Disciplinary Committee (Bench-II) of the Institute of Chartered Accountants of India (ICAI), under Section 21B(3) of the Chartered Accountants Act, 1949, found CA Dinesh Patidar, Manasa, guilty of professional and other misconduct under Item (7) of Part I of the Second Schedule and Item (2) of Part IV of the First Schedule. The charges relate to audit work done for the financial years 2012–13 and 2013–14. The Committee observed that Patidar made contradictory statements in audit reports, failed to verify figures independently, and incorrectly reported compliance with Companies Act, 2013 and CARO 2016—despite both being non-applicable during the audit period. Further, backdating of audit reports and misreporting on fixed assets and debentures—treated as deposits under applicable rules—were noted. The respondent admitted to errors and attributed them to lack of experience during his early practice years. He also submitted that there was no malafide intention, cooperated with proceedings, and pledged diligence in future work. Despite these representations, the Committee determined that the respondent’s approach reflected casualness and failure to adhere to professional standards and auditing responsibilities. The misconduct was established through findings dated 25th November 2024, and in line with the conclusion, CA Dinesh Patidar was reprimanded and fined ₹50,000, to be paid within 60 days from receipt of the order dated 21st January 2025.
THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA
(Set up by an Act of Parliament)
PR/G/353/2022/DD/231/2022/DC/1746/2023
[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/G/353/2022/DD/231/2022/DC/1746/2023]
In the matter of:
Shri Mukesh Kumar Soni,
Versus
CA. Dinesh Patidar,
Partner, Ws. Suresh S. Kimtee & Co,
Members Present (in person): –
CA Ranjeet Kumar Agarwal, Presiding Officer
Smt. Rani S. Nair, Government Nominee
Shri Arun Kumar, Government Nominee
CA. Sanjay Kumar Agarwal, Member
CA. Cotha S Srinivas, Member
Date of Hearing: 16th December 2024
Date of Order : 21st January 2025
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 CA. Dinesh Patidar ,(hereinafter referred to as the ‘Respondent’) is GUILTY of Protessional and Other Misconduct falling within the meaning of Item (7) of Part I of the Second Schedule and Item (2) of Part IV of the First 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 opportunity of being heard in person / through video conferencing and to make representation before the Committee on 16th December 2024.
3. The Committee noted that on the date of the hearing held on 16th December 2024, the Respondent was present through Video Conferencing and made his verbal representation on the Findings of the Disciplinary Committee, inter-alia, reiterating his submissions dated 12th December 2024 and further requested for a lenient view in the case.
4. The Committee also noted that the Respondent in his written representation on the Findings of the Committee, inter-alia, stated as under: –
(a) The errors in the financial statements, which he acknowledged during the Committee hearing, were entirely inadvertent and occurred without any malafide intent. These unintentional mistakes did not result in any default on public funds or liabilities.
(b) A review of the audited financial statements confirms that no borrowings from financial institutions or similar entities were recorded during the relevant audit period.
(c) Furthermore, these mistakes occurred during the initial years of his practice (The Respondent is a member of ICAI and holds Certificate of Practice since 13th February 2013).
(d) Since then, he has made every effort to enhance his knowledge and improve his professional practices.
(e) He fully cooperated throughout these proceedings and accepted the errors made, which were purely accidental and devoid of any malafide intention.
(f) He undertook to remain vigilant in the future and to discharge his professional responsibilities with the highest degree of diligence, adhering strictly to the auditing standards and Statutory requirements.
(g) He requested the Committee to consider his bonafide conduct and the fact that he was in the early years of his practice.
5. The Committee considered the reasoning as contained in the Findings holding the Respondent Guilty of Professional and Other Misconduct vis-a-vis written and verbal representation of the Respondent.
6. Keeping in view the facts and circumstances of the case, material on record including verbal and written representation on the Findings, the Committee in respect of the following charge(s) was of the following view:
(a) First Charge: The matter reported under Paragraph 3 (vi) of the Audit Report for FY 2012-13 and Paragraph 7 of Audit Report for FY 2013-14 was contradictory to the figures stated in the audited financials of the Company for such years audited by him. Further, the Respondent at the time of hearing held in the case on 25th July 2024 accepted his mistake as the current assignment was done by him during the early days of his practice and at that time he was not professionally aware. Thus, it is viewed that the Respondent has himself accepted the fact of misstatement in his audit reports. The Committee also noted that as per the provisions of Section 227 of the Companies Act 1956, the auditor should seek and obtain all the information and explanations which to the best of his knowledge and belief are necessary for the purpose of his audit, and if not, the details and the effect of such information on the financial statements must be mentioned. In the instant case, the Respondent copied the standard remark / comments from the previous year’s audit reports and failed to verify the amount independently with the total value of Debentures as mentioned in the Register of Debentures. Thus, the Committee held that the Respondent was casual while carrying out the audit of the Company for F.Y. 2012-13 and 2013-14.
