Code of Ethics Case Law

Volume-III
[CASE LAWS REFERENCER]
CODE OF ETHICS
(Vol.- III)
CODE OF ETHICS
(VOLUME – III)
Issued by
The Institute of Chartered Accountants of India
(Set up by an Act of Parliament)
New Delhi
All rights reserved. No part of this publication may be reproduced, stored in a
retrieval system, or transmitted, in any form, or by any means, electronic,
mechanical, photocopying, recording, or otherwise, without prior permission, in
writing, from the publisher.
©THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA
Price : Rs. 210
Twelfth edition : March, 2020
ISBN :
Published by : The Publication Department on behalf of Shri

Rakesh Sehgal, Acting Secretary, The Institute
of Chartered Accountants of India, Indraprastha
Marg, New Delhi -110002
Printed by :
FOREWORD
Professional Ethics is a very specialized subject and it is essential that suitable

guidance is provided to the Members so that they are duly aware about the
requirements applicable to them and they can address the expectations of all
Stakeholders. The Challenge to keep the Members updated is very big in this
fast changing environment. Despite leaps in technological advances, the place of
a well researched book in knowledge dissemination is privileged.
The disciplinary case laws relating to the ethical issues were hitherto appearing
in the commentary to various Sections and Clauses of two Schedules in the
Code of Ethics. This is for the First time that the Cases have been separated
from the commentary and issued separately as Case Laws Referencer. I
compliment the Ethical Standards Board of ICAI for this initiative. The Members
will benefit enormously from this initiative as now they can have separate
reference to the disciplinary case laws under respective Sections and Clauses.
The Case Laws Referencer brings out clearly the Disciplinary cases that a
Member in practice and service should have in mind while performing their
duties. There is improved guidance on number of issues as compared to earlier
editions, e.g. under “Other Misconduct” lot of new instances have been
incorporated and updated. It will be a kind of ready reckoner for all the Members.
The Case Laws Referencer which will be Code of Ethics (Volume-III) along with
the revised Volumes I and II will act as complete set of guidance on Professional
Ethics for the Members.
I congratulate the Chairman, Ethical Standards Board CA. Ranjeet Kumar
Agarwal, and Vice Chairperson, Ethical Standards Board CA Kemisha Soni and
the entire team of Ethical Standards Board for bringing out this useful publication
for the benefit of Members.
It is really hoped that this Referencer will provide useful guidance to the
Members.
New Delhi CA. Prafulla P. Chhajed

7th February, 2020 President
PREFACE
The Institute brought the First Edition of the Code of Ethics for Members, then
‘Code of Conduct’ in November, 1963. The said edition included not only the
provisions of the Chartered Accountants Act, 1949 (Act), but also the
interpretation of the Council, various High Courts and the Supreme Court
pronouncements. It may be noted that the Act itself, along with the two
Schedules to the Act set out norms for permissible activities for the Members of
the profession.
Section 22 of the Act defines and describes what constitutes `Professional
Misconduct’.The two Schedules (Schedule I & II) describe in detail the various
acts and omissions entailing professional/other misconduct, which are dealt with
punishment in accordance with Chapter-V of the Act. These Schedules are
distinguished on the basis of gravity of misconduct and quantum of punishment
for the misconduct. The Second Schedule pertains to comparably more grave
misconduct and higher punishment compared to First Schedule. The Disciplinary
mechanism of the Institute is provided in the Act, and thus with the sanction of
law behind, it has effectively been followed since the enactment of the Act
without any difficulty.
Since this year the Code of Ethics has been aligned with the International Ethical
Standards Board for Accountants (IESBA) after a gap of ten long years and
volume of Case Laws are increasing every year, we decided to separate the part
pertaining to Case Laws, and bring a new book titled Code on Ethics (Volume –
III) - Case Laws Referencer.
The highlights of this Case Laws Referencer are: -
 It has incorporated all the decided/published case laws of both the
Schedule till 1st April, 2019.
 It is very handy for the easy understanding of the Members using it.
 It is being issued in E-book form also with advance search feature.
 Members would be able to search the issue by clicking on the heading
and all decided case laws on those issues can be referred instantly.
 All the decided case laws have been segregated issue wise in the Index.
 All the Case Laws have been numbered for easy rememberance.
We are hopeful that this publication will act as a complementary guide to the
Members to help them acting in compliance with the provisions of Code of
Ethics.
We compliment CA. Prafulla P. Chhajed, President and CA. Atul Kumar Gupta,
Vice-President of ICAI, Shri Ashish Swaroop, Secretary of ESB and all Council
Colleagues, Co-opted Members and Special invitees for their co-operation and
support in bringing out this Referencer.
7th February, 2020 CA. Ranjeet Kumar Agarwal

New Delhi Chairman, Ethical Standards Board
CA Kemisha Soni
Vice-Chairperson, Ethical Standards Board
CONTENTS
THE CHARTERED ACCOUNTANTS

ACT, 1949
Section 22: Conduct of the Members in any other 1-13
circumstances:
False Certificate issued by Member 1
Retention of Books of A/c.s etc. without permission 1
Paid Assist. taking no steps to check Cash balance 1
Fabrication or window-dressing of facts and figures 2
Coercion in securing Fees 2
Misrepresentation of experience 3
Misuse of Services of Audit Assistant 3
Misappropriation of Institute’s Fund 4
Issuing certificate without verification 4
Possession of Government Records by a Member 5
Use of Abusive Language 5
Bogus Bills 6
Fake certificate of Incorporation of Company 6
Advt. with malafide intention to Malign 7
Member in employment having COP 7
Authoring Book on Black Money 7
Fabrication/Forgery of challans 9
Issuing false certificates for Money 10
Demand of excess Money and failure to refund 10
Issuing false certificate for disbursement of Loan 11
Failure to repay the Loan /Overdraft 11
Not completing work of Audit on time 12
Failure to appear before Tax Authorities 12
Violation of PCAOB Rules 13
Section 24: Penalty for falsely claiming to be a Member 14

etc.:
Failure to pay the fine, sentenced to imprisonment 14
Section 27: Maintenance of Branch Offices 15
Opening of Br. Office without Member in Charge 15
THE FIRST SCHEDULE
PART- I Professional Misconduct in relation
to Chartered Accountants in practice
Clause (1): Practice by non-chartered accountant: 16
Clause (2): Shares fees with non-Member: 17
Agreement to share the profits 17
Sharing Audit Fees as “Allowance” 17
Clause (3): Accepts fees from non-Member: 18
Clause (4): Enters into partnership with non-Member: 19-20
Entering in Partnership in Business Firms 19
Managing Partner with two partnership Firms 19
Partnership with non-Member and Client 20
Clause (5): Secures professional business through non- 21
employee/non-partner or unlawful means:
Writing letters for securing work 21
Clause (6): Solicits professional work: 22-33
Printed card for solicitation of work 22
Issuing letters of Authority 22
Application offering himself as Auditor 22
Roving Enquiries 23
Approaching through Third Person for Audit 25
Assistant of Member writing request for work 25
Writing letters of Change of Address to non-clients 25
Advt. of Congratulations for opening of Office 26
Highlighting Professional Attainments 27
Advt. seeking work from other professionals 27
Highlighting expertise in sales matters 28
Introducing as pioneer in liasoning with Govt. Dept. 28
Personal visit for securing appointment as Auditor 28
Letter for empanelment with a recommendation 28
Advt. mentioning administrative ability etc. 29
Letter with details of services & fees charged 29
Letter to Co-op Society with request to contact m 30
Letter to shareholder for appointment as Auditor 30
Details of services & books written on IT raid etc. 31
Publication of details of Member in Souvenir 32
Advertisement in Newspaper 32
Approached Chairman for Audit of Institution 33
Using Signboard on Poles and Shutters of shops 33
Clause (7): Advertises professional attainment: 34-38
Using designations other than CA 34
Advertising professional attainments 35
Offering concessions along with services 36
Letter giving impression as if sent to many org. 36
Advertisement of Services 36
Representation as agent of LIC Housing Fin. Ltd. 37
Use of Logo 38
Propagating services through SMS 38
Clause (8): Fails to communicate with outgoing auditor: 39-62
Failed to communicate unintentionally 39
Reasonable time not given for reply 39
Sent communication after commencement of audit 40
Commenced audit in five days without comm. 40
Registered post without Acknowledgement 40
Communication under Certificate of Posting 41
Communication vide Ordinary Post 43
Communication applicable to Govt. agencies also 44
Non-Communication in case of Tax Audit 44
Accepting audit without communication in writing 45
Non-Comm. of Audit Report signed later 46
Non-Comm. & non-compliance of the Co. Act 47
Non-Comm. in case of Audit of Army Canteen 48
Non-Comm. and non-acceptance of letters 48
Non-Comm. in case of removal of Previous Auditor 49
Non-Comm. despite repeated follow ups 52
Where removal not informed to the Prev. Auditor 53
Communication made after signing the B/S 53
Non-Comm. on the pretext of completing work 55
Communication sent through some Other Mode 55
Pending undisputed Audit Fees of Previous Auditor 56
Partner accepting the work in individual capacity 59
Non-Comm. in case of Audit of a Private Bank 60
Collusion with the client in irregularities 60
Giving different opinion for same set of transaction 60
Communication through Courier 61
Acknowledgement Proof not preserved 61
Personal visit not material as a Proof 62
Clause (9): Non compliance of Section 225 of the 63-72
Companies Act, 1956 (or Section 140 of the
Companies Act, 2013):
Failure to ascertain the requirements of Co. Act 63
Clause (10): Charging fees based on 73
percentage/contingency:
Clause (11): Engages in any other occupation: 74-94
Engaged in business 74
Seeking permission subsequent to engagement 75
In employment without permission of Council 76
Practicing CA as Karta of HUF 81
Cl. (4) be read with authority to Council in Cl. (11) 82
Reasonableness of restriction under Clause (11) 83
Working with Non-CA Firm without permission 83
Involvement in share business /transfers 84
Practicing CA involved as LIC Agent 86
Holding substantial interest in a Company 87
Looking after general administration 87
Consultancy services applied for but not approved 87
Working as MD/WTD/Director 88
Engaged as Lecturer without permission of Council 92
Firm and Company operating from same premises 92
Working as Recovery Agent without permission 93
Business relationship with the Auditee 93
Clause (12): Allows non-Member/non-Partner to sign 95
documents on his behalf:
PART-II Professional Misconduct in Relation

to Members of the Institute in Service
Clause (1): Shares his emoluments with others: 96
Clause (2): Accepts commission or gratification from a 97
lawyer etc. engaged by the employee:
PART-III Professional Misconduct in Relation

to Members of the Institute generally
Clause (1): Acts falsely as FCA: 98
Clause (2): Does not supply information to the Institute 99
and its other functionaries:
Not supplying information sought by the Institute 99

Clause (3): Gives false information under Clause (6) and 100
(7) of the First Schedule:
PART-IV Other Misconduct of Members in

