initial verification requests from banks only required confirmation of Gross Total Income from ITRs, without mandates to cross-verify with Form 26AS or other data. He acknowledged that verification in earlier years involved telephonic confirmation with Income Tax Department officials, a practice that the Committee viewed as inadequate and negligent.
After reviewing both written and verbal representations, the Committee held that Singh failed to exercise due diligence and did not follow appropriate procedures in certifying the ITRs. This led to a finding of professional misconduct. While acknowledging his admission and continued service to the bank, the Committee decided to reprimand Singh and imposed a fine of ₹25,000, to be paid within 60 days from receipt of the order. The decision was formalized in the Order dated 16th May 2024.
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THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA
(Set up by an Act of Parliament)
[DISCIPLINARY COMMITTEE [BENCH-IV (2024-2025)]
(Constituted under Section 218 of the Chartered Accountants Act, 1949)
ORDER UNDER SECTION 21E1(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.
[PRP/P/398/2017-DD/173/INF/2018-DC/1445/2021]
In the matter of: CA. Narinder Singh
MEMBERS PRESENT:
1. CA. Ranjeet Kumar Agarwal, Presiding Officer (In person)
2. Shri Jiwesh Nandan, I.A.S (Retd.), Government Nominee (In person)
3. Ms. Dakshita Das, I.R.A.S. (Retd.), Government Nominee (Through VC)
4. CA. Mangesh P Kinare, Member (In person)
5. CA. Abhay Chhajed, Member (In person)
DATE OF HEARING : 28th MARCH, 2024
DATE OF ORDER : 16th May, 2024
1. That vide Findings dated 05.02.2024 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 Narinder Singh (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 218(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 28th March 2024.
3. The Committee noted that on the date of hearing on 28th March 2024, the Respondent was present through video conferencing and made his verbal representation. The Respondent stated that he had already submitted his written representation on the Findings of the Committee on 27th February 2024. He further submitted that he had been engaged by the bank for ITR verification since 2005, and except these two liRs, there was no mistake in other 1TRs verified by him. He had no intention to commit any wrongdoing, however, he admitted the mistake. The Respondent pleaded for lenient view. The Committee also noted the written representation of the Respondent dated 19th February 2024 on the Findings of the Committee, which, inter-alia, are given as under
(a) ITR verification was started when most of the ITRs were filed manually and the chance of changing the amount of income declared in ITR was more, as manual figures could be easily altered.
(b) Bank Branch asked him to verify the Gross Total Income as per ITR filed only and it never asked at that time to verify other facts. In year 2015-16, after creation of Loan Cells by the Bank, the Bank started demanding copy of Form 26-AS and then he started giving the details of tax payable, if any, by assessee.
(c) Bank Branch asked him to verify the Gross Total Income as per ITR filed only and the fact of Gross Total Income is to be verified as per Income Tax records. The purpose of the Bank to start the ITR verification is to check the fake returns, as the amount of loan depends on the gross total income declared in the 1TR.
(d) The 1TR filing was changed from manual filing to e-filing w.e.f. A.Y. 2008-09, but in the initial years, less number of people were filing through online mode. The 1TR of Ms. Veena Handa for A.Y, 2008-09 pertained to the era of manual filing and ITR of Mr. Suresh Seth for A.Y. 2012-13 pertained to the era of e-filing.
(e) As both the 1TR’s pertained to different periods, the procedure of AN, 2008-09 could not be applied to ITR of A.Y. 2012-13.
(f) There was no intention to cheat the Bank while doing the certification work. The Respondent was engaged with the Bank since 2005 and till date, he is doing certification of ITR of different branches and never compromised with his duty of certification and the same fact could be verified from the Bank Branch Officials.
4. The Committee considered the reasoning as contained in Findings holding the Respondent ‘Guilty’ of Professional Misconduct vis-a-vis written and verbal representation of the Respondent. The Committee noted that the issues/ submissions made by the Respondent as aforestated have been dealt with by it at the time of hearing under Rule 18.
5. Thus, keeping in view the facts and circumstances of the case, material on record including written and verbal representation of the Respondent on the Findings, the Committee was of the view that the Respondent failed to adopt proper procedures to address the verification of the Income Tax Returns of both borrowers. Further, the Respondent’s admission that he verified the income Tax Returns telephonically with the officials of the Income Tax Department, demonstrated his negligence in conducting his professional duties for the assignment given by the Bank, The Committee held that the charges against the Respondent hold merit, and the Respondent failed to exercise due diligence as was expected from him under the circumstances. Hence, the Professional Misconduct on the part of the Respondent is clearly established as spelt out in the Committee’s Findings dated 05th 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 the ends of justice would be met if punishment is given to him in commensurate with his Professional Misconduct.
7. Thus, the Committee ordered that the Respondent i.e., CA. Narinder Singh be REPRIMANDED and also imposed a fine of Rs. 25,000/- (Rupees Twenty five thousand) upon him, which shall be paid within a period of 60 (sixty) days from the date of receipt of the Order.
Sd-
(CA. RANJEET KUMAR AGARWAL)
PRESIDING OFFICER
Sd/-
(SHRI MESH NANDAN, I.A.S. {RETD.})
GOVERNMENT NOMINEE
Sd/-
(MS. DAKSHITA DAS, I.R.A.S.{RETD.})
GOVERNMENT NOMINEE
Sd/-
(CA. MANGESH P KINARE)
MEMBER
Sd-
(CA. ABHAY CHHAJED)
MEMBER
