The Disciplinary Committee of the Institute of Chartered Accountants of India (ICAI) found CA. Ashok Bhartia guilty of professional misconduct under Item (7) of Part I of the Second Schedule to the Chartered Accountants Act, 1949. The finding stemmed from significant and recurring discrepancies in the reported authorized share capital in a company’s financial statements compared to what was reported to the Registrar of Companies (ROC) for two consecutive financial years (2011-12 and 2012-13). While the Committee found no evidence of a malafide intent or adverse impact on the true and fair view of the financial statements, it determined that the recurring errors indicated a lack of due diligence on the part of the Chartered Accountant. Despite the Respondent’s argument that these were bona fide typographical errors, the Committee held that a professional Chartered Accountant is expected to exercise appropriate scrutiny. Consequently, the Committee ordered that CA. Ashok Bhartia be reprimanded under Section 21B(3)(a) of the Chartered Accountants Act, 1949.
THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA
(Set up by an Act of Parliament)
[DISCIPLINARY COMMITTEE [BENCH-IV (2024-2025)]
[Constituted under Section 218 of the Chartered Accountants Act, 1949]
ORDER UNDER SECTION 218(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/248/2016-DD/189/2017-DC/1552/2022]
In the matter of:
Sh. Vashisht Kumar Goyal……………………… Complainant
Versus
CA. Ashok Bhartia…Respondent
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 (In person)
5. CA. Abhay Chhajed, Member (In person)
DATE OF HEARING : 28th MARCH, 2024
DATE OF ORDER : 16th May, 2024
1. That vide Findings dated 05.02.2024 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 Ashok Bhartia (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 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 28th March 2024.
3. The Committee noted that on the date of hearing on 28th March 2024, the Respondent was present through video conferencing, but due to some technical issue, his voice was not audible. Thereafter, he was connected through mobile phone call, and he stated that he has Submitted the written representation dated 01st March 2024 on the Findings of the Disciplinary Committee, which, inter-alia, are given as under:-
a. That except for one particular error, all other allegations were found as baseless by the Director (Discipline) himself which suggested that the complaint was motivated.
b. There is no impact on true and fair view of the financial statements, and therefore merely because typographical error occurred in two years, the same should not be a basis to hold the Chartered Accountant ‘guilty’ of professional misconduct.
c. In financial year ending on 31.03.2012, he had even corrected the bonafide typographical error manually and filing fees expenditure had been debited in the profit and loss account in both the financial years which show that error was a bonafide typographical error.
d. He relied upon the judgment of Hon’ble Supreme Court in the case of Price Waterhouse Coopers vs. DT reported in 348 ITR 306 wherein Hon’ble Supreme Court has held in para 19 that “even professionals can commit bona-fide inadvertent errors. This can only be defined as human error which we are all prone to make. The caliber and expertise of the assessee has little or nothing to do with the inadvertent error”.
e. The Respondent requested the Committee to drop the proceedings against him.
4, The Committee considered the reasoning as contained in Findings holding the Respondent ‘Guilty’ of Professional Misconduct vis-a-vis written and verbal representation of the Respondent. The Committee noted that the issues/ submissions made by the Respondent as *restated 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 as aforesaid and material On record including written and verbal representation of the Respondent on the Findings, the Committee noted that there was a significant variation in the amount of authorized share capital reported in the Company’s financial statements as against which had been reported by the Company to the ROC. The Committee was of the view that the Complainant did not provide the substantial evidence proving any adverse impact on the true and fair view of the Company’s financial position due to the reporting errors. Consequently, malafide intent on the part of the Respondent was not evident. However, the Committee raised concerns about the occurrence of these discrepancies / variations in the reported authorized share capital for two consecutive financial years.
6. The Committee noted that, as a professional Chartered Accountant, the Respondent was expected to exercise due diligence and scrutinize the relevant Forms filed with the ROC. The Committee was of the view that the recurring discrepancies could not be attributed to inadvertent typographical errors. The Committee held that the Respondent’s failure to detect and rectify discrepancies in the reporting of authorized share capital for two consecutive financial years shows the lack of due diligence exercised by him. Hence, the Professional Misconduct on the part of the Respondent is clearly established as spelt out in the Committee’s Findings dated 05th February 2024, which is to be read in consonance with the instant Order being passed in the case.
7. 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 Misconduct.
8. Thus, the Committee ordered that the Respondent i.e., CA. Ashok Bharti, be REPRIMANDED, under Section 2113(3)(a) of the Chartered Accountants Act,1949.
Sd/-
(CA. RANJEET KUMAR AGARWAL)
PRESIDING OFFICER
Sd/-
(MS. DAKSHITA DAS, I.R.A.S.{RETD.})
GOVERNMENT NOMINEE
Sd/-
(SHRI JIWESH NANDAN, I.A.S. {RETD.})
GOVERNMENT NOMINEE
Sd/-
(CA. MANGESH P KINARE)
MEMBER
Sd/-
(CA. ABHAY CHHAJED)
MEMBER