General
Clause (1): Becomes guilty of any offence punishable with 101
imprisonment for less than 6 months:
Clause (2): Brings disrepute to the profession/Institute as 102-117
a result of his action:
Floating Co.s/Firms for availing credit limits 102
Nexus with Chairman of the Company 102
Enaging in business of Ex -Client 103
Signing Balance Sheets being subject to Audit 103
Inaccurate reporting and hiding material facts 103
Endorsing signature of a dead Person 104
Wrongful use of Prop./Partnership of a Firm 104
Continued to practice after removal of Name 105
Signing documents after resignation from Firm 105
Procured Audits in Firm name without knowledge 106
Submission of wrong Tax Return 106
Taking Bribe from Bank Customers 106
Submission of wrong info with the ROC 107
Accepting bribe in respect of penalty matter 107
Middleman for arranging accommodation entries 108
Non-return of cheques held as Escrow Agent 108
Censuring order by PCOAB 109
Wrongfully obtaining the Service Charges 109
Wrongful refusal to work, change of password etc. 110
Dealing in Conversion of Black Money 110
Circulation of mass emails for Prof. Services 111
Creating false documents to evande Tax 111
Seeking Bribe from other Chartered Accountants 112
Cheating and Ransom 112
Failure to refund the amount for the flat 113
Prepared two Balance Sheets from the same Data 113
Non-verification of details & tampering of doc. 114
Director Information without Board Resolution 114
Preparation and certification of fake documents 115
Manipulation of Financial Statements etc. 116
THE SECOND SCHEDULE
PART-I Professional Misconduct in relation
to Chartered Accountants in Practice
Clause (1): Discloses information acquired without client’s 118-119
consent:
Clause (2): Certifies/submits report without examining the 120-122
related records:
False Certificate/Due Diligence 120
Clause (3): Permits to use name for vouching the accuracy 123
of future contingent earnings
Clause (4): Opines on Financial Statement where 124-126
substantial interest involved:
Lecturer conducting the Audit 124
Director in Company also its Auditor 124
Tax Audit & maintenance of Acct. simultaneously 125
Clause (5): Fails to disclose any material fact in Financial 127-134
Statement:
Failed to disclose non-creation of a Sinking Fund 127
False Certification of circulation of Newspaper 127
Failure of disclosure of irregularities in Audit 127
Failure to bring attention to Cash Transaction 128
Concealing known Material Facts 128
Clause (6): Fails to report a known material misstatement 135-141
appearing in Financial Statement:
Did not Disclose Material Facts known to him 135
Heavy Cash Transactions not reported 135
Accountant Cum Auditor and improper Audit 136
Incorrect Figure of Share Capital 136
Improper Appointment not disclosed 137
False Certification in connivance with Management 138
Share Capital received in Cash not reported 139
Contingent Liabilities not Reported 140
Clause (7): Perform professional duties without due 142-176
diligence/grossly negligent:
Furnishing wrong Certificates 142
Failure to indicate the mode of Valuation 143
Non-verification of Cash Balance 143
Failure to Report Important Information 143
Opening and Closing Stock not tallied 144
Failure to point out discrepancies 144
Discrepancy in Concurrent Auditor’s Report 146
NBFC Auditor did not report Non-Compliances 146
Wrong reporting about Stock 147
Wrong Information about Pricing 147
Dependency on Staff/Article Assistant 148
Failure to check the Bank Balances 148
Gross Negligence & failure to obtain sufficient Inf. 148
Delay in Completion of Audit 149
Failure to point out irregularities 150
Auditor taking active part in Management 152
Disbursed Loan on Proforma B/S Certified by CA 152
Material and Substantial Amount wrongly reported 152
NBFC Co. Registration not verified by Auditor 155
Stock were reported without exam.by Auditor 156
Certificates issued not based on Audited FS 156
Auditor not reporting as per RBI Guidelines 157
Certified Two Sets of Balance Sheet 157
Not attended Income Tax Proceedings 159
Manipulations in Audit Report 160
Wrong Reporting in Audit Report 161
Audit not done as per GAAP/AS 162
Original B/S had major differences with Prov. B/S 164
Revision of Audit report without due procedure 164
Failure to obtain sufficient information for Audit 166
Failed to disclose of Applicable Standards 166
Certifying Fake/Forged Financial Statements etc. 168
Forgery in Signature 173
False Statement of Current Account 174
Handed over password of Dig.Signature of Director 175
Not supplying requisite information timely to RBI 175
Clause (8): Fails to obtain sufficient information for 177-185
expressing an opinion:
Relying on Int. Auditor Report without diligence 177
Issued Presumptive Certificate without Disclaimer 178
False Certification without Due Diligence 178
Failed to detect Financial Leakages 179
Not Disclosing relevant Fact in FS 180
Non-Verification of Huge Cash Balances 183
Unq. Report despite non-compliances of AS/CARO 183
Non Reporting on misuse of Bank Account 185
Clause (9): Fails to invite attention to any material 186-188
departure from the generally accepted
procedure of audit:
Not adopted sample checking 186
Non Reporting as per GAAP 186
Clause (10): Keeps client’s money without opening separate 189-191
bank account:
What constitutes Clients’ Money 189
Not keeping of client’s Money in separate Bank A/c 189
PART-II Professional Misconduct of Members
of the Institute generally
Clause (1): Contravenes any of the provisions of the 192-204
Act/Regulations & Guidelines issued by the
Council:
Services of Article Assistants / Stipend 192
Failure to pay Stipend 197
Signed the FS without Certificate of Practice 198
Wrong Attestation for Undue Advantage 199
Accepted appointment in contra. of Guidelines 200
Description as CA and Invest.Consultant/Advisor 200
Audit vis-à-vis Indebtedness 201
Audit Limit Exceeded 202
Auditor while engaged in Business 203
Clause (2): Discloses employer’s information without 205
permission
Clause (3): Provides false information to the Institute and 206-211
its different authorities:
Supplying Wrong Information to the Institute 206
Wrong Information by an elected member 207
Conflict while acting as Observer in CA Exam. 208
CA being Prop./ Director / Manager in Bus. Firm 208
Clause (4): Defalcates/embezzles money received in 212
professional capacity:
PART-III Other Misconduct in relation to Members of the 213
Institute generally
Becomes guilty of any offence punishable with
imprisonment for more than six months, either in
civil or criminal case.
S.22. PROFESSIONAL OR OTHER MISCONDUCT
S 22 For the purposes of this Act, the expression “Professional or Other

Misconduct” shall be deemed to include any act or omission
provided in any of the Schedules, but nothing in this section shall
be construed to limit or abridge in any way the power conferred or
duty cast on the Director (Discipline) under sub-section (1) of
Section 21 to enquire into conduct of any member of the Institute
under any other circumstances.
False Certificate issued by Member
S 22.1(1) Where a Chartered Accountant admitted before the Examination
Committee that he had issued a certificate to a person that he
worked with him knowing it to be false.
Held, he was guilty of other misconduct.
(K.C. Jain Satyavadi in Re:- Page 98 of Vol. II of the Disciplinary
Cases and pages 221-222 of December, 1955 issue of the
Institute’s Journal - Judgement delivered on 7 th November, 1955).
Retention of Books of Accounts & documents without Client
Permission
S 22.1(2) Where a Chartered Accountant retained the books of account and
documents and failed to hand them over to the clients regardless
of their repeated requests.
Held, he was guilty of “other misconduct”.
(Jamnadas Harakchand and Others vs. P.C. Parekh - Page 492 of
Vol. IV of the Disciplinary Cases and pages 26-44 of July, 1967
issue of the Institute’s Journal - Judgement delivered on 12 th
January, 1967).
Paid Assistant taking no steps to check Cash Balance
S 22.1(3) Where a paid assistant on whom the employer had implicit
reliance took absolutely no steps whatsoever to check the cash
balance facilitating and resulting in serious defalcations. Though
no doubt he did pass on some information as to what he was
doing to his employer he did not mention any fact from which the
1
CASE LAWS REFERENCER
employer could have known that he had been so grossly

negligent.
Held, he was guilty of “other misconduct” as envisaged in Section
21 of the Act.
(D.B. Parelkar in Re:- Page 805 of Vol. IV of the Disciplinary
Cases and pages 502-504 of March, 1969 issue of the Institute’s
Journal - Judgement delivered on 27 th November, 1968).
Fabrication or Window-Dressing of facts and figures
S 22.1(4) Where a Chartered Accountant filed two separate returns of
income in his individual capacity viz. one for the income from the
profession as Chartered Accountant for and from the A.Y. 1965-66
to 1986-87 and another for the income from LIC Commission for
and from A.Y. 1967-68 to 1986-1987. Thus, the Respondent
evaded substantial income-tax and was liable for punishment. The
Respondent was also guilty of committing fraud by giving two
separate names to evade payment of the proper amount of
income-tax.
Held that the Respondent was guilty of “Other misconduct”.
(The Chief Commissioner (Administration) & Commissioner of
Income - Tax, Karnataka-I, Bangalore vs. H. Mohanlal Giriya-
Page 137 Vol. VIII-1-21(6) of Disciplinary cases).
Coercion in securing Fees
S 22.1(5) Where a Chartered Accountant had exercised undue influence
and coercion in securing from the Company payment of his fee
and the letter of appointment for the next year. Held he was guilty
of professional misconduct of a type not specified in the
Schedules.
Where a Chartered Accountant committed acts of commission and
omission in regard to the minute book of a Company containing
the minutes of the proceedings of the annual general meeting
purported to be held on a particular date thus knowingly made a
false record. Held he was guilty of professional misconduct for
acts not specified in the Schedules.
(Qaroon Trading and Finance Pvt. Ltd. vs. Laxmi Narain Saxena
2
PROFESSIONAL OR OTHER MISCONDUCT DEFINED
and Jitendra Mohan Chadha - Page 828 of Vol. IV of the

Disciplinary Cases and pages 47-49 of July, 1969 issue of the
Institute’s Journal - Judgement delivered on 12 th February, 1969).
Misrepresentation of Experience
S 22.1(6) Where a Chartered Accountant had misrepresented to a firm while
seeking employment as an Accountant that he had worked for 3
years as a senior Assistant with another firm.
Held he was guilty of “other misconduct” in terms of Section 21 of
the Act.
(B.K. Chakraborty in Re:- Page 872 of Vol. IV of the Disciplinary
Cases and pages 254-255 of October, 1969 issue of the Institute’s
Journal - Judgement delivered on 19 th July, 1969).
Misuse of Services of Audit Assistant
S 22.1(7) A Chartered Accountant was charged with misconduct for having
used the services of his audit clerk during the period of his audit
service for promoting the agricultural activities of the former. The
Disciplinary Committee though satisfied from the evidence
recorded that the audit clerk was required to attend to the
agricultural activities of his employer during office hours, very
regrettably came to the conclusion that engaging the services of
the audit clerk for agricultural operations not casually but for a
considerable time during his service as an audit clerk did not
render the Member guilty of professional or other misconduct. The
Council, having found the Member not guilty of any professional or
other misconduct, dismissed the complaint.
On appeal made by the audit clerk against the order of the
Council, the High Court held that the conduct of the Member in
having asked the audit clerk to attend to his agricultural work
instead of giving training to him to make him an auditor clearly
amounted to “other misconduct”.
(P.N.S. Murthy vs. D.V. Lakshmana Rao - Page 26 of Vol. V of the
Disciplinary Cases and page 579 of June, 1975 issue of the
Institute’s Journal - Judgement delivered on 21 st March, 1975).
3
Misappropriation of Institute’s Fund

S 22.1(8) A Chartered Accountant being the Secretary & Treasurer of the
Central India Regional Council of the Institute misappropriated a
large amount and utilised it for his personal use.
Held that the Chartered Accountant was guilty of charge of
misappropriation and the Court directed the removal of his
membership for a period of five years. It was observed that
warnings and reprimands in such cases would undermine the
basic purpose of Sections 21 and 22 of the Act and instead of
acting as a deterrent for such misconduct may embolden erring
Members to entertain hopes of lenient punishment.
(J.C. Tandon in Re:- Published at pages 548-549 of December,
1979 issue of the Institute’s Journal and page 26 of Vol. VI(1) of
Disciplinary Cases - Judgement delivered on 6 th August, 1979).
Issuing certificate without verification
S 22.1(9) A Chartered Accountant issued consumption certificate of a firm
on the strength of which Export Authorities issued licence for
importing raw material and components. The Chartered
Accountant failed to verify the certificate inspite of repeated
enquiries raised by the Export Authorities.
Held that the Chartered Accountant was guilty of misconduct by
not replying within a reasonable time and without a good cause to
the letters of the Deputy Chief Controller of Imports & Exports. It
was his implicit duty to verify the certificate issued by him in the
case of an inquiry by Public Authority and in not doing so he
committed an act of impropriety.
The words “professional or other misconduct” used in Section
21(1) are meaningful as they widen the authority of the Council
not only to inquire into the professional misconduct of the
Members, but misconduct otherwise also.
(Sri Gopal Shukla in Re:- Published at pages 546-548 of
December, 1979 issue of the Institute’s Journal and page 32 of
Vol. VI(1) of Disciplinary Cases - Judgement delivered on 6 th
August, 1979).
4
Possession of Government Records by a Member

