The case before the Board of Discipline under the Chartered Accountants Act, 1949 involved allegations against CA. Puneet Gupta, accused by CA. Rahul Bansal of conducting statutory audits for M/s Darzi-On-Call Services Pvt Ltd without obtaining a No Objection Certificate (NOC) from Bansal’s firm, the purported first auditor. Here’s a detailed summary of the proceedings and findings:
Background of the Case
CA. Rahul Bansal’s firm, originally known as M/s AVRP & Associates, was appointed as the first statutory auditor of M/s Darzi-On-Call Services Pvt Ltd for the financial year 2015-2016. Bansal claimed that despite their continuing role as auditor, CA. Puneet Gupta conducted audits for the financial years 2015-16 and 2016-17 without obtaining the required NOC as per Chartered Accountants Act provisions.
Proceedings
The hearings spanned multiple dates due to adjournments and non-appearances, finally concluding on 30th May 2024. CA. Puneet Gupta and CA. Rahul Bansal were present with their respective counsels, and witness Ms. Nazia Nabi also participated via video conference.
Submissions of the Parties
Respondent’s Submissions: CA. Puneet Gupta argued that he was appointed as the first auditor by M/s Darzi-On-Call Services Pvt Ltd in 2016, unaware of any prior auditor. He cited communications with the company and the absence of any notification or cooperation from Bansal’s firm. Gupta alleged that documents suggesting Bansal’s appointment were fabricated.
Complainant’s Submissions: CA. Rahul Bansal countered, presenting evidence of board resolutions and statutory filings supporting his claim as the first auditor. He emphasized the statutory requirement for auditors to obtain NOCs from predecessors and criticized Gupta’s lack of communication or due diligence.
Witness Testimony
Ms. Nazia Nabi, a director of M/s Darzi-On-Call Services Pvt Ltd, testified that Gupta was indeed appointed as the first auditor and had audited the company’s accounts. She denied any prior engagement with Bansal’s firm as auditors, reinforcing Gupta’s claim.
Board’s Observations and Findings
The Board reviewed documentary evidence including board resolutions and correspondence between the parties. They noted discrepancies in appointment dates and conflicting claims of being the first auditor. The Board also considered a letter from M/s Darzi-On-Call Services Pvt Ltd alleging misuse of documents by Bansal’s firm.
Conclusion
After deliberation, the Board concluded that CA. Puneet Gupta was ‘Not Guilty’ of misconduct under Item (8) of Part-I of the First Schedule to the Chartered Accountants Act, 1949. They determined that Gupta’s appointment as the first auditor stood valid based on testimonies and documentary evidence provided. The Board dismissed Bansal’s complaint, ruling that Gupta had no obligation to obtain an NOC from Bansal’s firm due to the circumstances surrounding the appointments and lack of cooperation.
Final Order
In line with Rule 15(2) of the Chartered Accountants (Procedure of Investigations of Professional and Other Misconduct and Conduct of Cases) Rules, 2007, the Board ordered the closure of the case on 12th June 2024, exonerating CA. Puneet Gupta from the charges brought against him by CA. Rahul Bansal.
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[PR/ 418/ 2018/ DD/85/ 2019/BOD/ 706/ 2023]
CONFIDENTIAL
BOARD OF DISCIPLINE
(Constituted under Section 21A of the Chartered Accountants Act 1949)
FINDINGS UNDER RULE 14 (9) OF THE CHARTERED ACCOUNTANTS (PROCEDURE OF INVESTIGATIONS READ WITH RULE 15 (2) OF PROFESSIONAL AND OTHER MISCONDUCT AND CONDUCT OF CASES) RULES, 2007
CORAM:
CA. Rajendra Kumar P„ Presiding Officer (Present in Per-son)
Ms. Dolly Cllaktaborty, Government Nominee (Present in Person)
CA. Priti Savla, Member (Through Video Conference)
IN THE MATTER OF:
CA. Rahul Bansal (M.No.520268)
Partner, M/s NPRA & Associates,
Chartered Accountants
Versus
CA. Puneet Gupta (M. No. 516247)
Date of Final hearing : 30th May 2024
Place of Final hearing: ICAI Bhawan, New Delhi
PARTIES PRESENT:
Counsel For Complainant : Shri Rajan Sandeo (In Person)
Respondent: CA. Puneet Gupta (In Person)
Counsel For Respondent: Shri Jatin Nanda (In Person)
Witness: Ms. Nazia Nabi (Through Video Conference)
FINDINGS
BACKGROUND OF CASE
1. As per version of the Complainant, the Complainant firm (earlier known as M/s AVRP & Associates, merged into M/s NPRA & Associates in December 2015) was first statutory auditor of M/s Darzi-On-Call Services Pvt Ltd (hereinafter referred to as the “Company”) for the financial year 2015-2016 (i.e., 3rd August 2015 to 31st March 2016). The Complainant firm continues to be the statutory auditor of the Company as they neither resigned from the said position nor was removed by the Company. However, it came to the knowledge of the Complainant that the Respondent has conducted the statutory audit of the Company for the financial years 2015-16 and 2016-17.