(b) Second Charge: The Committee viewed that the Respondent reported casually that the Company had issued debentures in the year 2012-13 in non-compliance of the provisions of Companies Act, 2013. The Committee noted that the Respondent, in spite of non-applicability of Companies Act 2013, gave his Audit Report dated 02-092014 on the financials of the Company for the F.Y. 2013-14 referring the provisions of Companies Act, 2013. The Respondent annexed a statement/additional reporting as required by Companies (Auditors’ Report) Order, 2016 along with his Audit Report signed on 02-09-2014 for the F.Y.2013-14. Regarding this CARO, 2016 reporting, the Committee noted that it was notified by MCA vide notification dated 29-03-2016 and was made mandatory for the companies (which fulfilled certain conditions) from the F.Y. commencing on or after •01-04-2015 only. Thus, it is clear that on the day of this additional reporting under CARO, 2016 in his audit report for the F.Y.2013-14 i.e., on 02-09-2014 by the Respondent, the CARO, 2016 was not even in existence and it clearly indicates that the Respondent has issued such audit report dated 02-09-2014 on any subsequent date after the CARO, 2016 was notified. The Committee also noted that the Company did not submit/upload its audited financials for the F.Y.2013-14 to the Complainant Department / MCA in the year 2014 rather submitted/uploaded only in the year 2019 as evidenced from the examination of Company’s account on MCA portal clearly indicating that the financial statements of the Company for F.Y.2013-14 have been signed by the Respondent in back date. The Committee also noted that no plausible explanation for the said anomaly had been provided by the Respondent in his defence. Thus, the Committee held that the alleged act of the Respondent is unbecoming of a Chartered Accountant.
(c) Third Charge: The Committee upon perusal of the audit report for the financial year 2012-13 noted that the annexure as part of audit report was not found as the applicable Order ‘The Companies (Auditor’s Report) Order, 2003’ (under which such additional reporting with respect to various matters including Fixed Assets was to be made as an annexures to the Audit Report) is noted to have been mentioned as not applicable on the company for the year 2012-13.In his audit report for the F.Y.2013-14, it is noted that the Respondent has mentioned that the Company does not own any fixed assets hence not applicable. The Committee viewed that contradictory information was stated by the Respondent in the annexure to the auditor’s report that the Company does not own any fixed assets despite the fact that the Company was having fixed assets on which depreciation has also been charged and the same was duly reflected in the financial statement audited by him. Moreover, the Respondent in his written submissions submitted at Prima Facie Opinion stage as well as during the course of hearing on 26th September 2024 accepted it to be a typing mistake. Thus, the Committee was of the view that the said act of the Respondent clearly indicates that the Respondent adopted a casual approach while issuing the audit report .
(d) Fourth Charge: The Committee noted that the reporting of ‘Deposit’ as alleged was required to be made by the Respondent in his audit report under the applicable Central Government’s Order ‘The Companies (Auditor’s Report) Order, 2003 and such Order is noted to have been mentioned in his Audit Report for the year 2012-13 as ‘not applicable’ on the company. The Committee noted that as per the copy of Certificate of Registration of mortgage, Charge of Rs. 1000,00,00,000/- (One Thousand Crore) had been registered on the assets of the Company on 14th March 2012. However, the amount of total immovable assets of the Company i.e. Rs.21.58 Lacs. apparent on the face of the Balance Sheet of the Company as on 31-03-2014 appears meagre to cover the amount of charge / outstanding debenture as on 31-032014 i.e., Rs.171.05 Crores. Hence, the amount of debentures so outstanding as on 31.03.2014 falls within the meaning of Deposits in terms of the requirements of Rule 2(b)(x) of Companies (Acceptance of Deposit) Rules, 1975 and accordingly, should have been treated as deposits in terms of the requirement of which the Respondent as auditor failed to point out the same in his audit report. Accordingly, the Committee held that the Respondent was casual in his approach while carrying out the audit and due diligence was not exercised by him while conducting the Statutory Audit of the Company.
6.1 Hence, professional misconduct on the part of the Respondent is clearly established as spelt out in the Committee’s Findings dated 25th November 2024 which is to be read in consonance with the instant Order being passed in the case.
7. 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.
8. Thus, the Committee ordered that CA. Dinesh Patidar be Reprimanded and also a Fine of Rs. 50,000/- (Rupees Fifty Thousand only) be imposed upon him payable within a period of 60 days from the date of receipt of the Order.
Sd/-
(CA. RANJEET KUMAR AGARWAL)
PRESIDING OFFICER
Sd/-
(MRS. RANI S. NAIR, IRS RETD.)
GOVERNMENT NOMINEE
Sd/-
(SHRI ARUN KUMAR, IAS RETD.)
GOVERNMENT NOMINEE
Sd/-
(SANJAY KUMAR AGARWAL)
MEMBER