S 22.1(10) Where a Chartered Accountant, being a tenant of premises, was
searched in connection with the taxation matter of the owner of
the said premises.
During the search, Income-Tax Assessment records of a Hindu
Undivided Family (HUF) were found inside the steel almirah in the
bedroom of the said Chartered Accountant. When interrogated, he
explained that he had requested the concerned Income-tax Officer
for one HUF assessment record to enable him to know how HUF
accounts were prepared and maintained and, according to him the
Income-tax Officer obliged him by handing over the said
assessment records. The Income-tax Officer, however,
categorically denied having passed on the Income-Tax
Assessment records to him.
The Council was of the opinion that the possession of Government
records by a Chartered Accountant constitutes “other misconduct”
under Section 21 of the Chartered Accountants Act, 1949. A
Chartered Accountant is not expected to be in possession of
Government records or to retain them with him. Such an action on
the part of a Chartered Accountant is grossly improper and
unworthy of his status as a Chartered Accountant and is against
the ethics of the profession. The said Chartered Accountant could
not give any satisfactory explanation as to how the records came
into his possession and also why he did not return the records to
the Department immediately when he came to know that the
records came to be in his possession. He was held guilty of “other
misconduct”.
(S.K. Bhaumik in Re:- Page 568 of Vol. VI(1) of Disciplinary Cases
- Judgement dated 5 th March, 1990).
Use of Abusive Language
S 22.1(11) The Respondent, inter alia, had used objectionable, derogatory
and abusive language. He made irrelevant, incoherent,
irresponsible and insane statements, expressions in all his
correspondence with the complainant. He was, inter alia, held
guilty of “other misconduct”.
5
(K. Bhattacharjee vs. B.K. Chakraborty - Page 86 of Vol. VII(1) of

Disciplinary Cases – Council’s decision dated 11 th to 13th
February, 1988 - Judgement dated 10 th June, 1996).
Bogus Bills
S 22.1(12) The Respondent who was allotted the audit work of three
branches of the Complainant-Bank for a year submitted bogus
bills/receipts for claim of halting allowance expenses for audit of
said branches, as found on the investigation by the Complainant-
Banks Vigilance Department. He was held guilty of “other
misconduct”.
(State Bank of Patiala vs. Rishi K. Gupta – Page 291 of Vol. VII(1)
of Disciplinary Cases – Council’s decision dated 5 th& 6th August,
1991 - Judgement dated 20 th July, 2000).
Fake Certificate of Incorporation of Company
S 22.1(13) The Respondent was entrusted with the work of incorporation of a
Company. He was also entrusted with the work of filing the return
for registration of the charge in Form No. 8 with the Registrar of
Companies. After making enquiries, he made available a
certificate of incorporation issued by the Registrar of Companies.
But on enquiry from the Office of the Registrar of Companies, it
was learnt that the name of the said Company, was not borne on
the Register of Companies and Form No. 8 was not traceable in
the Registrar’s office. He had later admitted that the above
certificate was fake, forged and not genuine. He had not filed any
of the documents with the Registrar of Companies. He had failed
to make available or return the documents despite requests on the
pretext that the same were not traceable. He had provided to the
Complainant a communication issued by the Office of the
Registrar of Companies which had also been discovered to be
fake.
He was, inter alia, held guilty for “other misconduct”.
(Deepak Pahwa vs. A.K. Gupta – Page 346 of Vol. VII (1) of
Disciplinary Cases – Council’s decision dated 6 th September, 1995
- Judgement dated 4 th September, 2000).
6
Advertisement with malafide intention to malign

S 22.1(14) Where the Respondent published an advertisement in the
newspaper with a malafide intention to malign the Complainant.
Held that Respondent was inter alia guilty of “other misconduct”.
(S.C. Katyal vs. O.P.C. Jain & O.P. Sharma –Page 1 of Vol. VIII-1
-21(6) of Disciplinary cases – Council’s decision dated 25 th to 27th
February, 1999 - Judgement delivered on 27 th April, 2001 and
published in the September, 2001 issue of Journal at pages 309 to
311).
Member in Employment giving declaration of being in
Practice
S 22.1(15) A Chartered Accountant while in employment with a Corporation
conveyed acceptance as Statutory Auditor to the complainant and
give a wrong declaration to the bank that he was a full time
practicing Chartered Accountant and not employed elsewhere with
an intention to obtain Bank Branch Audits and derive undue
benefits. The Respondent having committed an act which is
unbecoming a Chartered Accountant was therefore inter alia guilty
of “Other misconduct”.
(The Senior Manager, Punjab National Bank vs. N.K. Chopra –
Page 121 Vol. VIII-1-21 (6) of Disciplinary Cases – Council’s
decision dated 22 nd July, 1997 - Judgement delivered on 20 th May,
2003 and published in the December, 2003 issue of Institute’s
Journal at page 686).
Authoring Book on Black Money
S 22.1(16) The Respondent authored a book titled ‘Tax Planning for Secret
Income (Black Money)’. On going through the preface as well as
the contents of the book it was seen that the author had explained
in detail the various methods of creation of black money followed
by different sections of society and the methods, legal as well as
illegal, generally adopted to convert the same into white. Since it
appeared that the title of the book, its preface, its contents and in
totality the book was likely to create an impression in the eyes of
common man that Chartered Accountants are experts in helping in
7
the creation of black money and its conversion into white money
though there is no direct reference as such to the Chartered
Accountants; this might tend to lower the image of the profession
in the public eyes.
Held that the Respondent was guilty of “other misconduct”.
The Hon’ble Gujarat High Court in its judgement dated 14 th
February, 2003 observed that:
“… Having regard to the old age of the Respondent, ailments that
he is suffering from, repentance that he has shown in the Court
and the time lag that has elapsed, as also his statement that he
has never published any such writing after the publication of the
said book, in our opinion, interest of justice will be met if the
Respondent is removed forthwith from the membership of the
Institute for a period of five years. We accordingly, while upholding
the Respondent guilty of misconduct, direct that the Respondent
be removed forthwith from the membership of the Institute for a
period of five years. The reference stands disposed of accordingly
with no order as to costs.
At this stage, the learned counsel for the Respondent submits that
the operation of this order may be stayed to enable the
Respondent to approach the higher forum. In our opinion, in the
facts and circumstances of the case, it will be improper for us to
stay the operation of this order when the removal of the
Respondent was due long back, having regard to the serious
nature of the misconduct committed by him.”
The Respondent filed a review petition and special Leave Petition
against the above judgement of the Gujarat High Court, in the
Supreme Court. The Supreme Court, by its judgement dated 6
August 2003, dismissed the review petition. The text of the order
is given below:
"We have gone through the review petition and the connected
papers. We do not find any good reason to review our order. It
lacks merits. The review petition is therefore dismissed."
(P.C. Parekh in Re: –Page 63 Vol. VIII-1-21(6) of Disciplinary
Cases – Judgement of the Gujarat High Court dated 14 th February
8
2003 and judgement of Supreme Court dated 6 th August, 2003 and

published in the February, 2004 issue of Institute’s Journal at
pages 869 to 890).
Fabrication/Forgery of challans
S 22.1(17) The Respondent had fabricated and filed challans for advance tax
in respect of certain clients and relatives and then filed their
returns of Income showing nominal income so as to claim refund
against advance tax paid. On investigation it was found by the
Income Tax Department that the Respondent had changed the
amount of advance tax paid in copies of challans that are retained
by the assessee and sent to the Department alongwith the return.
The returns also, in many cases, were verified by him. The
address given in the returns was his own so that the refund
vouchers could reach him and he had, in fact, encashed these
vouchers by opening bank accounts in the names of the
assessees. The Respondent was said to have admitted having
committed this forgery etc. thereby defrauding the exchequer to
the tune of Rs. 15 lakhs. As per FIR filed by the Income Tax
Officer, the Respondent was arrested and was remanded first to
police custody and thereafter to judicial custody.
Held that the Respondent was guilty of "Other misconduct". The
Council also decided to recommend to the High Court that the
name of the Respondent be removed permanently from the
Register of Members.
The Hon’ble Gujarat High Court while delivering the order
observed that:
“…The petitioner Council is one such representative body charged
with responsibility of ensuring discipline and ethical conduct
amongst its members and impose appropriate punishment on
members who are found to have indulged in conduct which lowers
the esteem of the professionals as a class. Adopting the aforesaid
approach, it is not possible to find any infirmity, either on facts or
in law, in the reasoning and the findings recorded by the
Disciplinary Committee and the petitioner Council by holding the
Respondent as being guilty of "other misconduct" under Section
21 read with Section 22 of the Act and hence, there is no
9
necessity to interfere with the punishment recommended. It has

been proved beyond reasonable doubt, in the facts and
circumstances of the case and by the evidence on record, that the
Respondent and only the Respondent, is guilty of "other
misconduct" and hence liable to punishment under section
21(6)(c) of the Act i.e. removal from membership of the Institute
permanently.
The reference is accordingly disposed of with a direction to the
petitioner Council to remove the Respondent from the membership
of the Institute permanently.”
(Commissioner of Income - Tax, Gujarat -III, Ahmedabad vs.
Mukesh R. Shah –Page 161 Vol. VIII-1-21(6) of Disciplinary Cases
– Judgement delivered dated 11 th November 2003 and published
in the January, 2004 issue of Institute’s Journal at pages 764 to
781).
Issuing false certificates for Monetary consideration
S 22.1(18) While investigating into cases of some fraudulent imports and
clearance, the Custom Department came across a case of one
Chartered Accountant who issued false certificates to several
parties for past exports for monetary consideration, without
verifying any supporting records or documents. On the strength of
these false certificates, certain unscrupulous importers were able
to obtain import license, effect imports and clear these free of
duty, perpetuating a fraud on Government revenue and depriving
the Government of its legitimate revenue to the tune of several
Crores of Rupees. In his statement recorded under section 108 of
the Custom Act, 1962, the Respondent had also confessed his
role in this affairs as well as the fact that he also got a share in
this deal of issuing false certificates.
Held that he was guilty of “Other Misconduct”.
(Additional Collector of Customs, Department of Customs vs. K.N.
Kanodia:- Page 691 Vol. VIII-1-21(6) of Disciplinary cases-
Judgement dated 12 th August, 2004).
10
Demand of excess Money & failure to refund Unspent Money

S 22.1(19) A Chartered Accountant demanded and received large sums of
money towards advance payment and claimed expenses beyond
the eligibility/entitlement as per RBI guidelines and failed to refund
the unspent money. The Council held him guilty of “other
misconduct” in terms of Section 22 read with Section 21 of the
Chartered Accountants Act, 1949 which was accepted by the High
Court.
(S.N. Banerjee, Dy. General Manager, State Bank of Hyderabad
vs. Lokesh Dhawan-Page323 Vol.IX -1-21(6)of Disciplinary cases-
Council’s decision dated 23 rd June, 2001 and Judgement of High
Court dated 5th November, 2007).
Issuing False Certificate for disbursement of Loan
S 22.1(20) A Chartered Accountant was engaged by his client for getting
financial assistance from bank, but for disbursement of a term
loan in favour of his client he issued a false certificate. The act of
issuing the vague certificate by him contributed and enabled the
officers of the bank to have paper formalities completed which
amounted to aiding and abetting by the Chartered Accountant, for
disbursement of the loan and for this act he was held guilty of
“other misconduct”. The High Court confirmed the decision of the
Council.
(Supdt. of Police, CBI, ACB, New Delhi vs. Dayal Singh - Page
177 & 288 Vol. IX-1-21(60) of Disciplinary cases- (25-CA(55)/92),
Decision of the Council dated 30th April, 2001, 216th Meeting of the
Council and Judgement of High Court dated 10 th May, 2007).
Failure to repay the Loan /Overdraft
S 22.1(21) A Chartered Accountant, appointed as Concurrent Auditor of a
bank, firstly used his influence for getting some cheque purchased
and thereafter failed to repay the loan/overdraft. He acted in an
irresponsible manner and had not discharged his duties
professionally. Being a Concurrent Auditor used his position to
obtain the funds and failed to repay the same to the Complainant.
Though such conduct may not directly attract any particular
clause(s) specified in any of the schedule(s) of the Chartered
Accountants Act, 1949, yet such act is certainly unpardonable.
11
The Council held him guilty of “other misconduct” under Section

