The Disciplinary Committee of the Institute of Chartered Accountants of India (ICAI) has found CA. Ajay Kumar guilty of professional misconduct. The case, initiated by a complaint from the Central Bureau of Investigation (CBI), centered on his role in signing tax audit reports for a firm, M/s. Global Paper Resources, which were used to secure a loan from Vijaya Bank. CA. Ajay Kumar contended that he was misled by a senior colleague, CA. Parminder Singh Oberoi, and signed the reports in good faith because CA. Oberoi had exceeded his own tax audit limit. CA. Kumar also admitted to not independently verifying the accounts, issuing an ante-dated certificate, and lacking engagement letters or working papers for the audit. The Committee found these admissions constituted a clear failure to comply with auditing standards. The committee’s order, dated February 4, 2025, determined that his misconduct was established. Consequently, CA. Kumar’s name has been removed from the Register of members for a period of one year, and he has been fined Rs. 50,000.
THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA
(Set up by an Act of Parliament)
[DISCIPLINARY COMMITTEE [BENCH-IV (2024-2025)]
[Constituted under Section 21B of the Chartered Accountants Act, 1949]
ORDER UNDER SECTION 2113(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/G/236/21/DD/02/2022/DC/1840/2023]
In the matter of:
Superintendent of Police
Central Bureau of Investigation,
Versus
CA. Ajay Kumar
MEMBERS PRESENT:
1. CA. Ranjeet Kumar Agarwal, Presiding Officer (In person)
2. Shri Jiwesh Nandan, I.A.S (Retd.), Government Nominee (In person)
3. Ms. Dakshita Das, I.R.A.S. (Retd.), Government Nominee (Through VC)
4. CA. Mangesh P Kinare, Member (Through VC)
5. CA. Abhay Chhajed, Member (In person)
DATE OF HEARING : 20th January 2025
DATE OF ORDER : 04th February 2025
1. That vide Findings dated 19.12.2024 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. Ajay Kumar (hereinafter referred to as the Respondent”) is GUILTY of Professional and Other Misconduct falling within the meaning of Items (2), (7), (8) and (9) of Part I of Second Schedule and Item (2) of Part-IV of First Schedule to the Chartered Accountants Act, 1949.
2. That pursuant to the said Findings, an action under Section 218(3) of the Chartered Accountants (Amendment) Act, 2006 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 20th January 2025.
3. The Committee noted that on the date of the hearing on 20th January 2025, the Respondent was physically present for the hearing and appeared before it. Thereafter, the Committee asked the Respondent to make submissions in the matter. During the hearing, the Respondent stated that he had already submitted his written representation dated 06th January 2025 on the Findings of the Committee. He submitted that he had been cheated and implicated in this case by his senior professional colleague CA. Parminder Singh Oberoi. CA. Parminder Singh Oberoi had assured him that he had conducted the audit of the firm (M/s. Global Paper Resources) and the Respondent had signed the Audit Report(s) in good faith. The Committee also noted the written representation of the Respondent dated 06th January 2025 on the Findings of the Committee, which, inter alia, are given as under:-
- The Respondent signed the Tax Audit Report (s) of the firm at the behest of CA. Parminder Singh Oberoi as CA. Parminder Singh Oberoi had exceeded tax audit limit prescribed by the ICAI.
- Parminder Singh Oberoi influenced the Respondent and obtained back dated certificate dated 17.02.2014 from him.
- The Respondent has no engagement letter and working papers related to subject audit assignment.
- The reason that the Respondent did not verify the accounts independently cannot constitute a professional misconduct.
- The criminal proceedings before CBI Court has not yet begun, and the Disciplinary Committee should have waited for the verdict of CBI Court.
4. The Committee considered the reasoning as contained in the Findings holding the Respondent ‘Guilty’ of Professional and Other Misconduct vis-à-vis written and verbal representation of the Respondent. The Committee noted that the issues/ submissions made by the Respondent as aforestated have been dealt with by it at the time of hearing under Rule 18.
5. Thus, keeping in view the facts and circumstances of the case and material on record including written and verbal representation of the Respondent on the Findings, the Committee noted that the Tax Audit Report(s) signed by the Respondent were part of the loan documents, based upon which the loan was sanctioned by Vijaya Bank as per details given in complaint of CBI. The Committee further observed that the name of Respondent has been included as an accused person in the Chargesheet dated 11.11.2021 filed by the Complainant Department (CBI authority). In view of submissions of the Respondent, the Committee was of the view that the Respondent has signed Tax Audit Report(s) of the Firm without independent verification of books of accounts and other related records/documents of the Firm for the relevant period i.e. Financial Years 2010-2011 to 2012-2013.
6. The Committee further noted that as per submissions of the Respondent, he had issued ante-dated certificate, on the instructions of CA. Parminder Singh Oberoi. Moreover, the Committee opined that the Respondent has admitted that he had not complied with the requirements of SA 210 (Revised) — ‘Agreeing the Terms of Audit Engagements’ and SQC 1 —’Quality Control for Firms as he has no engagement letter and working paper/audit document related to audit assignment.
7. Hence, the Professional Misconduct on the part of the Respondent is clearly established as spelt out in the Committee’s Findings dated 19.12.2024 which is to be read in consonance with the instant Order being passed in the case.
8. Accordingly, the Committee was of the view that the ends of justice would be met if punishment is given to him in commensurate with his Professional and Other Misconduct.
9. Thus, the Committee ordered that the name of the Respondent i.e. CA. Ajay Kumar, New Delhi be removed from the Register of members for a period of 01 (One) year and also imposed a fine of Rs. 50,000/- (Fifty thousand rupees only) upon him, which shall be paid within a period of 60 (sixty) days from the date of receipt of this Order.
Sd/-
(CA. RANJEET KUMAR AGARWAL)
PRESIDING OFFICER
Sd/-
(SHRI JIWESH NAN DAN, I.A.S.{RETD.})
GOVERNMENT NOMINEE
Sd/-
(MS. DAKSHITA DAS, I.R.A.S.{RETD.})
GOVERNMENT NOMINEE
Sd/-
(CA. MANGESH P KINARE)
MEMBER
Sd/-
(CA. ABHAY CHHAJED)
MEMBER