CHARGE ALLEGED:
2. The only charge alleged by the Complainant is that his firm was appointed as the first auditor of the Company and for the said appointment, Form ADT-1 was duly filed, however, the Respondent has conducted the statutory audit of the Company for the financial years 2015-16 and 2016-17 without obtaining No Objection Certificate (NOC) from the Complainant. Accordingly, Complainant alleged that the Respondent violated Item (8) of Part-I of the First Schedule to the Chartered Accountants Act, 1949
BRIEF OF PROCEEDINGS HELD:
3. The details of the hearings fixed and held in the matter, are given as under:
| Date of Hearing(s) | Status of hearing(s) |
| 28th March 2023 | Adjourned at the request of the Respondent. |
| 10th April 2024 | Adjourned due to non-appearance of Complainant Respondent. and |
| 7th May 2024 | Part Heard and Adjourned. |
| 30th May 2024 | The matter was heard and concluded. |
SUBMISSIONS OF THE PARTIES:
RESPONDENT:
4. The Respondent vide letter dated 24th October 2023 submitted that: – .
4.1 The said matter was resolved with the Complainant and with M/s Darzi-On- Call Services Private Limited. Respondent has already given a response to the Institute with representation received from his client during the year 2019 itself. However, on professional grounds the matter was again taken up and discussed in detail with both the client M/s Darzi-On- Call Services and the Complainant and concluded that there was some communication gap and loss of communication documents which lead to conflict and based on which the above matter was raised with the Institute. The confusion was primarily on account of change in the staff and missing documents at both the ends.
4.2 The Respondent vide email dated 26th October 2023 informed the Complainant that, “As per our earlier discussion and meeting with the said client and clarification from their end on the missing trail of communication, it was agreed to close the matter from your end since the matter was reported due to some confusion and in absence of missing documentation”.
4.3 The Respondent vide letter dated 9th April 2024 further submitted that he was the first Auditor of the Company for FY 2015-16 appointed by the Board of Directors. Since this was the first year of business operations, he had no reason to believe that there was an outgoing auditor. In the year 2019, Respondent received an email/letter from M/s AVRP & Associates, claiming to be the Auditor for the same financial year, while being in silence mode for the past 3 years. They did not even send any email or other communication to the Company to provide Books of Accounts for the Audit Purpose. Upon receipt of the above communication from the Complainant, he pursued the matter with the business entity, and the Board of Directors confirmed in writing that they did not appoint the Complainant as the first auditor of the Company. It was also confirmed that the Complainant firm was hired as a consultant for incorporation of the said Company and other miscellaneous compliances only.
4.4 The Respondent submits that there is no professional fee due in the records as per the balance sheet pertaining to the Complainant and that the Complainant’s appointment letter looks forged/fake as there is no email id, contact number, website and stamp of the Company on it. Respondent further submits that the Complainant used his address for incorporation of the said Company, which is wrong. The Complainant is also seeking Rent from the Company for the use of his address.
COMPLAINANT:
5. The Complainant vide email dated 26th October 2023 while replying to the Respondent, a copy of which was also marked to the Disciplinary Directorate, stated that there was no communication either from M/s Darzi-on-Call Services Private Limited or from the Respondent to him regarding any of the meetings or information about the closure of the matter. He wrote that the matter was not reported due to any confusion or in the absence of any missing documentation, in fact, there was a clear lack of communication from the Respondent’s end prior to accepting the assignment of the statutory audit of the Company. He states that a professional should and ought to conduct due diligence for obtaining the “No Objection Certificate” from the previous auditor. The Complainant has neither resigned nor removed by the Company, and he still holds the office of the first auditor of the Company as per the forms and evidence on record and statutory filing of the Company.
The Complainant further states that neither the Company nor the Respondent has ever communicated anything with him. As per the letter dated 12.04.2019 written by the Company to the Respondent, it is mentioned therein that the Company had requested Mr. Rahul and Mr. Ajay several times about the completion of the ROC formalities but they never paid any heed to the request. Complainant further states that he would like to know the documents and information sought by the Respondent regarding the Company has ever communicated with him, as the Company never submitted its financials or books of accounts for the purpose of audit and annual compliance to the Respondent. Further he states that being the first auditor, he was never served with the “Notice of AGM or any other meeting” of the Company, which indicates very serious and penal lacking; and mala-fide intention on the part of the Board of the Directors of the Company.