22 read with Section 21 of the Chartered Accountants Act, 1949
and the High Court further confirmed the same.
(Manager, Punjab National Bank vs. M.K. Sachdeva- page 273
Vol-IX-1-21(6), Decision of the Council dated 16 th April, 2004,
242nd Meeting of the Council and Judgement of High Court dated
7th August, 2007).
Not completing work of Audit on time
S 22.1(22) Where a Chartered Accountant had not completed his audit work
of the accounts of a Company, in spite of several reminders and
payment of advance fee of audit, the Council held him guilty under
Clause (7) of Part I of the Second Schedule and ‘other
misconduct’ within the meaning of Section 21 read with Section
22. The High Court also accepted the Council’s decision and
ordered to remove his name from the Register of Members for a
period of one year.
(R. K. Goswami, Administrator, Delhi Nagrik Sekhari Bank Ltd. vs.
M/s Dayal Singh & Co – Page 288 Vol.IX -1-21(6)of Disciplinary
cases, Council’s decision dated16th April, 2004 and Judgement of
High Court dated 7 th August, 2007).
Failure to appear before Tax Authorities
S 22.1(23) Chartered Accountant was held guilty under Clause (7) of Part I of
the Second Schedule and “other misconduct as being a tax
consultant and a tax auditor he failed to appear before the Income
Tax Authorities for his client even after having instructions from
his client. In spite of being fully paid for his professional services
and provided all the books of account and other documents, he
failed to satisfy the Income Tax Officer because of his negligence
and careless attitude. There were several anomalies in the books
of account. The opening and closing balances as per the bank
statements and pass-books were not re-produced correctly in the
cash book.
(R.C. Dutta vs. Kailash C. Mishra - Page 143 Vol.IX-1-21(6) of
Disciplinary cases-, Council’s decision dated 5 th January, 2005
and Judgement of High Court dated 1 st March, 2007).
12
Violation of PCAOB Rules

S 22.1(24) A Chartered Accountant in practice was involved in numerous and
repeated violations of PCAOB (Public Company Accounting
Oversight Board) Rules, Quality Control Standards and Auditing
Standards in connection with the audits of its client for which
PCAOB barred him for specified period from its membership.
Held, the default on the part of the Respondent brought disrepute
to the profession under Clause (2) of Part IV of the First Schedule,
read with section 22 of Chartered Accountants Act, 1949.
It was also held that a corrective action needs to be taken to
signal the Members at large that before/while undertaking any
professional assignment particularly in case of international
clients, due care, caution and compliance in terms of their
respective standards needs to be exercised and Members need to
ensure that they are adequately equipped professionally and
otherwise to execute such professional assignments.
(Sandeep P S G Nair, Mumbai in Re:- [PPR/20/W/13-DD/17
/W/INF/13-BOD/302/2017]).
---------
13
SECTION 24: PENALTY FOR FALSELY CLAIMING
TO BE A MEMBER
S 24 Any person who -

(i) not being a member of the Institute-
(a) represents that he is a member of the Institute; or
(b) uses the designation Chartered Accountant; or
(ii) being a member of the Institute, but not having a certificate of
practice, represents that he is in practice or practices as a
Chartered Accountant, shall be punishable on first conviction
with fine which may extend to one thousand rupees, and on
any subsequent conviction with imprisonment which may
extend to six months or with fine which may extend to five
thousand rupees, or with both.
Failure to pay the fine, sentenced to rigorous imprisonment
S 24.1(25) In a case under the above provision, the Court of AdditionalChief
Judicial Magistrate had by its judgement dated 18th July, 1989
found the accused guilty under Section 24(i)(a) & (b) of the
Chartered Accountants Act and Section 465 of the Indian Penal
Code. The Court imposed a fine on the accused and in the event of
his failure to pay the fine, sentenced to rigorous imprisonment for
three months.
(Case of Prem Batra decided on 18.7.1989 and published in
September, 1989 issue of the Institute’s Journal at Page 246).
---------
14
SECTION 27: MAINTENANCE OF BRANCH
OFFICES
S 27 (1) Where a chartered accountant in practice or a firm of such

chartered accountants has more than one office in India,
each one of such offices shall be in the separate charge of a
member of the Institute:
Provided that the Council may in suitable cases exempt any
chartered accountant in practice or a firm of such chartered
accountants from the operation of this sub-section.
(2) Every chartered accountant in practice or a firm of such
chartered accountants maintaining more than one office shall
send to the Council a list of offices and the persons in charge
thereof and shall keep the Council informed of any changes in
relation thereto.
Opening of Branch Office without Member in Charge
S 27.1(26) Where a Chartered Accountant kept the Branch Office without
putting a Member in charge thereof thereby committing a breach
of clause (i) of Section 27 of the Act.
Held that the fault was only technical which had been made good
and ordered the papers to be filed.
(P.N. Mehta in Re:- Page 774 of Vol. IV of the Disciplinary Cases
and pages 396-399 of February, 1969 issue of the Institute’s
Journal - Judgement delivered on 12 th November, 1968).
---------
15
PART I OF FIRST SCHEDULE
Professional Misconduct in Relation to Chartered

Accountants in Practice
1.1.1 Clause (1): allows any person to practice in his name as a

chartered accountant unless such person is also a chartered
accountant in practice and is in partnership with or employed by
him.
---------
16
PART I OF FIRST SCHEDULE – CLAUSE (2)
1.1.2 Clause (2): pays or allows or agrees to pay or allow, directly or

indirectly, any share, commission or brokerage in the fees or
profits of his professional business, to any person other than a
member of the Institute or a partner or a retired partner or the
legal representative of a deceased partner, or a member of any
other professional body or with such other persons having such
qualifications as may be prescribed, for the purpose of rendering
such professional services from time to time in or outside India:
Some of the decisions under Clause (2) are given below:
Agreement to Share the Profits
1.1.2(27) In a decision of the Council, where a Chartered Accountant
entered into an agreement whereby he had clearly agreed to pay
the share in profits of his professional business to the complainant
and another person who were not the Members of the Institute.
It was held that he was guilty of professional misconduct under the
clause.
(Vadilal V. Shah vs. J.B. Sanghavi - Page 239 of Vol.V of the
Disciplinary Cases -decided from 13 th to 16th February, 1974).
Sharing Audit Fees as “Allowance’’
1.1.2(28) A Chartered Accountant gave 50% of the Audit Fees received by
him to the complainant, who was not a Chartered Accountant,
under the nomenclature of office allowance and such an
arrangement continued for a number of years, it was held by the
Council that in substance the Chartered Accountant had shared
his profits.
Held, he was guilty of professional misconduct under the clause. It
is not the nomenclature to a transaction that is material but it is
the substance of the transaction which has to be looked into.
(D.S. Sadri vs. B.M Pithawala - Page 300 of Vol. V of the
Disciplinary cases - decided from 14 th to 17th September, 1977).
-----------
17
1.1.3 Clause (3): accepts or agrees to accept any part of the profits of
the professional work of a person who is not a member of the
Institute:
----------
18
1.1.4 Clause (4): enters into partnership, in or outside India, with any
person other than a chartered accountant in practice or such other
person who is a member of any other professional body having
such qualifications as may be prescribed, including a resident who
but for his residence abroad would be entitled to be registered as
a member under Clause (v) of sub-Section (1) of Section 4 or
whose qualifications are recognised by the Central Government or
the Council for the purpose of permitting such partnerships:
The decisions of the Council under Clause (4) are given below:
Entering in Partnership with Business Firms
1.1.4(29) Where a Chartered Accountant had engaged himself as a partner
in two business firms and Managing Director in two Companies
and was also holding Certificate of Practice without obtaining
permission of the Institute.
Held that he was a guilty of professional misconduct inter alia
under Clauses (4) and (11).
(Harish Kumar in Re:–Pages 286 of Vol. VIII (2) of Disciplinary
Cases – Council’s decision dated 1 st to 3rd August, 2001).
Managing Partner with two Partnership Firms
1.1.4(30) The Respondent was a Taxation Advisor of a group of Companies.
During search and seizure under Section 132 of The Income Tax
Act, 1961 of the group and also of the Chartered Accountant, the
Complainant found that the Respondent was colluding with this
group in evasion of tax. The Respondent had signed two sets of
financial statements of the same auditee, for the same financial
year. The two financial statements showed different figures of
contract receipts, net profits and balance sheet. He was grossly
negligent in the conduct of his professional duties. The
Respondent admitted that he was Managing Partner / Partner in
two partnership firms where there were other partners who were
not Chartered Accountants.
Held, the respondent was guilty under Clause (4) of Part I of First
Schedule and under Clauses (5), (6) & (7) of Part I of Second
Schedule.
19
(Assistant Director of Income Tax (Investment), Calicut vs. P.

Subramanian – Page 132 of Volume X -2B–21(4) of the
Disciplinary Cases-Council decision of 281 stMeeting held in
October, 2008).
Partnership with a person being a client and non-member
1.1.4(31) Where the Respondent entered into a partnership in the name and
style of a Builder. Also, the Respondent being a Chartered
Accountant and a professional entered into a business partnership
with his client whose returns and accounts had been maintained
by him, which was conflict of interest.
Held guilty of Professional Misconduct falling within the meaning
of Clauses (4) & (11) Part I of the First Schedule of the Chartered
Accountants Act, 1949.
(The Assistant Commissioner of Income-Tax, Agra vs. Anurag
Jain [PR/101/2011/DD/125/11/BOD/164/2014] - Judgement
delivered on 6th November, 2015).
---------
20
1.1.5 Clause (5): secures, either through the services of a person who
is not an employee of such chartered accountant or who is not his
partner or by means which are not open to a chartered
accountant, any professional business:
Writing letters with details and experience for securing work
1.1.5(32) A Chartered Accountant wrote various letters to officers of
different Army Canteens giving details about him and his
experience, hispartner & office and the norms for charging audit
fees.
He was held guilty for violation of Clauses (5) & (6).
(Jethanand Sharda vs. Deepak Mehta – Council’s decision dated
1st to 4th July, 1998 – Page 61 of Volume VIII(2) of Disciplinary
Cases).
-----------
21
1.1.6 Clause (6): solicits clients or professional work either directly or

indirectly by circular, advertisement, personal communication or
interview or by any other means;
Printed card for solicitation of work
1.1.6(33) Where a Chartered Accountant sent a printed card and circular
letters soliciting work.
Held, he was guilty under the clause.
(M.J. Gadre vs. W.G. Ambekar - Page 43 of Vol. I of the
Disciplinary Cases and pages 87-89 of August, 1952 issue of the
Institute’s journal-judgement delivered on 4 th April, 1952).
Issuing letters of Authority
1.1.6(34) Where a Chartered Accountant firm issued a letter of authority in
favour of two other CharteredAccountants to accept and carry out
audits of Co-operative Societies on its behalf and they (the two
Chartered Accountants) issued circulars of which the firm was not
aware.
Held that the firm was not guilty of Professional Misconduct.
(V.B. Kirtane in Re: - Page 423 of Vol.III of the Disciplinary Cases
and page 465 of January, 1958 issue of the Institute’s journal -
Judgement delivered on 11 th November, 1957).
But the person, in whose favour the letter of authority was given in
the above case, was held guilty.
(M.R. Walke in Re: - Page 441 of Vol.III of the Disciplinary Cases
and pages 469-470 of January, 1958 issue of the Institute’s
journal-Judgement delivered on 11 th November, 1957).
Application offering himself as an Auditor
1.1.6(35) Where a Chartered Accountant sent an application to the
Chairman of a Co-operative Society offering himself for
appointment as an auditor.
Held that the infringement was a serious breach of professional
ethics.
22
(G.K. Joglekar in. Re: and D.G. Jawalker in Re:- Pages 429 and
433 of Vol. III of the Disciplinary Cases and pages 466-469 of
January, 1958 issue of the Institute’s Journal-Judgement delivered
on 11th November, 1957).
1.1.6(36) A letter of request was sent for being appointed as auditor. Held,
he was guilty.
(B.K. Swain in Re: - Page 134 of Vol. IV of the Disciplinary Cases
and pages 356-358 of March, 1960 issue of Institute’s Journal -
Judgement delivered on 12 th February, 1960)
1.1.6(37) A Chartered Accountant sent a printed circular to a person
unknown to him offering his services in profit planning and profit
improvement programmes. The circular conveyed the idea that it
was meant for strangers only.
Held, the Chartered Accountant was guilty of professional
misconduct under the clause as he used the circulars to solicit
clients and professional work.
(B.S.N Bhushan in Re: - Page 989 of Vol.IV of the Disciplinary
cases decided on 11 th& 12th January, 1965).
Roving Enquiries
1.1.6(38) A Chartered Accountant wrote several letters to the Assistant
Registrar of Co-operative Societies, Government of West Bengal
stating that though his firm was on the panel of auditors, no audit
work was allotted to the firm and requested them to look into the
matter.
Held the Chartered Accountant was guilty of professional
misconduct under the clause.
(D.C. Pal in Re: - Page 1001 of Vol. IV of the Disciplinary Cases -
decided on 12th, 13th and 14th September, 1966).
1.1.6(39) A Chartered Accountant wrote several letters to Assistant
Registrars/Registrars of Co-operative Societies, Government of
West Bengal requesting for allotment of audit work and to enroll
his name on panel of auditors.
23
Held, he was guilty of professional misconduct under the clause.

