In the Matter of CA. Sachin Suresh Agrawal, Mumbai (ICAI Disciplinary Committee)
Part-Time COP Does Not Permit Tax Audit: Signing Section 44AB Reports Amounts to Professional Misconduct
Summary: The Disciplinary Committee of the Institute of Chartered Accountants of India (ICAI), in its findings dated 11 February 2026 and punishment order dated 11 September 2026, held CA. Sachin Suresh Agrawal, Mumbai, guilty of professional misconduct under Item (1) of Part II of the Second Schedule to the Chartered Accountants Act, 1949. The proceedings arose from information supplied by the Central Board of Direct Taxes concerning tax audit reports for FY 2010-11. Three reports relating to M/s. Prashant Construction, M/s. Star Construction and M/s. SM Collection had been filed against the respondent’s membership number despite his holding only a Part-Time Certificate of Practice (COP). The central issue was whether he had undertaken statutory attest assignments without the requisite professional eligibility.
Background of the Proceedings
The disciplinary proceedings arose from information supplied by the Central Board of Direct Taxes to ICAI concerning tax audit reports for FY 2010-11. While examining that information, ICAI identified instances involving incorrect membership particulars and reports attributed to members whose professional status required verification.
In the present case, three tax audit reports under section 44AB of the Income-tax Act, 1961 were recorded against the membership number of CA. Sachin Suresh Agrawal, who held only a Part-Time Certificate of Practice.
The reports concerned M/s. Prashant Construction, M/s. Star Construction and M/s. SM Collection. The question before the Committee was whether the respondent had undertaken these assignments despite being ineligible to perform attest functions.
Certificate of Practice and Authority to Attest Are Distinct
The Committee referred to section 6(1) of the Chartered Accountants Act, 1949, which requires a member to obtain a Certificate of Practice before practising.
However, possession of a COP did not, by itself, answer whether the member could undertake a statutory audit. The Committee also relied on the Council’s decision at its 241st meeting in March 2004, effective from 1 April 2005, restricting members in part-time practice from performing attest functions.
The findings recorded that the Council’s clarification covered services relating to audit, review, certification, agreed-upon procedures and compilation within the specified professional framework.
Consequently, the Committee held that certification of a tax audit report is a statutory audit function permitted only to members holding a Full-Time COP. A Part-Time COP could not authorise the respondent to undertake the disputed tax audits.
Earlier Written Response Became Crucial Evidence
ICAI’s Secretary had written to the respondent on 7 February 2012, specifically referring to CBDT information concerning FY 2010-11 and tax audits uploaded against his membership number.
The communication did not automatically presume that the member had conducted the audits. It expressly recognised the possibility of misuse of his name or membership number, or an error in the recorded COP status, and sought clarification.
In his reply dated 14 February 2012, the respondent acknowledged that the filings relating to the three named concerns had been made under his name. The Committee treated this response, including the request to pardon his ignorance, as an admission supporting the charge.
This contemporaneous correspondence became central to the subsequent disciplinary finding.
Defence That the Audits Related to Earlier Years Rejected
During the disciplinary hearing, the respondent denied undertaking or certifying tax audits for FY 2010-11. He submitted that he was employed during that period and had not carried out professional assignments.
According to his explanation, he had obtained his COP in 2002 and conducted certain audits during 2002-2004. He claimed that, when replying to the 2012 communication, he had assumed that ICAI was referring to those earlier assignments.
The Committee rejected this explanation because the Secretary’s letter expressly identified FY 2010-11 in its opening paragraph. It considered the relevant year unambiguous and held that the respondent’s later interpretation could not satisfactorily explain his earlier acknowledgment.
Accordingly, the Committee concluded that the respondent had undertaken the three tax audits while holding only a Part-Time COP.
Misconduct Concerned Eligibility to Undertake the Assignment
The respondent was held guilty under Item (1) of Part II of the Second Schedule to the Chartered Accountants Act, 1949. This provision addresses contravention of the Act, regulations or Council guidelines by a member, whether in practice or otherwise.
The misconduct finding concerned lack of authority to perform the attest function. It did not depend on establishing that the audit conclusions were incorrect, that the clients suffered a loss or that the respondent had failed to verify a particular account balance.
Thus, professional eligibility was itself a substantive requirement governing acceptance and certification of the assignments.
Punishment Proceedings and Final Order
After recording its findings, the Committee provided opportunities to make representations on punishment. An adjournment requested for the July 2026 hearing was granted.
However, the respondent subsequently neither appeared nor filed a written representation despite service of notices. Invoking the proviso to Rule 19(1), the Committee proceeded on the available record, treating him as having nothing further to represent at that stage.
By its order dated 11 September 2026, the Committee reprimanded the respondent and imposed a fine of ₹25,000, payable within sixty days of receipt of the order. No removal from membership was ordered.
Author’s Comments
A membership number establishes professional identity; it does not establish eligibility to sign every professional report. Before accepting an attest assignment, a member must ensure that the COP status permits the function concerned.
The order also demonstrates the importance of responding carefully to regulatory correspondence. An acknowledgment made years earlier can become decisive evidence when a later denial conflicts with the period expressly identified in the original communication.
Equally, the initial appearance of a report against a membership number should be distinguished from proof that the member issued it. ICAI’s original letter recognised possible misuse and recording errors. In this case, the Committee relied materially on the respondent’s own contemporaneous response.
The practical lesson is straightforward: verify professional eligibility before accepting the audit, and verify the facts before answering a regulatory notice.
FULL TEXT OF THE ORIGINAL DISCIPLINARY ORDER AND FINDINGS
