Institute of Chartered Accountants of India (ICAI) Disciplinary Committee has found CA. Pawan Kumar Agrawal guilty of professional misconduct. The order, issued on June 26, 2024, by Bench-I (2024-2025), stemmed from a complaint filed by CA. Pawan Kumar Jain. The committee, comprising Presiding Officer CA. Charanjot Singh Nanda, Government Nominee Shri Jugal Kishore Mohapatra, CA. Chandrashekhar Vasant Chitale, and CA. Gyan Chandra Misra, conducted a hearing on April 2, 2024.
CA. Agrawal was found guilty of professional misconduct under three specific items of Part I of the First Schedule to the Chartered Accountants Act, 1949: Item (4), Item (8), and Item (11).
1. Partnership with an Unqualified Person (Item 4, Part I, First Schedule): The committee found that CA. Agrawal entered into a partnership firm, M/s. Trihari Fuels, with his wife. He had created his own Hindu Undivided Family (HUF) and became a partner in this firm, despite holding a full-time Certificate of Practice (COP) as a Chartered Accountant. The ICAI regulations prohibit a member in practice from entering into a partnership with any person other than a Chartered Accountant in practice or certain other prescribed qualified professionals without specific permission. CA. Agrawal’s resignation from the firm effective March 31, 2017, did not negate the misconduct that occurred during his tenure as a partner without ICAI’s permission.
2. Directorship in a Company Without Proper Permission (Item 11, Part I, First Schedule): CA. Agrawal was found to be a Director in M/s Trihari Infrastructure Private Limited, a company incorporated on November 23, 2013, while he simultaneously held his COP. While a member in practice is generally permitted to be a ‘Director Simpliciter’ (non-executive director) without specific permission, any other role, such as Whole-Time Director, Managing Director, or engagement in other businesses, requires prior permission from the Council. CA. Agrawal failed to provide any evidence that he was merely a Director Simpliciter or that he had obtained the necessary general or specific permission from the ICAI Council for his directorship. This disregard for the Chartered Accountants Regulations constituted professional misconduct.
3. Non-Communication with Previous Auditor (Item 8, Part I, First Schedule): The committee noted that CA. Agrawal, before accepting the audit of branches of State Bank of India (SBI), did not communicate in writing with the previous auditors. The Chartered Accountants Act, 1949, read with the Code of Ethics – 2009, mandates written communication with the previous auditor before accepting an audit assignment. While CA. Agrawal claimed to have obtained telephonic concurrence from the previous auditors and even produced letters from them confirming such calls, the ICAI guidelines explicitly state that communication must be in writing. The guidelines provide for conditional acceptance and commencement of work in cases of time shortage after written communication has been sent, but they do not relax the requirement for written communication itself. Therefore, relying solely on telephonic communication was deemed a violation of professional standards.
Based on the established professional misconduct, the Disciplinary Committee imposed a fine of ₹25,000/- (Rupees Twenty-five Thousand only) on CA. Pawan Kumar Agrawal . He is required to pay this fine within 90 days of receiving the order. Should he fail to pay the fine within the stipulated period, his name will be removed from the Register of Members for an additional 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/421/2018/DD/46/2019/DC/1534/2022]
In the matter of: –
CA. Pawan Kumar Jain….Complainant
-Vs-
CA. Pawan Kumar Agrawal,
M/s. Agrawal Jain and Bardia,
Chartered Accountants….Respondent
MEMBERS PRESENT: –
CA. CharanJot Singh Nanda, Presiding 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 1807) of the Chartered Accountants (Procedure of Investigations of Professional and Other Misconduct and Conduct of Cases) Rules, 2007, the Disciplinary Committee noted that CA. Pawan Kumar Agrawal (hereinafter referred to as the Respondent”) was held GUILTY of professional misconduct falling within the meaning of Item (4) (8 & (11) of Part I of First 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 2ndApril 2024.
3. The Committee noted that on the date of the hearing held on 2ndApril 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 stated that he has already given his written submission and requested bench to be lenient on him.
5. The Committee considered the reasoning as contained in the findings holding the Respondent Guilty of professional misconduct vis-a-vis verbal/ written 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, the Committee is of the view that professional misconduct on the part of the Respondent is established. Accordingly, the Committee ordered that a fine of Rs. 25,000/- (Rupees Twenty-five Thousand only) be imposed upon the Respondent i.e. CA. Pawan Kumar Agrawal 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/-
(SHRI JUGAL KISHORE
MOHAPATARA), I.A.S. (RETD.),
(GOVERNMENT NOMINEE)
Sd/-
(CA. CHANDRASHEKHAR VASANT
CHITALE)
(MEMBER)
Sd/-
(CA. GYAN CHANDRA MISRA)
(MEMBER)
DATE: 26.06.2024
PLACE: New Delhi
