The Institute of Chartered Accountants of India’s Disciplinary Committee (Bench-II) has found CA. (Ms.) Himani guilty of professional and other misconduct. The complaint, filed by the Directorate General of GST Intelligence, Jaipur, alleged her involvement in the registration of 81 firms implicated in a fraud valued at over Rs. 118 crore. While CA. Himani argued she was only a consultant and unaware of any malafide intentions or fraudulent use of documents, and that criminal proceedings on the same charges were pending, the Committee determined these arguments were not sustainable. The Committee concluded that she actively participated in creating 27 bogus firms and filing returns for 10 of them, failing to adhere to KYC norms and exercising due diligence. Evidence indicated her access to and misuse of documents for unethical professional work, leading to the conclusion that she brought disrepute to the profession. Consequently, the Committee ordered the removal of her name from the Register of Members for one year.
THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA
(Set up by an Act of Parliament)
PRG/293/18-DD/101/2019-DC/1475/2021
[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 JPROCEDURE OF INVESTIGATIONS OF PROFESSIONAL AND OTHER MISCONDUCT AND CONDUCT OF CASES) RULES, 2007
In the matter of:
Mr. Rajendra Kumar
Additional Director General
Complainant
Versus
CA. (Ms.) Himani
…..Respondent
Members Present:-
CA. Ranjeet Kumar Agarwal, Presiding Officer (in person)
Mrs. Rani S. Nair, IRS (Retd.), Government Nominee (through VC)
Shri Arun Kumar, lAS (Retd.), Government Nominee (through VC)
CA. Sanjay Kumar Agarwal, Member (in person)
CA. Cotha S Srinivas, Member (in person)
Date of Hearing : 28th March, 2024
Date of Order : 17th June, 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 (Ms.) Himani, Jaipur (hereinafter referred to as the ‘Respondent’) is GUILTY of Professional and Other Misconduct falling within the meaning of Item (2) of Part IV of First Schedule and 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 216 (3) of the Chartered Accountants (Amendment) Act, 2006 was contemplated against the Respondent and a communication was addressed to her thereby granting 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 the hearing held on 28th March 2024, the Respondent was present in person before it and made her verbal representation on the Findings of the Disciplinary Committee, inter-alia, stating that she was neither involved directly nor indirectly. She had not done anything with mala-fide intention and had not received any monetary benefit directly, indirectly, or circumstantially. She again submitted a notarized Affidavit dated 17th January 2024 bringing on record certain facts which according to her were never brought on record by the GST Department while filing the complaint before the Disciplinary Directorate. The GST Department conducted Search at her home thrice, but they did not find any conclusive evidence against her. Thus, she requested for a lenient view in her case. The Committee also noted that the Respondent in her written representation on the Findings of the Committee, inter-alia, stated as under
(a) The Respondent was not involved in any manner otherwise than as a Consultant in the process of registration of the alleged firms under GST Mt, 2017 and charged the clients for professional fees only.
(b) Any Consultant who is involved only to the extent of registration and filling of return on the basis of data supplied by the management of the concern cannot have any information on the intended use of such firm by the management unless the Consultant is also part of the management which is not the case here, since no such positive evidence have been produced by the Department so far.
(c) As far as Knowledge of the Respondent is concerned, a Chartered Accountant in practice is free to let his/her property on rent to anyone without any prior approval of the Institute.
(d) There is no such evidence gathered by the Complainant Department that the Respondent has actually done any misuse of any of the ids/documents to be believed in her possession being a Chartered Accountant “OTHERWISE THAN STATEMENTS” of some persons.
(e) No conclusion should be drawn merely on the basis of statements of anyone including the Respondent unless the same is supported with corroborative evidence obtained by following legal process.
(f) The role of the Respondent was limited to filling of periodical return under GST Law on the basis of data supplied by the management of the said concerns and the Form is verified at GST Portal by the management of the concern. Therefore by no stretch of imagination, it could be said that the Respondent has caused any loss to the Government Exchequer, since the Respondent has no capacity or control to pass on the credit of Input Tax credit(ITC) to any person which is ultimately the responsibility of the Department to allow/disallow credit of Input Tax credit(ITC) to any person.
(g) The Respondent has already retracted her Statement dated 17.06.2020 on 22.06.2020. The Respondent prepared the retraction on the expert advice of her Lawyer. The form and content are not much relevant rather the fact that the Respondent intended to retract her Statement. The Department or Hon’ble Trial Court has not objected to the retraction of the Respondent. ‘
(h) The case of the Respondent should be viewed from a lenient angle since, this is the first complaint of her career as a Chartered Accountant. The Respondent has already suffered imprisonment of 1.5 Years and also at the time when she had a small baby. The Respondent has already suffered huge financial loss in the form of legal expenses.
(i) The Respondent is still suffering from the mental trauma caused due to this case. The matter of Complaint in this case is also pending at the Hon’ble Trial Court for adjudication and till date no positive/negative decision has been pronounced by the Hon’ble Court.
4. The Committee considered the reasoning as contained in the Findings holding the Respondent Guilty of Professional and Other Misconduct vis-a-vis written and verbal representation of the Respondent.
