The Institute of Chartered Accountants of India (ICAI) Disciplinary Committee has found CA. Ankit Ashokkumar Chokshi guilty of professional misconduct. The case stemmed from an audit of a religious trust where the CA failed to report a deposit of Rs. 23.23 lakhs, leading to a violation of Section 35 of the Gujarat Public Trust Act, 1950. The Committee also noted the CA issued a clean audit opinion despite not receiving sufficient documentation. While the CA admitted his mistake and claimed no malicious intent, the Committee rejected his late submission of evidence. The Committee concluded that the CA was guilty of professional misconduct under Items 7 and 8 of Part-I of the Second Schedule to the Chartered Accountants Act, 1949, and imposed a fine of Rs. 25,000.
THE INSUTE OF CHARTERED ACCOUNTANTS OF NDIA
(Set up by an Act of Parliament)
PR/510/2022/DD/450/2022-DC/1910/2024
[DISCIPLINARY COMMITTEE [BENCH-IV (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/510/2022/DD/45012022-DC/1910/2024]
In the matter of:
Shri Kutbuddin H. Vohra
Versus
CA. Ankit Ashokkumar Chokshi
Members Present :-
CA. Ranjeet Kumar Agarwal, Presiding Officer (in Person)
Mrs. Rani S Nair, I.R.S. (Retd.), Government Nominee (in Person)
CA. Sanjay Kumar Agarwal, Member (in Person)
CA. Cotha S Srinivas, Member (through VC)
Date of Hearing: 3rd February 2025
Date of Order: 8th February 2025
1. That vide Findings under Rule 18(8) 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. Ankit Ashokkumar Chokshi , (hereinafter referred to as the `Respondent’) is GUILTY of Professional Misconduct falling within the meaning of Item (7) and (8) 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 opportunity of being heard in person / through video conferencing and to make representation before the Committee on 03rdFebruary,2025.
3. The Respondent was present before the Committee on 03rdFebruary 2025 through video conferencing and made his verbal representation on the Findings of the Disciplinary Committee inter-alia, stating that the amount of Rs 23.23 lakhs was paid on 3rd January 2012 to Shree Kalki Logistics Private Limited for acquiring a property which was a godown at Shree Rajlaxmi Logistics Park, Village Dhamangaon, Tal. Bhiwandi, District, Thane. He was under the belief that if it is for earning income then it should not be reported. He has already furnished the receipt of the company from where godowns have been purchased. But now he has got the knowledge that it is not for the furtherance of the object but only for earning the income, so it should have been reported. He believed that it was for the purpose of purchasing property and the same need not be reported under Section 35 of the Gujarat Public Trust Act 1950. He further requested that since it was only a wrongful belief and there was no malafide intention on his part, lenient view may be taken by the Committee.
4. The Committee noted that the Respondent in his written representation dated 20th January 2025, inter-alia, stated as under: –
(a) On 19th January 2025, he received a copy of cheque and copy of receipt issued by “Shree Kalki Logistics Private Limited” confirming that the payment was made towards booking of Warehousing unit measuring 2300 Sq. Ft. Built up area at Shree Rajlaxmi Logistics Park, Village Dhamangaon, Tal. Bhiwandi, District, Thane.
(b) The alleged documents belong to the year 2012 which is older than more than 10 years. They were not traceable readily and received on 19th January 2025 by him from the Trust and therefore submitted afterwards.
(c) The copy of the cheque and receipts are in accordance with the Management representation letter provided to him by the Trust. It is confirmed that the payment was made for acquiring property for earning income which is towards furtherance of the objects of the Trust and not an advancement of loan. Therefore, it is not a violation of Section 35 of the Gujarat Public Trust Act, 1950 since the payment was made for acquiring assets.
(d) The Trust of the Dawoodi Bohra Community where his Holiness i.e. (Head of the Dawoodi Bohra Community) is the sole trustee, do not pay interest or accept interest in accordance with the tenets of the Holy Quran.
(e) Under any circumstances even if the amount under reference is considered to be an advancement of loan with Shree Kalki Logistics Private Limited, the Trust has not made any loss of revenue as they are not accepting or paying interest in accordance with the tenets of the Holy Quran.
(f) No malafide intention was involved on his part.
(g) The Respondent further admitted the mistake committed on his part and requested the Committee to take a lenient view in his case.
5. The Committee also noted that the Complainant vide communication dated 16th January 2025, 20th January 2025 and 21st January 2025, inter-alia, made the following submissions:
(a) While auditing the religious Trust, it is the duty of the auditor to verify who is operating the bank account of the trust.
