CA Reprimanded by ICAI Disciplinary Committee for issuing unverified certificate

The Institute of Chartered Accountants of India’s Disciplinary Committee (Bench-III) has reprimanded CA. Jayaraman Dindigul Viswanathan for professional misconduct. The finding, dated January 22, 2024, concluded he was negligent in his professional duties by issuing a certificate without proper verification. Specifically, he certified that goods exported by M/s Pavathal Spinning Mills Private Limited were manufactured by the company, which resulted in revenue loss to the government. During the hearing on May 2, 2024, the Respondent, aged around 80, admitted to not verifying the manufacturing origin of the exported goods, despite claiming reliance on another CA’s work and customs certifications. The Committee determined that a Chartered Accountant cannot solely rely on another’s work and is responsible for the accuracy of facts in their certificates. Considering the nature of the charge and the Respondent’s age, the Committee ordered a reprimand as appropriate punishment.

THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA
(Set up by an Act of Parliament)

[DISCIPLINARY COMMITTEE [BENCH-III (2024-2025)]
[Constituted under Section 21B of the Chartered Accountants Act, 19491]

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

PPR/P/029/2018/DD/214/INF/2018/DC/1770/2023

In the matter of:

CA. Jayaraman Dindigul Viswanathan 
…..Respondent

MEMBERS PRESENT:
CA. Charanjot Singh Nanda, Presiding Officer (Present in Person)
Smt. Anita Kapur, Government Nominee (Present in Person)
Dr. K. Rajeswara Rao, Government Nominee (Present through Video Conferencing Mode)
CA. Piyush S. Chhajed, Member (Present in Person)

Date of Hearing: 2nd May 2024
Date of Order: 31st July, 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 dated 22nd January 2024, the Disciplinary Committee was, inter-alia, of the opinion that CA. Jayaraman Dindigul Viswanathan (hereinafter referred to as the “Respondent”) was 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 charge against the Respondent was that he was grossly negligent in the conduct of his professional duties as he had issued a certificate wherein it was stated that the goods exported under the impugned shipping bills were manufactured by M/s Pavathal Spinning Mills Private Limited (hereinafter referred as the ‘Company’) without verifying the documents, which resulted in revenue loss to the Government.

3. That pursuant to the said findings, an action under Section 21B(3) of the Chartered Accountants Act, 1949 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 2nd May 2024.

4. The Committee noted that on the date of hearing held on 2nd May 2024, the Respondent was present through Video Conferencing Mode and made his verbal submissions on the findings of the Disciplinary Committee. The Committee noted that the Respondent had also submitted his written representation dated 4¹h March 2024. In the verbal and written submissions, the Respondent had, inter-alia, submitted as under:

a. That he had relied on the work of another Chartered Accountant who had conducted a thorough examination of Company’s documents and operations while issuing the alleged certificate.

b. That he had also considered the custom clearance procedures wherein the customs officials themselves certified that the client is indeed a supporting manufacturer of the exported yam.

c. That any oversight or error in judgement on his part was unintentional and does not constitute gross negligence and requested to consider his old age (around 80 years) while making the decision.

5. The Committee considered the reasoning as contained in the findings holding the Respondent Guilty of professional misconduct vis-a-vis representation of the Respondent made before it.

6. Keeping in view the facts and circumstances of the case, along with the material on record including representations on the findings, the Committee viewed that the Respondent had issued impugned certificates during March 2014 and in the certificates, he certified that exported goods were manufactured by the Company. However, in his statement before the Informant Department (Department of Revenue Intelligence, Tuticorin) on 28th December 2017 the Respondent admitted his mistake by stating that he had not verified that the exported goods had been manufactured by the Company. It is viewed by the Committee that a professional is expected to perform his duty diligently and was responsible for accuracy of the fact stated in the Certificate.

7. The Committee further observed that the Respondent was required to be more cautious while relying on work of another Chartered Accountant. Being a Chartered Accountant he cannot blindly rely on another person’s work. This conduct of the Respondent constitutes Professional Misconduct as per Item (7) of Part I of the Second Schedule to the Chartered Accountants Act, 1949.

8. The professional misconduct on the part of the Respondent is clearly established as spelt out in the Committee’s Findings dated 22nd January 2024 which is to be read in conjunction with the instant Order being passed in the case.

9., The Committee, hence, viewed that the ends of justice will be met if appropriate punishment commensurate with his professional misconduct is given to him.

10. Accordingly, the Committee, upon considering the nature of charge, facts of the matter and also the old age of the Respondent ordered that CA, Jayaraman Dindigul Viswanathan be reprimanded.

DATE: 31st JULY, 2024
PLACE: NEW DELHI