4.1 On consideration of the representation of the Respondent, as regards the plea of the Respondent that the Criminal proceedings on the same charges are pending, the Committee viewed that Criminal proceedings are distinct from Disciplinary proceedings. The proceedings before the Disciplinary Committee are quasi-judicial in nature where the misconduct can be proved by preponderance of probabilities having regard to the conduct of the Respondent which is distinct from Criminal proceedings where the misconduct has to be proved beyond reasonable doubt. While coming to the said view, the Committee took into consideration the decision of the Hon’ble Supreme Court in the matter of “Ajit Kumar Nag —vs- General Manager (PJ) Indian Oil Corporation Limited-AIR 2005 SC 4217 wherein the Hon’ble Apex Court held as under:-
“The degree of proof which is necessary to order a conviction is different from the degree of proof necessary to record the commission of delinquency. The rules relating to appreciation of evidence in the two proceedings is also not similar. In criminal law, burden of proof is on the prosecution and unless the prosecution is able to prove the guilt of the accused ‘beyond reasonable doubt he cannot be convicted by a Court of law. In a departmental enquiry penalty can be imposed on the delinquent Officer on a finding recorded on the basis of ‘preponderance of probability’.”
4.2 Similarly in the matter of Capt. M Paul Anthony —vs- Bharat Gold Mines Limited – AIR….1999 SC 1416 the Hon’ble Supreme Court held as under: –
“In Departmental proceedings, factors prevailing in the mind of the Disciplinary authority may be many, such as enforcement of discipline of to investigate level of integrity of delinquent or other staff. The standard of proof required in those proceedings is also different from that required in a criminal case. While in Departmental proceedings, the standard of proof is one of preponderance of probabilities, in a criminal case, the Charge has to be proved by the prosecution beyond reasonable doubt.”
Thus, the Committee viewed that the said plea of the Respondent is not sustainable.
4.3 As regard the plea of the Respondent that she had already retracted from her Statement made before the Complainant Department, the Committee was of the view that apart from the Respondent’s own Statement recorded before the Complainant Department, there are other evidences on the basis of which the Respondent has been held guilty by the Committee.
4.4 As regard the other submissions of the Respondent, the Committee was of the view that the same were basically a reiteration of the submissions made by the Respondent during the course of hearing, due cognizance of which has already been taken by the Committee before arriving at its Findings in the instant case.
5. Keeping in view the facts and circumstances of the case, material on record including verbal and written representation on the Findings, the Committee from the list provided by the Complainant Department noted that the Respondent along with Mr. Sandeep Goyal and Mr. Rajesh Arora had registered 81 firms and was involved in the fraud to the tune of Rs. 1,18,10,52,910/-. which were registered at different places i.e., 58 firms were registered in Rajasthan, 9 in Delhi, 1 in Uttar Pradesh, 5 at Assam, 2 at Jammu, 3 in Punjab and 3 in West Bengal. The Committee also noted that out of the said 81 firms, the Respondent had accepted that she had created/registered 27 firms and filed return of 10 firms out of the said 27 firms based on the documents available on record.
5.1 The Committee also noted that the Respondent in her submissions before it submitted that at the time of registration of the said firms, she had no idea that the documents provided by clients were fake and further she had not issued any invoices on the basis of which Input Tax Credit (ITC) was availed fraudulently. However, the documents on record including Statements/ Panchama of different persons clearly establish that the Respondent was actively involved along with Mr. Sandeep Goyal and Mr. Rajesh Arora in registering the above firms, Apart from this, the Respondent had easy access to the documents which was evident froni recovery of her laptop and mobile phone and which she utilized for doing unethical professional work which is not expected from a Chartered Accountant.
5.2 The Committee was of the view that the Respondent as a Chartered Accountant was having knowledge of various laws including the GST and she was well versed with various Sections and provisions relating to GST law. The Committee noted that she was arrested for the charge of creation of bogus firms. The Respondent not only mis-utilized the documents using invoices but also tried to portray another picture In the mind of the Committee as it she did not know anything about the said fraud. Whereas the fact on records proves that she was an active participant in utilizing the Input Tax Credit (ITC) by creating bogus firms and that too on a very large scale and operated from various States.
5.3 The Committee held that the Respondent not only failed to adhere the KYC Norms and/ or Guidelines issued by the ICAI but also failed to exercise due diligence by creating bogus firma not only in the name of her clients but also in the name of her family members.
5.4 The Committee also noted that the Hon’ble Supreme Court vide Order dated 27th January 2020 granted bail to the Respondent in the Criminal case on humanitarian grounds that she was having a child aged three years without commenting on the merits of the case.
5.5 The Committee on the overall examination of facts based on the documents provided by both parties and while examining the role of the Respondent vis-a-vis her professional and/or other misconduct is of the view that. the preponderance of probability cannot be ignored which clearly establish the active involvement of the Respondent in the present matter.
5.6 Thus, the Committee held that the Respondent was duty bound to follow the Professional Ethics encompassing the personal and corporate standards of behavior expected from a Chartered Accountant. But her acts prove that she failed to maintain the high standards of conduct in her Profession and had consequently brought disrepute to the Profession.
5.7 Hence, Professional and Other 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 her in commensurate with her Professional and Other misconduct.
7. Thus, the Committee ordered that the name of CA. (Ms.) Himani, Jaipur be removed from the Register of Members for a period of 01(One) Year.
Sd/-
(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
