The Institute of Chartered Accountants of India’s Disciplinary Committee (Bench-II) issued an order against CA. Arun Kanhyalal Burad of Nashik for professional misconduct. The committee found him guilty under Item (7) of Part I of the Second Schedule to the Chartered Accountants Act, 1949. The case originated from a complaint by Mrs. Shashibala Singh. Despite being given an opportunity to be heard, CA. Burad did not appear but submitted a written representation citing health issues and admitting a mistake in the financials which he claimed was rectified.
The Committee reviewed the case, noting that CA. Burad had issued both original and revised audit reports for FY 2014-15 on the same date, without cross-referencing or adhering to SA-560 (Subsequent Events) guidelines. The core issue involved incorrect treatment of “Share Application Money Pending Allotment” in the balance sheet, which was later corrected in a revised financial statement filed with authorities. However, his failure to substantiate his defense in person and the clear establishment of misconduct led to the decision. Consequently, the Committee ordered that CA. Arun Kanhyalal Burad be reprimanded and a fine of Rs. 25,000 be imposed, payable within 60 days.
THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA
(Setup by an Act of Parliament)
PRP174/2016/DD/202/2016/DC/1581/2022
[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/174/2016IDD/202/2016/DC/1581/2022]
In the matter of:
Mrs. Shashibala Singh
…Complainant
Versus
CA. Arun Kanhyalal Burad
…Respondent
Members Present:-
CA. Ranjeet Kumar Agarwal, Presiding Officer (in person)
Mrs. Rani S. Nair, IRS (Retd.), Government Nominee (through VC)
Shri Arun Kumar, IAS (Retd.), Government Nominee (in person)
CA. Sanjay Kumar Agarwal, Member (in person)
CA. Cotha S Srinivas, Member (through VC)
Date of Hearing : 10th April, 2024
Date of Order : 28th May, 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 was, inter-alia, of the opinion that CA. Arun Kanhyalal Burad (hereinafter referred to as the Respondent’) is 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 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 10th April 2024.
3. The Committee noted that on the date of hearing held on 10thApril 2024, the Respondent was not present before it and vide communication dated 19th March 2024 submitted his written representation on the Findings of the Committee. Keeping in view the provisions of Rule 19(1) of the Chartered Accountants (Procedure of Investigations of Professional and Other Misconduct and Conduct of Cases) Rules, 2007, the Committee was of the view that the Respondent has nothing more to represent before it and thus, decided to consider his case for award of punishment on the basis of material available on record. The Committee noted that the Respondent in his written representation on the Findings of the Committee, inter-alia, stated as under:-
(a) Due to unforeseen health issues, he was unable to attend the previous hearings as planned.
(b) There was a mistake in the financials which the Respondent rectified as soon as he got to know about it.
(c) He also mentioned in the audit report that it was revised. For this, he provided the copy of the Revised Annual Return.
4. The Committee considered the reasoning as contained in Findings holding the Respondent Guilty of Professional Misconduct vis-à-vis written representation of the Respondent. On consideration of the same, the Committee held that due consideration to the submissions and documents on record had been given by the Committee before arriving at its Findings and that no fresh ground can be adduced at this stage.
5. Keeping in view the facts and circumstances of the case, material on record including written representation on the Findings, the Committee noted that when the Respondent Came to know abOut the mistake / error, he filed the revised Income Tax Return on 01st February 2016, revised annual return and revised Balance Sheet of the Company, M/s Hind Tools India Pvt. Ltd. for the FY 2014-15. Further, both the revised and original audit report for the F.Y. 2014-15 had been issued by the Respondent on the same date. There was no reference to the original audit report issued by the Respondent in the revised Audit report. The requirements prescribed in SA-560 (Subsequent Events) with respect to issue of revised Audit report had not been taken into consideration by the Respondent. The Respondent had conducted audit of the Company’s financial statements for the financial year 2014-2015 and submitted his audit report dated 31.10.2015 to the Company. However, the impact of share allotment was not taken into consideration by the Company as the Balance Sheet of the Company as on 31.03.2015 was showing Rs. 1,31,89,200/- as “Share Application Money Pending Allotment” rather including it in “Paid Up Capital.”
51 It was further noted that Respondent signed a revised financial statement of the Company for the financial year 2014-15 on 31.10.2015 after knowing about the mistake in the financial statements from the practicing Company Secretary. However, the said revised Audit report
THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA
(Setup by an Act of Parliament)
appears to have been filed with the Income Tax Department along with the revised Income Tax return on 01.02.2016 as admitted by the Respondent in his written statement filed at PFO stage. Based on the revised financial statements, the Company had filed revised annual return of the Company with Ministry of Corporate Affairs and also filed revised Income Tax return with the Income Tax Department on 17.02.2016. The Respondent certified the revised financial statement and the amount of share application money was shown as zero.
5.2 The Respondent never appeared during the hearings conducted for the present matter and failed to substantiate his defence/ submissions. However, the Respondent was actively engaged in professional work as he was generating UDIN.
5.3 Hence, professional misconduct on the part of the Respondent is clearly established as spelt out in the Committee’s Findings dated 7th February 2024 which is to be read in consonance with the instant Order being passed in the case.
6. 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.
7. Thus, the Committee ordered that CA. Arun Kanhyalal Burad, Nashik be Reprimanded and also a Fine of Rs. 25,000/- (Rupees Twenty-five Thousand only) be imposed upon him payable within a period of 60 days from the date of receipt of the Order.
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(CA. RANJEET KUMAR AGARWAL)
PRESIDING OFFICER
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(MRS. RANI S. NAIR, IRS (RETD.))
GOVERNMENT NOMINEE
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(SHRI ARUN KUMAR, IAS (RETD.))
GOVERNMENT NOMINEE
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(CA. SANJAY KUMAR AGARWAL)
MEMBER
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(CA. COTHA S SRINIVAS)
MEMBER