Additionally, the Complainant states that in the Prima Facie Opinion dated 29.05.2023, the Director (Discipline) at Para 10 observed that the Respondent appeared to have failed to ensure the compliance of the requirements of Section 139 and 140 of the Companies Act 2013, while accepting the appointment as an auditor of the Company. However, it is stated that since the said misconduct was not part of the original complaint, the same is not dealt with. The Complainant in response states that when all the documents on record of ROC and Company clearly indicate the facts of the case, the Complainant has no clue regarding what type of miscommunication or confusion the Respondent is refereeing to.
WITNESS:
6. Nazia Nabi, Director of the Company through a letter dated 8th April 2024 states that the Complainant assisted in the incorporation of the said Company by using his address on his own and they never agreed to any rental agreement. Further, she denied the appointment of the Complainant or his firm as the auditor of the Company and further states that the documents evidencing the appointment of the Complainant have been prepared with unlawful intent and via misuse of DSC Stamp. Thus, the documents evidencing the appointment of the Complainant as an auditor of the Company be considered as incorrect, fake, null and void.
OBSERVATIONS OF THE BOARD:
7. Upon review of the evidence presented by the parties, the Board of Discipline notes that, as per allegation, Respondent conducted audit of Company for FY 2015-2016 and 2016-2017 without obtaining NOC from the Complainant. Complainant to corroborate his stance of being first Auditor of the Company, submitted Company’s Board Resolution dated 31st August 2015, wherein the Complainant .firm was appointed as the first auditor of the Company and Form No. ADT-1 where Complainant firm is shown as Auditor of the Company. Respondent to contradict the view of the Complainant, submitted Board Resolution dated 18th August 2016 and Company’s Director letter dated 18th August 2016 wherein the Respondent was appointed as the first auditor of the Company. The Board noticed that both the parties are saying that they have been appointed as the first auditor and the appointment date is also different.
8. The Board took heed of a letter dated 12th April 2019 of the Company’s Director addressed to the Respondent, wherein the Director states that the Company took the professional help of the Complainant for the Incorporation of the company and in lieu thereof, Complainant did all formalities and prepared all documents related to incorporation. In the same letter, the Director even stated that the Complainant, without their knowledge, signed documents related to appointment of himself as the first Auditor and uploaded documents related to his appointment on ROC. The Complainant was also in possession of the digital signature of Directors, incorporation certificate etc. and the Complainant did not return these documents to the Company even after numerous communications. Thus, on perusal of this letter, the Board is of the view that the appointment of the Complainant as the first auditor is based on fake and bogus documents. Further, if the Respondent was appointed as first auditor of the Company in the year 2016, that means the Respondent must have no reason to believe that there may be an outgoing auditor. Furthermore, Complainant came forward with complaint in the year 2018, whereas the cause of action arose in the year 2015, thus it puts a question mark on the genuineness of the complaint. Moreover, the Complainant himself never appeared before the Board of discipline.
9. Besides above, the Board of Discipline also called upon the witness, Smt. Nazia Nabi, founder member of the Company and majority shareholder Director since inception of the said Company to appear and depose before it. The Board noted that she appeared through Video Conference and submitted before the Board that the Company has appointed the Respondent as the Auditor and has never appointed the Complainant as its Auditor.
10.Thus, after thorough review of the documents on record and deliberations on the matter, the Board is of view that the witness being a majority shareholder Director since inception, confirmed that the Respondent was the first auditor and he has audited the books of account of the Company, therefore, the question of getting NOC from the Complainant does not arise and hence based on the deposition of the witness by taking her submissions on record, Respondent is held ‘Not Guilty’ of the charge alleged.
CONCLUSION:
11. Thus, in conclusion, in the considered opinion of the Board, the Respondent is `NOT GUILTY’ of Other Misconduct falling within the meaning of Item (8) of Part-I of the First Schedule to the Chartered Accountants Act, 1949. Accordingly, the Board passed an order for closure of the case in terms of the provisions of Rule 15 (2) of the Chartered Accountants (Procedure of Investigations of Professional and Other Misconduct and Conduct of Cases) Rules, 2007.
| Sd/- | Sd/- | Sd/- |
| CA. Rajendra Kumar P | Dolly Chakrabarty, !AAS (Retd.) | CA. Priti Savla |
| Presiding Officer | Government Nominee | Member |
Date: 12-06-2024