(b) In the cheque which the auditor has provided, signatures of Mulla Sajjad Husainibhai and J.A.V (Johar Ahmedali Vohra) are shown. Neither of the signatures are of the Registered Trustee.
(c) Also, the Auditor has presented a receipt which has no revenue stamp affixed on it (Revenue stamp is mandatory to be attached for amount exceeding Rs 5000 as per Indian Stamp Act 1899). Further, if a Company provides a receipt, it has a printed serial number on the receipt. The receipt presented by the Respondent has no serial number. Also, the contact number of the Company in the receipt is not true.
(d) The Respondent says that the Company name is Shree Kalki logistics Pvt ltd, not The Kalki logistics Pvt. ltd. But he has not pointed out this mistake in 6 years Balance Sheet. Further Management Representation letter also states that the name is The Kalki logistics Pvt. ltd.
(e) If the money is provided to Shree Kalki logistics Pvt. Ltd. to acquire land, the Company is not financially stable as it has a paid-up capital of only Rs. 4.5 lakhs and has not filed the Balance Sheet from 2010. The Complainant questioned so for what benefit that huge money was provided to Company without security.
6. The Committee considered the reasoning as contained in the Findings holding the Respondent Guilty of Professional Misconduct vis-a-vis written and verbal representation of the Respondent together with the submissions of the Complainant.
On consideration of the representation of the Respondent, the Committee held that no new facts and evidence can adduced at the stage of the award of punishment. It was incumbent upon the Respondent to adduce evidence when the case was under consideration for hearing under Rule 18 of the Chartered Accountants (Procedure of Investigations of Professional and Other Misconduct and Conduct of Cases) Rules, 2007.
7. Keeping in view the facts and circumstances of the case and material on record including verbal and written representation on the Findings, the Committee noted the following as per its Findings dated 13th January 2025: –
| Charge No. | Charge(s) | Decision of the Committee | Item of the Schedule in which Respondent held Guilty |
|
1. |
The Respondent being the auditor of the Trust has not mentioned in his Audit Report about the breach of Section 35 of the Gujarat Public Trust Act, 1950. The Respondent has not verified the deposit receipt of The Kalki Logistic Pvt. Ltd. The Assistant Charity Commissioner in his report presented to the Charity Commissioner (Ahmedabad) has accepted that the Trust has violated the provisions of Section 35 of the Gujarat Public Trust Act, 1950.
|
Guilty | Item (7) & (8) of Part-I of the Second Schedule. |
7.1 The Respondent pleaded ‘Guilty’ to the charge alleged against him before it at the time of hearing held on 16th December 2024. Accordingly, in terms of provisions of Rule 18 (8) of Chartered Accountants (Procedure of Investigations of Professional and Other Misconduct and Conduct of Cases) Rules, 2007, the Committee recorded the plea of guilt of the Respondent. The Committee noted that the Respondent conducted the audit of the Trust for the FY 2011-12 to 2016-17. The alleged amount of Rs 23.23 lakhs was continuously shown as Other Deposits in the Balance Sheets from FY 2011-12 till 2016-17 without adjusting the amount against the purchase of assets. Though, the said amount was returned to the Trust in F.Y. 2017-18 as admitted by the Respondent.
7.2 The Committee also observed that if the Respondent did not get sufficient documents for verification in respect of material item of the Balance Sheet, he should have considered to issue either qualified or disclaimer of opinion in terms of requirement of SA 705, but he failed to do so.
7.3 Also, the Assistant Charity Commissioner, Surendra Nagar (Gujarat) in his report mentioned that the Trust has breached the requirement of Section 35 of the Gujarat Public Trust Act, 1950. Thus, the Committee held that the Respondent as an auditor failed to point out the violation of Section 35 of the Gujarat Public Trust Act, 1950 in his audit report.
7.4 Hence, Professional Misconduct falling within the meaning of Item (7) and (8) of Part I of the Second Schedule to the Chartered Accountants Act, 1949 on the part of the Respondent is clearly established as held in the Committee’s Findings dated 13th January 2025 which is to be read in consonance with the instant Order being passed in the case.
Accordingly, the Committee was of the view that ends of justice will be met if punishment is given to the Respondent in commensurate with his Professional Misconduct.
9. Thus, the Committee, keeping in view the facts and circumstances of the case, material on record and representation of the Respondent before it, ordered that a Fine of Rs.25,000/- (Rupees Twenty-Five Thousand only) be imposed upon CA. Ankit Ashokkumar Chokshi , 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, I.R.S. (RETD.)
GOVERNMENT NOMINEE
Sd/-
(CA. SANJAY KUMAR AGARWAL)
MEMBER
Sd/-
(CA. COTHA S SRINIVAS)
MEMBER
