Disciplinary Committee of the Institute of Chartered Accountants of India (ICAI) has imposed a penalty of Rs. 5,000 on CA. Bal Chandra Khaitan for professional misconduct. The order, dated June 26, 2024, stems from a complaint filed by Purushottam Das Tulshyan. The committee found Mr. Khaitan guilty of failing to report a significant accounting error in his audit report. The case pertained to a company that had incorrectly classified a reserve arising from an amalgamation. Instead of showing it as a ‘Capital Reserve’ as required by Accounting Standard 14, the company listed it under ‘General Reserve’ and improperly used it to charge depreciation. The committee held that the respondent, as the auditor, failed in his duty to report this material non-compliance. However, the committee exonerated Mr. Khaitan on two other allegations. The first, related to misreporting on bank guarantees, was dismissed as the accounting treatment was a management decision. The second, concerning the recognition of a government grant, was also dismissed because, despite a slight deviation from accounting standards, the company’s policy was clearly disclosed in the financial statements and did not constitute gross negligence. If the fine is not paid within 90 days, Mr. Khaitan’s name will be removed from the Register of Members for a period of thirty days.
THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA
(Set up by an Act of Parliament)
[DISCIPLINARY COMMITTEE BENCH-I (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/128/2016/DD/189/2016/DC/1442/2021]
In the matter of: –
Purushottam Das Tulshyan….Complainant
-Vs-
CA. Bal Chandra Khaitan,.. Respondent
MEMBERS PRESENT: –
CA. Charanjot Singh Nanda, Pre
siding Officer
Shri Jugal Kishore Mohapatra, IAS (Retd.) (Government Nominee)
CA. Chandrashekhar Vasant Chitale, Member
CA. Gyan Chandra Misra, Member
Date of Hearing : 2nd April 2024
Date of Order : 26.06.2024
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, the Disciplinary Committee noted that) Bal Chandra Khaitan, (hereinafter referred to as the Respondent”) was held GUILTY of professional misconduct falling within the meaning of Item (5), (6) & (7) of Part I of 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 communication was addressed to him thereby granting opportunity of being heard in person / through video conferencing and to make written & verbal representation before the Committee on 2nd April 2024.
3. The Committee noted that on the date of the hearing held on 2nd April 2024, the Respondent was present through video conferencing, and he made his verbal submission on the findings of the Disciplinary Committee.
4. In his verbal submission the Respondent inter alia requested Committee to take a lenient view on him.
5. The Committee considered the reasoning as contained in the findings holding the Respondent Guilty of professional misconduct vis-a-vis verbal submissions of the Respondent.
6. Keeping in view the facts and circumstances of the case, material on record including verbal/ written submissions of the Respondent on the findings of the Committee, the Committee is of the view that the professional misconduct on the part of the Respondent is established. Accordingly, the Committee ordered that a fine of Rs. 5,000/- (Rupees Five Thousand only) be imposed upon the Respondent i.e. CA. Bal Chandra Khaitan, to be paid within 90 days of receipt of the Order. If the Respondent fails to pay the fine within the stipulated period, his name be removed from the Register of Member for a period of thirty days.
Sd/-
(CA. CHARANJOT SINGH NANDA)
(PRESIDING OFFICER)
Sd/-
(CA. CHANDRASHEKHAR VASANT
CHITALE)
(MEMBER)
Sd/-
(SHRI JUGAL KISHORE MOHAPATARA), I.A.S. (RETD.),
(GOVERNMENT NOMINEE)
Sd/-
(CA. GYAN CHANDRA MISRA)
(MEMBER)
DATE:26.06.2024
PLACE: New Delhi
