The Institute of Chartered Accountants of India’s Disciplinary Committee (Bench-II) has penalized CA. Jigneshkumar Jaysukhlal Korat for professional misconduct. The complaint, filed by Shri Piyush J. Bhat of the State Bank of India, alleged that CA. Korat certified fabricated financial documents for M/s New Infra Mobile Care. The Committee found him guilty of professional and other misconduct under the Chartered Accountants Act, 1949, specifically for certifying a Tax Audit Report and Balance Sheet with a material difference of Rs. 1348.56 lacs in sales figures compared to Income Tax Department records. Additionally, he certified an inflow of fresh capital without sufficient supporting documentation, seemingly to fulfill a loan pre-disbursal condition. Despite multiple opportunities, CA. Korat failed to appear before the Committee or provide a representation. Consequently, the Committee ordered the removal of his name from the Register of Members for three months and imposed a fine of Rs. 1,00,000
THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA
(Set up by an Act of Parliament)
[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
JPR/8412018-DD/119/2018/DC/1373/20201
In the matter of:
Shri Piyush J. Bhat,
Assistant General Manager (SAO-II)…Complainant
Versus
CA. Jigneshkumar Jaysukhlal Korat
M/s Jignesh Korat & Associates.. 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. Jignesh Kumar Jaysukhlal Korat (hereinafter referred to as the ‘Respondent’) is GUILTY of Professional and Other Misconduct falling within the meaning of Item (7) of. Part I of the Second Schedule and Item (2) of Part IV of the 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 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 the hearing held on 10th April 2024, neither the Respondent was present before it nor was there any intimation as regard his non-appearance. The Committee also noted that the case was earlier fixed on 19th March 2024 for award of punishment and had been adjourned due to paucity of time. Thereafter, the case was fixed on 28th March 2024 and had been adjourned on account of medical illness of the Respondent so as to provide a final opportunity to the Respondent to make his representation before it. The Committee also noted that the Notice for hearing sent at the address available in the member records of ICAI had been received back undelivered. The Notice for the hearing had also been sent to the email address available in the member records of ICAI. As per email delivery intimation for the communication of the date of hearing, the delivery of the said email had been completed. The Committee further noted from the member records of ICAI that ‘KYM’ Form of the Respondent had been submitted and the same was found bk’.
3.1 Thus, the Committee was of the view that all possible efforts (speed post and email) have been made to ensure the delivery of the communication for hearing upon the Respondent, but he chose not to represent it before 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.
4. The Committee considered the reasoning as contained in the Findings holding the Respondent Guilty of Professional and Other Misconduct
5. Keeping in view the facts as well as circumstances of the case and material on record, with respect to the first charge, the Committee noted that cash credit limit was sanctioned in favour of M/s New Infra Mobile Care on the basis of a fabricated Tax Audit Report and a fabricated Balance Sheet as on 31st March 2014 certified by the Respondent. This Balance Sheet did not match with the Balance Sheet available on record with the Income Tax Department. The Committee noted that as per the Income Tax website, sales/ turnover of M/s New Infra Mobile Care (as prepared by the Respondent) was Rs. 729.01 lacs, whereas, according to the Tax Audit report submitted to the bank, the same was Rs 2077.57 lacs. There was a material difference of Rs 1348.56 lacs between the actual figure of sales. The Committee noted that there was a material difference of Rs.1348.56 lacs between the actual figure of sales. The Committee noted that the Respondent failed to bring on record any evidence that he had no knowledge of the submission of the fabricated tax audit report with the bank. The Committee noted that the Respondent had not filed any FIR against the client in this regard which creates doubt about his professional conduct. The Committee on perusal of the Certificate dated 19th December 2014 submitted by the Respondent to the bank noted that the stamp of Respondent’s firm and his initials on the document is the same when compared with the balance sheet of M/s New Infra Mobile Care submitted with the Bank.
5.1 With respect to the second charge, the Committee on perusal of the Certificate issued by the Respondent noted that the Respondent certified that M/s New Infra Mobile Care brought in fresh capital and quasi capital of Rs. 1,47,23,100/- as on date i.e. 19th December 2014 from various parties, which was certified based on books of accounts, other records, provisional records and statements produced before the Respondent for verification. The Committee noted that the Respondent had only produced ledger accounts of respective parties from whom M/s New Infra Mobile Care received the funds which cannot be treated as an exhaustive document to conclude inflow of fresh capital. The Committee noted that the date of sanctioning of the loan is 9th December 2014. The date of the Certificate is 19th December 2014, and the chronology of dates clearly establishes that the certificate is given to fulfill the pre-disbursal condition of infusion of fresh capital. Also, the Respondent did not bring on record any evidence to prove inflow of fresh capital.
5.2 Hence, professional and other misconduct on the part of the Respondent is clearly established as spelt out in the Committee’s Findings dated 70 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 and other misconduct.
7. Thus, the Committee ordered that the name of CA. Jigneshkumar Jaysukhlal Korat be removed from the Register of Members for a period of 03 (Three) Months and also a Fine of Rs. 1,00,000/- (Rupees One lakh only) be imposed upon him payable within a period of 60 days from the date of receipt of the Order.
Sd/–
(CA. RANJEET KUMAR AGARWAL)
PRESIDING OFFICER
Sd/-
(MRS. RANI S. NAIR, IRS (RETD.))
GOVERNMENT NOMINEE
Sd/–
(SHRI ARUN KUMAR, IAS (RETD.))
GOVERNMENT NOMINEE
Sd/-
(CA. SANJAY KUMAR AGARWAL)
MEMBER
Sd/-
(CA. COTHA S SRINIVAS)
MEMBER