The activities of the Chartered Accountant went much beyond the
instructions of the Council to the effect that roving enquiries
should not be made with the Government Department for
empanelling the name unless it had been ascertained in advance
that specific panel was being maintained. It was also held that an
auditor of co-operative societies under a licence granted by co-
operative department was not its employee and, therefore, he
could not solicit work.
(Chief Auditor of Co-operative Societies, West Bengal vs. B.B.
Mukherjee- Page 1007 of Vol. IV of the Disciplinary Cases -
decided on 16th September, 1967).
1.1.6(40) The Respondent issued circular offer to a Govt. Agency,
antedated in the nature of offer-cum-appointment seeking
letter/circular tantamounting to enquiries, advertisement and
soliciting the work. It is noteworthy that the above letter of the
Respondent did not indicate reference of any enquiry by the
Agency in response to which the said offer was made. The
Respondent had used his acquaintance with the then
Chairman/D.M. of the Agency for fetching the assignment,
ignoring the recommendations of original committee and
influencing the subordinate officers for changing the
recommendation in favour of the Respondent. The said act of the
Respondent amounted to solicitation of work.
Held that the Chartered Accountant is guilty of professional
misconduct within the meaning of Clause (6) of Part I of First
Schedule to the Chartered Accountants Act, 1949.
(A.K. Gupta of M/s G.P. Jaiswal & Co. vs. Habibullah – Page 110
of Vol.X-2B-21(4) of Disciplinary Cases – Council’s decision dated
15th to 17th April, 2004).
1.1.6(41) A Chartered Accountant, inspite of the previous reprimand, sent
letters to Registrar, Co-operative Societies, Calcutta, stating that
no allotment of audit was made to him and requested to take
action immediately and oblige.
Held he was guilty of professional misconduct under the clause.
24
(D.N. Das Gupta, Chief Auditor of Co-operative Societies, West

Bengal vs. B.B. Mukherjee - Page 1028 of Vol. IV of the
Disciplinary Cases-decided on 15 th and 16th September, 1969).
Approaching through third person for appointment as Auditor
1.1.6(42) A Chartered Accountant approached the Principal of a Secondary
school through a third person known to the Principal for his
appointment as auditor of that school. Further, the Chartered
Accountant misrepresented to the previous Auditor that he had
been offered appointment as Auditor of the School and enquired
whether he had any objection to his accepting the same though it
was a fact that the appointment of Chartered Accountant was not
made.
misconduct under the clause. It was further held that writing letter
by the Chartered Accountant to the previous auditor offering his
services to audit the accounts of School was not wrong as it was
an offer to a professional colleague and not to a prospective
client.
(M.L. Agarwal in Re: - Page 1033 of Vol. IV of the Disciplinary
Cases-decided on 16th and 17th February, 1973).
Assistant of Member writing request for Professional Work
1.1.6(43) An assistant of the Chartered Accountant under his authorisation
wrote letter to a stranger association requesting for appointment
as auditor.
misconduct under the Clause.
(S.N. Mukherji & Co. vs. P.K. Ghosh - Page 273 of Vol.V of the
Disciplinary Cases-decided on 20 th& 21st February, 1975).
Writing letters of change of Address to non-Clients
1.1.6(44) A Member was found guilty of professional misconduct under
Clauses (6) and (7) of Part I of the First Schedule for having
issued circular letter regarding change of address of his firm to
persons who were not in professional relationship with him and for
having written to the shareholders thanking them for appointing
him as Auditor.
25
He was reprimanded by the Council under Section 21(4). On an

appeal made by him against the order of the Council, the High
Court confirmed the order passed by the Council having regard to
the ethical requirements about publicity by the Members of the
Institute as laid down in the Code of Conduct.
(K.K. Mehra vs. M.K. Kaul - Page 80 of Vol. V of the Disciplinary
Cases and pages 189-191 of February, 1976 issue of the
Institute’s Journal - Judgement delivered on 23 rd October, 1975)
Advertisement of Congratulations for opening of Office
1.1.6(45) An advertisement was published in a newspaper containing the
Member’s photograph wherein he was congratulated on the
occasion of the opening ceremony of his office.
He was found guilty by the Council and later, by High Court - of
violating this Clause (soliciting work by advertisement). The
following observations of the High Court may be relevant:
(a) The advertisement which had been put in by the Member is a
noticeable one and the profession of Chartered Accountancy
should maintain high standards of integrity, professional
ethics and efficiency.
(b) If soliciting of work is allowed the independence and
forthrightness of a Chartered Accountant in the discharge of
duties cannot be maintained and therefore some discipline
must be maintained by the profession.
(G.P. Agrawal in Re: - Page 14 of Vol. VI(2) of Disciplinary Cases
- Judgement dated 30 th April, 1982).
1.1.6(46) A Member had an advertisement published in a newspaper
regarding inauguration of his professional office. It was held that
having regard to:
(i) the nature of the advertisement
(ii) the function organised on that occasion
(iii) the persons invited
(iv) the medium used
26
(v) the names of various concerns which had conveyed their

good wishes
(vi) the advertisement having been released by the Respondent
himself, and he had solicited professional work by
advertisement, he was found guilty in terms of this clause.
(Shashindra S. Ostwal in Re: - Page 81 of Vol. VI(2) of
Disciplinary Cases - Decided on 11th, 12th and 13th February,
1988).
Writing to Company highlighting Professional attainments
1.1.6(47) A Member issued a printed circular letter to a Company
highlighting the details of his professional attainments and
services which he could render in various fields offering his
professional services on a contractual basis.
He was found guilty in terms of this clause.
(Parimal Majumder in Re: - Page 333 of Vol. VI(2) of Disciplinary
Cases - Decided on 11th,12th,13th and 14th September, 1989).
Advertisement seeking work from other Professionals
1.1.6(48) A Member gave an advertisement in a Newspaper seeking works
from other professionals.
(B.K. Sharma in Re: - Page 340 of Vol. VI(2) of Disciplinary Cases
- Decided on 11th,12th,13th and 14th September, 1989).
1.1.6(49) A Chartered Accountant issued circular/letter to Chartered
Accountants/firms of Chartered Accountants outside Kanpur. In
the said circular, while offering his services, the details regarding
expenses to be incurred and fees to be charged by him for
rendering professional services etc. were also mentioned.
Held that he was guilty of professional misconduct under the
Clause.
(Sanjeev Srivastava in Re: – Page 249 Vol. IX-2A-21(4) of
Disciplinary Cases – Council’s decision dated 11th to 13th
November, 2002).
27
Highlighting expertise in Sales matters in letter

1.1.6(50) A Member wrote a letter to a Company in standard format
highlighting his expertise in Sales tax matters and had requested
for a draft of Rs. 200/- if his knowledge of the Sales tax matters
has been found worthwhile.
The Member was found guilty in terms of this Clause.
(K.A. Gupta in Re: - Page 371 of Vol. VI(2) of Disciplinary Cases -
Decided on 18 th, 19th and 20th December, 1989).
Liasoning with Government Departments
1.1.6(51) Where a Chartered Accountant had sent a letter to another firm of
Chartered Accountants, in which he had introduced his firm as
pioneer in liasoning with Central Government Ministries and its
allied Departments for getting various Government clearances for
which he had claimed to have expertise and had given a list of his
existing clients and details of his staff etc.
Held that he was guilty under the clause.
(Bijoy Kumar in Re: - Page 69 of Vol. VII(2) of the Disciplinary
Cases – Council’s decision dated 16 th September, 1991).
Personal visit for securing Appointment as Auditor
1.1.6(52) Where a Chartered Accountant had visited personally the clients
for securing the appointment as auditors of the Institutions.
Held that he was guilty under clause (6) of Part I of First
Schedule.
(J.S. Bhati vs. M.L. Aggarwal - Page 87 of Vol.VII(2) of
Disciplinary Cases – Council’s decision dated 4 th& 5th December,
1975 - Judgement dated 30 th October, 1991).
Writing letter for Empanelment with a recommendation
1.1.6(53) Where a Chartered Accountant had addressed an undated but
signed letter to a Bank requesting for empanelment of his firm as
auditor alongwith the particulars of his firm showing the past
experience and other details of the firm; and a Member of
28
Parliament had also sent a letter to the Bank recommending the

name of the said Chartered Accountants firm for immediate
empanelling for Internal Audit/Inspection Audit/Management Audit,
Expenditure Audit.
Held that the Member was guilty under clause (6) of Part I of the
First Schedule.
(Naresh C. Agarwal in Re: - Page 160 of Vol.VII(2) of Disciplinary
Cases – Council’s decision dated 16 th to 18th July, 1992).
1.1.6(54) Where a Chartered Accountant had solicited clients and
professional work by personal communication as also by
enclosing a circular with his communication, utilized the influence
of a Minister as well as created political pressure to secure
professional work, etc.
Held he was guilty under the clause.
(K. Bhattacharjee vs. B.K. Chakraborty - Page 462 of Vol.VII(2) of
February, 1988 and Judgement dated 10 th June, 1996 dismissing
appeal filed by the Respondent).
Advertisement mentioning administrative ability and
availability for retainership
1.1.6(55) Where a Chartered Accountant had published an advertisement in
two newspapers mentioning that he was a Senior Chartered
Accountant having administrative ability and was available on
retainership for setting up Accounts Department/Internal
Auditing/Finance Management.
(D.M. Kothari in Re: - Page 253 of Vol.VII(2) of Disciplinary Cases
– Council’s decision dated 5 th to 7th August, 1993).
Sending letter with details of services and fees charged
1.1.6(56) Where a Chartered Accountant had sent a letter on the letterhead
of his firm to a non-member introducing himself as a Chartered
Accountant giving details of services rendered by him and the
schedule of his fees for rendering various kinds of services.
29
(V.K. Goel in Re: - Page 340 of Vol.VII(2) of Disciplinary Cases –

Council’s decision dated 5 th to 7th December, 1994).
Letter to Co-operative Society with request to contact
1.1.6(57) Where a Chartered Accountant had written a letter to a Co-
operative Society wherein he had mentioned that he had been
authorised by the Registrar of Societies to conduct the statutory
audit of the Societies and requested it to contact him.
Held that it tantamounts to solicitation of the audit and he had
violated the provisions of the clause.
(M.V. Lonkar in Re: - Page 410 of Vol.VII(2) of Disciplinary Cases
– Council’s decision dated 23 rd& 24th February, 1996).
Letter to Shareholder about eligibility for appointment as
Auditor
1.1.6(58) A Chartered Accountant had issued a letter to a shareholder of a
Company informing him about his eligibility for appointment as
statutory auditor of any Company and the said shareholder had
forwarded the aforesaid letter of the Chartered Accountant to the
Company proposing the Chartered Accountant’s appointment as
auditor, as a special notice under Section 225 read with Section
224(2)(d) of the Companies Act, 1956. The Company had
informed the shareholder that it could not take any action on his
letter as the Chartered Accountant’s certificate in terms of Section
224(1) of the Companies Act had not been received. The
Chartered Accountant had directly written to the Complainant
Company certifying that the appointment, if made, would be in
accordance with the limits specified in Section 224(1B) of the
Companies Act. Besides the above Company, other 9 Companies
had also received such notices under Section 225 of the
Companies Act.
It was held by the Council that he was guilty under Clause (6). The
Council decided that his name be removed from the Register of
Members for a period of one month. He appealed against the
decision of the Council to the High Court. The High Court allowed
the appeal in part. While upholding the finding of the Council that
he was guilty of committing professional misconduct, the Court
30
modified the punishment awarded to him by substituting the same

with a censure that he shall be careful in future in observing the
high tradition and best standards of the noble profession of
Chartered Accountants.
(V.K. Goenka, VC & MD, Warren Tea Ltd. vs. P.K. Lodha - Page
588 of Vol. VII(2) of Disciplinary Cases – Council’s decision dated
6th to 8th December,1995 and judgement of the High Court dated
29th August, 1996).
1.1.6(59) A Chartered Accountant had addressed a letter to the Managing
Director of a Company seeking appointment as its internal auditor.
He had stated that he was of the bona fide belief that the
Company might be maintaining a panel of Chartered Accountants
for assigning the internal audit work. He was held guilty for
violation of Clause (6).
(P.G. Biswas in Re:- Page 790 of Vol. VII(2) of Disciplinary Cases
– Council’s decision dated 8 th to 10th December, 1997).
1.1.6(60) A Chartered Accountant wrote various letters to officers of
different Army Canteens giving details about him and his
experience, his partner & office and the norms for charging audit
fees. He was held guilty for violation of Clauses (5) & (6).
(Jethanand Sharda vs. Deepak Mehta – Council’s decision dated
1st to 4th July, 1998 – Page 61 of Vol. VIII(2) of Disciplinary
Cases).
Details of Services and books written along with New Year
Greetings
1.1.6(61) A Chartered Accountant sent New Year Greeting Cards bearing
his name, qualification, the name and address of his firm and also
containing the following:
“List of super hit books written by Suresh D. Chauhan. Guide to
win girls – Income-Tax raid. Contact for any type of bank for
institutional loans or deposits”.
Held that the Chartered Accountant contravened Clause (6) & (7)
of Part-I of the First Schedule to the Chartered Accountants Act,
1949 in having solicited assignment relating to any type of bank or
institutional loans or deposits.
31
(S.D. Chauhan in Re:- Page 226 of Vol. VIII (2) of Disciplinary

Cases – Council’s decision dated 1 st - 3rd August, 2001).
Publication of details of Member in Souvenir
1.1.6(62) The Souvenir published on the occasion of “Navaratrotsav” by
‘Parel Paschim Vibhag Va Tata Mills Welfare Centre 1991’
contained an advertisement with a caption “With Best
Compliments from Abhiraj R. Ranawat B.Com., A.C.A. (Chartered
Accountant) Share and Stock Sub-Broker. The said advertisement
also contained office timing 8 A.M. to 10 A.M., telephone nos. of
market and residence and addresses of office and market.
Arising out of the above, the Respondent was, inter alia, held
guilty in having published his designation as Chartered Accountant
with telephone nos., office address etc. in the Souvenir for
soliciting professional work directly or indirectly in violation to
Clause (6).
(A.R. Ranawat in Re:- Page 414 of Vol. VIII (2) of Disciplinary
Cases – Council’s decision dated 26 th to 28th August, 2001).
Advertisement in Newspaper
1.1.6(63) A Chartered Accountant had issued the following advertisements
in “Hindustan Times” –
“Experienced C.A. having Posh Office with telephones, Computer,
Telex, Car, Qualified Staff available for taxation, Company Law,
Accounts, Internal control, Financing from banks and institutions,
contact phone ……………….” By issuing the above advertisement,
the Respondent has tried to (i) Solicit clients of professional work
either directly or indirectly, (ii) Advertised his professional
attainments of services in violation of Clause (6) & (7) Part I of
First Schedule to the Chartered Accountants Act, 1949.
Held that he was guilty of professional misconduct under the said
Clauses.
(Rajeev Sharma in Re:- Pages 454 of Volume VIII (2) of
Disciplinary Cases – Council’s decision dated 26 th to 28th August,
2001).
32
Approached Chairman for Audit of Institution

1.1.6(64) Where a Chartered Accountant approached the Chairman of an
Institution and offered to accept the audit of said Institution.
Held that he was inter alia guilty of professional misconduct within
the meaning of Clause (6) of Part I of the First Schedule of the
Chartered Accountants Act, 1949.
(L.K. Kathare vs. G. Sreenivasa -Page 784 of Vol. X-2A-21(4) of
September, 2003).
Using Signboard on Electric Poles and Shutters of shops
1.1.6(65) An Industrial Consultant was providing services of Income Tax
Returns, TDS Return, PAN No. etc. and the same was run by the
Member’s wife. However, the address, telephone number, email
id, PAN No. form, calendars etc. of Consultant all belonged to the
Member. The signboard of the firm was hanged on various electric
poles and shutters of shop. The firm of the Member was closed
w.e.f. 30.12.2004 and yet the Member continued to advertise the
name of the said firm. The Member also failed to give any reply to
explain as to how he could advertise whereas all these ways are
prohibited under the Chartered Accountants Act.
Held, guilty of professional misconduct falling within the meaning
of Clause (6) of Part I of First Schedule to the Chartered
(Sunil Kumar in Re: Page 37 of Vol I Part I of Disciplinary Cases,
Judgement Delivered on 3 rd February, 2011).
----------
33
1.1.7 Clause (7): advertises his professional attainments or services, or

uses any designation or expressions other than chartered
accountant on professional documents, visiting cards, letter heads
or sign boards, unless it be a degree of a University established
by law in India or recognised by the Central Government or a title
indicating membership of the Institute of Chartered Accountants of
India or of any other institution that has been recognised by the
Central Government or may be recognised by the Council:
Provided that a member in practice may advertise through a write
up, setting out the services provided by him or his firm and
particulars of his firm subject to such guidelines as may be issued
by the Council;
Using designations other than Chartered Accountant
1.1.7(66) Where a Chartered Accountant used the designation ‘Incorporated
Accountant, London’ and ‘Registered Accountant, India’, in the
Balance Sheet and also failed to report to the shareholders in the
prescribed form under the Banking Companies Act
Held the Chartered Accountant was guilty of the two charges. The
word ‘member’ in Section 21 of the Act should be construed as
including a past member for the purpose of enquiry, as what was
required was membership at the time of the commission of the
alleged misconduct.
(Mirza M. Hussain in Re: - Page 24 of Vol. II of the Disciplinary
Cases and pages 26-29 of July, 1955 issue of the Institute’s
Journal-Judgement delivered on 10 th May, 1955).
1.1.7(67) A Chartered Accountant used the designation ‘Industrial and
Management Consultant’ in addition to the designation ‘Chartered
Accountant’ on printed circular sent to a stranger. Held, he was
guilty of professional misconduct under the clause.
(B.S.N. Bhushan in Re: - Page 989 of Vol.IV of the Disciplinary
Cases-decided on 11th and 12th January, 1965).
34
1.1.7(68) Where a Chartered Accountant in his firm’s letter head had used
the designation ‘Manager (Liaison & Sales)’.
Held that he was guilty under clause (7) of Part I of the First
Schedule.
(Bijoy Kumar in Re:- Page 69 of Vol. VII(2) of the Disciplinary
Cases – Council’s decision dated 16 th September, 1991).
1.1.7(69) Where a Chartered Accountant had used the designation and
expression other than the Chartered Accountant, mentioned his
experience as General Manager of a Cooperative Bank,
expressed himself as President and Chief Executive of an Institute
in his professional documents and had depicted religion and
politics in his letterheads and letters for professional attainments.
Held he was guilty under clause (7).
(K. Bhattacharjee vs. B.K. Chakraborty - Page 462 of Vol.VII(2) of
Disciplinary Cases - Council's decision dated 11 th to 13th February,
1988 and Judgement dated 10 th June, 1996 dismissing appeal
filed by the Respondent).
1.1.7(70) Where the Respondent used the designation “Share and Stock
Sub-broker” alongwith the designation of “Chartered Accountant”
violating inter alia provisions of this clause.
(A.R. Ranawat in Re: - Page 414 of Vol. VIII (2) of Disciplinary
Cases – Council’s decision dated 26 th to 28th August, 2001)
Advertising Professional Attainments
1.1.7(71) A Chartered Accountant wrote several letters to Government
Department, inter alia, pointing out seniority of his firm, sending
his life sketch and stating that he had a glorious record of service
to the country as well as to the organisation of accountancy
profession with a view to get the audit work. These letters were
clearly in the nature of advertising professional attainments.
(Sirdar P.S. Sodhbans in Re: - Page 1022 of Vol. IV of the
Disciplinary Cases - decided on 13 th and 14th March, 1969).
35
Offering Concessions along with services

1.1.7(72) Where a Chartered Accountant had issued two insertions in a
Journal published by a Chamber of Commerce offering various
services and expressing his willingness to offer the concession in
respect of all services offered by him.
Held that he was guilty under clauses (6) & (7).
(N.O. Abraham Isaac Raj in Re:- Page 117 of Vol.VII(2) of
Disciplinary Cases – Council’s decision dated 9th to 11th April,
1992).
Letter giving Impression as if sent to many organisations
1.1.7(73) Where a Chartered Accountant had addressed a letter to the
Managing Director of a Company offering his services as a
practising Chartered Accountant and giving impression that the
letter had been addressed to more than one organisation for the
above purpose, it was held that the Member had contravened the
provisions of clauses (6) & (7).
(Yogesh Gupta in Re:- Page 400 of Vol.VII(2) of Disciplinary
Cases - Council's decision dated 23 rd& 24th February, 1996)
Advertisement of Services
1.1.7(74) A Chartered Accountant sent New Year Greeting Cards bearing
his name, qualification, the name and address of his firm and also
containing the following:
“List of super hit books written by Suresh D. Chauhan. Guide to
win girls – Income-Tax raid. Contact for any type of bank for
institutional loans or deposits”. Held that the Chartered Accountant
contravened Clause (6) & (7) of Part-I of the First Schedule in
having solicited assignment relating to any type of bank or
institutional loans or deposits.
(S.D. Chauhan in Re: – Page 226 of Vol.VIII(2) of Disciplinary
Cases – Council’s decision dated 1 st - 3rd August, 2001).
1.1.7(75) A Chartered Accountant had issued the following advertisements
in “Hindustan Times” –
36
“Experienced C.A. having Posh Office with telephones, Computer,

Telex, Car, Qualified Staff available for taxation, Company Law,
Accounts, Internal control, Financing from banks and institutions,
contact phone ……….” By issuing the above advertisement, the
Respondent has tried to (i) solicit clients of professional work
either directly or indirectly, (ii) advertised his professional
attainments of services in violation of Clause (6) & (7) Part I of the
First Schedule.
(Rajeev Sharma in Re: - Page 454 of Vol.VIII(2)of Disciplinary
1.1.7(76) Where a Chartered Accountant advertised services and used
designations/expression other than “Chartered Accountant” in
professional stationery. Held that he was inter alia guilty of
professional misconduct under the Clause (7) of Part I of First
(Sri Nath Prasad vs. Vineet Aggarwal – Page 23 Vol. IX-2B-21(4)
of Disciplinary Cases – Council’s decision dated 2 nd to 4th
February, 2004).
Representation as an Agent of LIC Housing Finance Ltd.
1.1.7(77) A Chartered Accountant firm was working as Recovery Agent for
Housing Finance Company without taking any permission from the
Council to engage in any work other than the profession of
Chartered Accountancy. The Respondent had written a letter to
the Complainant for recovery of money wherein he represented
himself as an agent of LIC housing Finance Ltd. He intimidated
the Complainant with harsh and coercive method of recovery.
Held that the Respondent was guilty under clauses (7) & (11) of
Part I of First Schedule.
(Yogesh Kumar Sharma vs. O.P. Maheshwari of M/s O.P.
Maheshwari & Co. (25-CA(212)/2003). - to be published later
under Disciplinary Cases Volume X-2B–21(4). Council decision of
281st Meeting held in October, 2008).
37
Use of Logo
1.1.7(78) Where a Chartered Accountant as an in-charge of TIN Facilitation
Centre of National Securities Depository Limited (NSDL) had
accepted part of the profits of the professional work of a person
who was not a Member of the Institute. He was acting as CEO of
the said facilitation centre and had written on public platform and
sought work from an undisclosed person. He responded to a mail
soliciting the job. In his resume, he advertised his professional
attainments and which was like a circular and the same was sent
to stranger. In addition, he used the logo in his visiting card and in
the resume of the firm.
Held guilty of “professional misconduct” falling under Clause (7) of
Part I of First Schedule to the Chartered Accountants Act, 1949.
(Amresh Kumar Vashisht vs. Anuj Goyal Re: Page 165 of Vol I
Part I of Disciplinary Cases, Judgement delivered on 3 rd February,
2011, Further Judgement delivered on 28thJanuary 2012 by
Appellate Authority).
Propagating services through SMS
1.1.7(79) Where a Chartered Accountant allegedly propagating his services
subsequent to demonetization, an objective of Government of
eradicating black money, through mass SMS alongwith his mobile
number offering his services towards conversion of cash with
minimum tax liability.
of Clause (6) & (7) of Part I and “Other Misconduct” falling within
the meaning of Clause (2) of Part IV of First Schedule read with
section 22 of the Chartered Accountants Act, 1949.
(Kailash Shankarlal Mantry in Re: [PPR/392/2016 /DD/135/INF
/2016/BOD/240/17] Judgement delivered on 30 thMay 2017).
---------
38
1.1.8 Clause (8): accepts a position as auditor previously held by

anotherchartered accountant or a certified auditor who has been
issued certificate under the Restricted Certificate Rules, 1932
without first communicating with him in writing;
Failed to communicate unintentionally
1.1.8(80) Where a Chartered Accountant failed to communicate in writing
with the previous Auditor of his appointment as Auditor of a Co-
Operative Bank and such omission was not intentional.
Held that the breach was only technical and that it was open to the
High Court to award a lesser punishment than removal of a
Member.
(S.V. Kharwandikar vs. D.K. Borkar - Page 113 of Vol.I of the
Disciplinary Cases and page 236 of November, 1952 issue of the
Institute’s Journal-Judgement delivered on 18th August, 1952).
Reasonable time not given for reply
1.1.8(81) A Chartered Accountant commenced the work of audit on the very
day he sent letter to the previous Auditor
The appointment could be accepted only when the outgoing
auditor does not respond within a reasonable time.
(S.N. Johri vs. N.K. Jain - Page 1042 of Vol.IV of the Disciplinary
Cases - decided on 13th, 14th & 15th September, 1973).
1.1.8(82) Where a Chartered Accountant as incoming Auditor had made
written communication with the outgoing Auditor by hand delivery
for seeking his ‘No Objection Certificate’ and without providing
reasonable time the incoming auditor conducted the audit and
signed the audit report. He also could not produce any
documentary evidence of written communication.
Held guilty of professional misconduct falling under Clause (8) of
Part I of the First Schedule to the Chartered Accountants Act,
1949.
(Rajesh Rathi of M/sRathi Pasari & Associates vs. Ramod Tapdiya
of M/s Pramod Tapdiya & Associates Re:-Page 207 of Vol. II Part
I of Disciplinary Cases, Judgement delivered on 13 thJanuary,
2014)
39
1.1.8(83) Where a Chartered Accountant had accepted the Statutory Audit

of a Bank without giving reasonable time period to the previous
Auditor for responding. He sought NOC from the previous auditor
and on the same date he commenced the Audit. Though he
submitted that he had sent the communication earlier but could
not produce any documentary evidence.
Held guilty of professional misconduct falling within the meaning of
Clause (8) of Part - I of First Schedule to the Chartered
Accountants Act. 1949.
(Milind Ramchandra Kulkarni (based on letter received) Re: Page
76 of Vol I Part I of Disciplinary Cases, Judgement delivered on
3rdFebruary, 2011).
Sent Communication after commencement of Audit
1.1.8(84) A Chartered Accountant sent a registered letter to the previous
auditor after the commencement of the audit by him.
(Radhe Shyam vs. K.S. Dubey - Page 234 of Vol. V of the
Disciplinary Cases - decided on 15 th& 16th February, 1974).
Commenced Audit in Five Days without Communication
1.1.8(85) A Chartered Accountant commenced the audit within five days of
the date of his appointment without sending any communication to
the previous auditor. The previous auditor also denied the receipt
of any communication.
(S.B. Chidrawar vs. C.K. Rao - Page 251 of Vol. V of the
Disciplinary Cases - decided on 19 th & 20th July, 1974).
Registered Post without Acknowledgement
1.1.8(86) A Chartered Accountant had sent a communication to the previous
auditor under certificate of posting without obtaining any
acknowledgement thereof. The Council held the Member guilty in
terms of this Clause.
On an appeal made by the Member, the High Court observed that
the expression “in communication with” when read in the light of
40
the instructions contained in the booklet “Code of Conduct” could

not be interpreted in any other manner but to mean that there
should be positive evidence of the fact that the communication
addressed to the outgoing auditor had reached his hands.
Certificate of Posting of a letter could not in the circumstances be
taken as positive evidence of its delivery to the addressee.
(M.L. Agarwal vs. J.S. Bhati - Page 65 of Vol. V of the Disciplinary
Cases and pages 305-307 of November, 1975 issue of the
Institute’s Journal - Judgement delivered on 29 th August, 1975).
1.1.8(87) A Member accepted the position of a statutory auditor and sent
the communication to the previous auditor through Registered
Post without Acknowledgement Due. The Council held the
Member guilty of professional misconduct under Clause (8) of Part
I of First Schedule to the Chartered Accountants Act, 1949.
(Ashok K. Aggarwal vs. Yogesh Thakur - Page 89 Vol X-2A-21(4)
of Disciplinary Cases – Council’s decision dated 29 th August,
2005).
Communication under Certificate of Posting
1.1.8(88) A Chartered Accountant sent under postal certificate, letters to the
previous auditor before appointment and also before
commencement of audit by him but there was no proof that they
were received by the previous auditor.
The communication was not proper within the meaning of the
words Communication with occurring in the clause.
(Mehra Khanna & Co. vs. Man Mohan Mehra - Page 292 of Vol.V
of the Disciplinary Cases - decided on 22nd& 23rd December,
1976).
1.1.8(89) A Member sent under Certificate of Posting a letter to the previous
auditor before accepting his appointment as the auditor of a
society but there was no proof that the said letter was received by
the previous auditor. He was found guilty in terms of this Clause
because a mere posting of a letter under certificate of posting is
not sufficient to establish communication with the retiring auditor
unless there is some other evidence to show that the letter has in
fact reached the person communicated with.
41
(A.K. Todani vs. A.P. Bhadani - Page 177 of Vol.VI(2) of

Disciplinary Cases - Decided on 15th, 16th and 17th December,
1988)
1.1.8(90) A Member sent “under Certificate of Posting” letter to the previous
auditor before accepting the audit of a Charitable Society. He
could not produce any conclusive evidence that the said letter was
received by the previous auditor. Mere posting of a letter “under
Certificate of Posting” is not sufficient to prove communication
with the retiring auditor unless there is other evidence that the
letter has in fact reached the person communicated with. He was
found guilty in terms of this Clause.
(J. Patnaik vs. Y. Pani - Page 219 of Vol. VI(2) of Disciplinary
Cases - Decided on 15th, 16th and 17th December, 1988).
1.1.8(91) A Member sent “under Certificate of Posting” letter to the previous
auditor before accepting the tax audit of a Partnership Firm. But
there was no proof that the said letter was received by the
outgoing auditor. He was found guilty in terms of this Clause
because a mere posting of a letter “Under Certificate of Posting” is
not sufficient to establish communication with the retiring auditor
unless there is some other evidence to show that the letter has in
fact reached the person communicated with.
(S.K. Jain vs. D.K. Karmakar - Page 348 of Vol. VI(2) of
Disciplinary Cases - Decided on 11th, 12th, 13th and 14th
September, 1989).
1.1.8(92) It was observed that mere posting of a letter under ‘Certificate of
Posting’ was not sufficient to prove communication with the
previous auditor unless the following requirements have been
complied with:
(i) if there is evidence that a communication to the previous
auditor had been by R.P.A.D.
(ii) if there was positive evidence about delivery of the
communication to the previous auditor.
The Respondent had failed to produce in defence that the
communication was received by the previous auditor.
42
The Respondent was held guilty of professional misconduct falling

within the meaning of Clause (8) of Part I of the First Schedule to
the Chartered Accountants Act, 1949.
(Rajiv Bhatnagar, Trustee, Saraswati Educational Foundation,
Noida vs. Sanjeev Vohra, Ludhiana, [DD/188/09/DC/131/2010]).
1.1.8(93) Where the Respondent had accepted the assignment as a
Statutory Auditor of the Trustand sent a letter under Post
Certificate to the previous auditors, about his appointment as
Statutory Auditor of the Trust. The Respondent waited for a
reasonable period before proceeding to commence the Statutory
Audit but no response was received from the previous auditors.
The Respondent accepted the assignment of the Internal Audit
work and continuing the Internal Audit work without
communicating to Complainant firm.
As per the ICAI Regulations – Code of Ethics,Clause (8) of Part I
of the First Schedule, the incoming auditors before accepting to
carry out any professional work done by a previous Auditor,
should necessarily communicate with the previous Auditors in
writing and that too by way “Registered Post with
Acknowledgement Due” (R.P.A.D).
The Respondent was failed to comply with the above and held
guilty of professional misconduct.
(N. Raja, Chennai vs. Subrata Roy Re: [PR/27/2012-DD/80/2012-
BOD/165/2014]).
Communication vide Ordinary Post
1.1.8(94) A Chartered Accountant sent a letter by ordinary post to the
previous auditor after the acceptance of the audit assignment.
Moreover, no evidence was produced to show that the said letter
was either sent to or was received by the previous auditor.
clause as the same amounts to non-communicating with the
previous auditor.
(K.K. Sud vs. K.N. Chandla - Page 306 of Vol. V of the
Disciplinary Cases - decided on 27 th28th& 29thOctober, 1978).
43
1.1.8(95) Member sent the communication by Ordinary Post. The Council

held the Member guilty of professional misconduct under Clause
(8) of Part I of the First Schedule read with Sections 21 and 22 of
(Mahendra R. Shah vs. Ms. Deepali Dattatraya Dalal - Page 443
Vol.X-2A-21(4) of Disciplinary Cases – Council’s decision dated
6th October, 2005).
Communication applicable to Appointment by Governemnt
Agencies also
1.1.8(96) The provision of Clause (8) requiring a communication with the
previous auditor is absolute and applicable even in respect of
appointment by the Government agencies and even in cases
where the Member is aware that the previous auditor had been
made aware of the appointment.
(Rajeev Kumar vs. R.K. Agrawal - Page 143 of Vol. VI(2) of
1988).
Non-Communication in case of Tax Audit
1.1.8(97) Where a Chartered Accountant had conducted Tax Audit of a firm
without first communicating in writing with the Complainant, who
was the previous tax auditor of the said firm.
Held that hewas guilty under the clause.
(V.A. Parikh vs. R.I. Galledar - Page 19 of Vol. VII(2) of the
Disciplinary Cases – Council’s decision dated 6 th to 8th June,
1991).
1.1.8(98) Where a Chartered Accountant accepted the Tax Audit of a
company without communicating with the outgoing Auditor.
Further in Schedule IV – Sundry Creditors for Expenses to the
Balance Sheet of that FY, Rs.3,000/- was shown as outstanding
and payable to him as Audit Fees.
(Vishnu Kumar Javar vs. Vinod K. Jain - Page 7 of Vol I Part I of
Disciplinary Cases, Judgement delivered on 3 rdFebruary 2011).
44
Accepting audit without Communication in Writing

1.1.8(99) Where a Chartered Accountant had accepted a position as Auditor
of a Co-operative Bank previously held by the Complainant
without first communicating with him in writing before accepting
the audit.
(D.H. Firke vs. L.B. Jadhav - Page 26 of Vol. VII(2) of the
Disciplinary Cases – Council’s decision dated 6 th to 8th June,
1991).
1.1.8(100) Where a Chartered Accountant had not replied to two letters which
were sent to him and had conducted the Audits without
communicating with the complainant in writing.
Held that the Member was guilty under the clause.
(V.K. Gupta vs. A.K. Jain - Page 49 of Vol.VII(2) of the
Disciplinary Cases – Council’sdecision dated 16 th September,
1991).
1.1.8(101) Where a Chartered Accountant had not communicated with the
complainant before accepting the appointment as auditor of a
school.
(J.S. Bhati vs. M.L. Aggarwal - Page 87 of Vol.VII(2) of
Disciplinary Cases – Council’s decision dated 4 th& 5thDecember,
1975 and Judgement dated 30 th October, 1991 of Rajasthan High
Court).
1.1.8(102) Where a Chartered Accountant had accepted the position as an
auditor of two Companies previously held by the complainant
without first communicating with him in writing.
(S.K. Kansal vs. S.L. Gupta - Page 131 & 141 of Vol.VII(2) of
Disciplinary Cases – Council’s decision dated 16 th to 18th July,
1992).
1.1.8(103) Where a Chartered Accountant had accepted the position as Tax
45
Auditor of a Company and as Statutory Auditor of another

Company previously held by the Complainant without first
communicating with him in writing.
(Naresh H. Kumbhani vs. P.V. Dalal - Page 272 of Vol.VII(2) of
November, 1993).
1.1.8(104) Where the Respondent had audited the accounts of a Company
without first communications with the previous auditor of the
Company.
Clause (8) of Part I of First Schedule to the Chartered
(Tarak Nath Datta (based on letter received) Re: Page 87 of Vol I
Part I of Disciplinary Cases, Judgement delivered on 3 rdFebruary
2011).
1.1.8(105) The Respondent had accepted Statutory Audit of a non-corporate
entity without first communicating with the complainant in writing.
It was observed that the Respondent adopted very casual
approach in the case and even he was not aware of the fact that
No Objection Certificate (NOC) from previous auditor which was
required to be obtained for Audit.
The Respondent was held guilty of Professional Misconduct falling
(Puneet Bhatia vs. Arvind Kumar Munka [PR/77/16-DD/125/
2016/BOD/ 391/ 2017]).
Non-Communication where Audit Report signed Later
1.1.8(106) A Chartered Accountant accepted the Tax Audit work of a unit of a
State Textile Corporation, for the Assessment Years 1986-87 and
1987-88 under Section 44AB of the Income-tax Act, 1961, without
communicating with the complainant who had done the work for
Assessment Year 1985-86. Although the Tax Audit Report of the
46
Assessment Year 1985-86 was signed much later, yet there was
no doubt that the Complainant was holding the position of the Tax
Auditor of the said unit, on the date of appointment of the said
Chartered Accountant for the next two years viz., 1986-87 and
1987-88. Accordingly, it was incumbent upon him to communicate
with the Complainant before accepting the Tax Audit of the
Corporation as a whole for the assessment years 1986-87 and
1987-88.
Therefore, he was held guilty under Clause (8).
(M.S. Padmanabhan Nair vs. R. Chidambaram - Page 501 of Vol.
VII(2) of Disciplinary Cases – Council’s decision dated 5 th to 6th
December, 1996).
Non-Communication and not ascertaining compliance of
provisions of Companies Act, 1956
1.1.8(107) Where a Chartered Accountant accepted the appointment as
Auditor without first communicating with the previous auditor and
without first ascertaining from the Company whether the
requirement of Sections 224 & 225 of the Companies Act, 1956
had been duly complied with.
Held that he was guilty under the Clauses (8) & (9).
(Lalit K. Gupta of M/s Lalit K. Gupta & Co. vs. Ajay Bansal – Page
145 of Vol.VIII (2) of Disciplinary Cases – Council’s decision dated
1st to 3rd August, 2001).
1.1.8(108) Where a Chartered Accountant accepted audit of three
Companies without first communicating in writing with the previous
auditor. He also accepted the audit without ascertaining whether
the provisions of Section 225 of the Companies Act, 1956 had
been complied with.
Clauses (8) & (9).
(J.R. Kakadiya vs. M.S. Chokshi – Page 179 of Vol. VIII (2) of
Disciplinary Cases – Decision of the Council dated 1 st to 3rd
August, 2001).
47
1.1.8(109) Where a Chartered Accountant accepted the position as auditor

without first ascertaining from the Company as to whether the
provisions of Section 224 (7) of the Companies Act were complied
with and without first communicating with the previous auditor of
the Company. Held that he was inter alia guilty of professional
misconduct under Clauses (8) & (9) of the First Schedule of the
(M/s Jha & Associates vs. S. Dhar - Page 466 of Vol. VIII (2) of
Disciplinary Cases – Council’s decision dated 6 th to 8th December,
2001).
1.1.8(110) Where a Chartered Accountant had accepted the position as the
Statutory Auditor of a company without first communicating with
the previous auditor in writing and without first ascertaining from it
whether the requirement of section 225 of the Companies Act,
1956 in respect of such appointment had been properly complied
with.
Held guilty of ‘Professional Misconduct’ falling within the meaning
of Clauses (8) and (9) of Part I of the First Schedule to the
(Gireesh Bhalla vs. Pradeep Kumar Sharma [PR-312/2014-
DD/327/2014/BOD/256/2017] Judgement delivered on 28 th June,
2018).
Non-Communication in case of Audit of Army Canteen
1.1.8(111) Where a Chartered Accountant accepted the position as Auditor of
Army Canteen without prior communication in writing with the
previous auditor.
Clause.
(Jethanand Sharda vs. Deepak Mehta - Pages 403 of Vol. VIII (2)
of Disciplinary Cases – Council’s decision dated 1st to 3rd August,
2001. Also published in the December 2002 issue of Institute’s
journal at page 628).
Non-Communication and non-acceptance of letters from
Previous Auditor
1.1.8(112) Where a Chartered Accountant accepted a position as auditor of a
48
school without first communicating in writing with the previous

auditor while the Respondent claimed to have sent the letter but
no letter was received by the complainant. In spite of repeated
efforts of postal authorities the Respondent did not accept the
Registered A.D. letters from the complainant.
Clause.
(D.R. Soni vs. H.L. Joshi – Page 101 Vol.IX-2B-21(4) of
September, 2002).
Non-Communication in case of removal of Previous Auditor
1.1.8(113) While the audit was pending, the complainant came to know that
the Respondent had signed the accounts of the Company for the
two years. The Respondent never communicated with
complainant. The complainant had never resigned from the
Auditorship of the Company. No notice for the complainant’s
removal was sent by the Company. The provision of the Section
225 of the Companies Act, 1956 were not complied with properly
by the Company and all this was ignored by the Respondent.
Held that the Respondent was guilty of professional misconduct
within the meaning of Clauses (8) & (9) of the Part I of the First
Schedule of the Chartered Accountants Act, 1949.
(J.P. Gupta vs. Charanjit Malhotra - Page 113 Vol.IX-2A-21(4)of
November, 2002).
1.1.8(114) Even while another C.A. Firm was doing Audit of a Company and
raised audit queries, the Respondent on being approached by the
Company accepted the position of Statutory Auditor.The
Respondent communicated with the previous Auditor after already
signing the balance sheet. He did not bother to examine whether
the provisions of Section 224 and 225 have been duly complied
with. Held that he was guilty of professional misconduct under
Clause (8) & (9) of the First Schedule of the Chartered
49
(S.P. Khemka vs. T.G. Ramanathan – Page 387 Vol IX -2A -21(4)
of Disciplinary Cases – Council’s decision dated 26 th to 28th
December, 2002).
1.1.8(115) Where the Respondent omitted to communicate with the previous
auditor before accepting the audit of Private Limited Company and
also without first ascertaining whether requirements of Sections
224, 225 & 226 of the Companies Act, 1956 were complied with.
Held that he was guilty of professional misconduct under Clause
(8) & (9) of Part I of the First Schedule of the Chartered
(V.K. Wadhwa vs. G.P. Makkar – Page 451 Vol.IX-2A-21(4) of
December, 2002).
1.1.8(116) The Complainant was appointed Statutory Auditor of a Private
Limited Company but the Company did not get their Accounts
Audited by the complainant. Later the Company produced a
Balance Sheet and Profit and Loss Account before the
complainant for Statutory Audit and report prepared by the
Respondent’s firm in the capacity as an Internal Auditor without
any books of account, which the complainant refused to do. The
Respondent was appointed as Internal Auditor, then as Branch
Auditor and finally as Statutory Auditor without any knowledge of
the complainant. The Respondent signed the unaudited financial
statement as the Statutory Auditor and the same was filed with the
Registrar of Companies under section 220 of the Companies Act,
1956. Held that the Chartered Accountant was guilty of
professional misconduct within the meaning of Clauses (8) & (9) of
(Phool Chand Gupta vs. Parshu Ram Bhagat – Page 671 Vol.IX-
2A-21(4) of Disciplinary Cases – Council’s decision dated 16 th to
18th September, 2003).
1.1.8(117) The Complainant was the Tax Auditor of a firm for three financial
years under Section 44 AB of the Income Tax Act, 1961. On
reminding the auditee firm for getting the accounts audited for
subsequent years, the auditee firm informed the Complainant that
50
the work had been entrusted to another Chartered Accountant and

he had also completed the audit. Thus, the Respondent firm had
not only accepted the said tax audit but also completed the same
without first communicating with the Complainant.
Held that the Chartered Accountant was guilty of professional
(S.M. Momaya of M/s S.M. Momaya & Co. vs. Ashok Sharma of
M/s Ashok K. & Co. – Page 199 Vol.IX-2B-21(4) of Disciplinary
Cases – Council’s decision dated 15 th to 17th April, 2004).
1.1.8(118) The Complainant’s firm (previous auditor) was appointed as
auditors of a company at its Annual General Meeting and re-
appointed for the subsequent year. In absence of any resignation
from previous auditor or notice for removal and the change of
auditors, the incoming auditor accepted the appointment without
first communicating. The incoming auditor did not verify the
compliance of Section 224 and 225 of the Companies Act, 1956.
The Council held the incoming auditor guilty of professional
misconduct under Clauses (8) and (9) of Part I of First Schedule
read with Sections 21 and 22 of the Chartered Accountants Act,
1949.
(Rajeev Mittal of M/S. Mittal Rajeev & Associates vs. Rajeev Shah
of M/s Bihani & Shah - Page 454 Vol.X-2A-21(4) of Disciplinary
Cases – Council’s decision dated 6 th October, 2005).
1.1.8(119) The Complainant-firm was the Statutory Auditors of a company
since its incorporation and Audited and certified the Company’s
Accounts up to 1994. They completed the routine audit of the
Company’s Accounts for the year ending 31 st March, 1995 and the
trial balance along with the schedules and draft accounts was
handed over to the Company for approval of the Board of
Directors. Later, the Incoming Auditor took up the Audit and
certified the Accounts for the same year, without communicating
and ascertaining the compliance of provisions of Section 225 of
Companies Act, 1956. The Council held the incoming auditor
guilty of professional misconduct under Clauses (8) and (9) of Part
I of First Schedule to the Chartered Accountants Act, 1949.
51
(Vinod Somani vs. M.L. Agarwal - Page 511 Vol.X-2A-21(4) of

Disciplinary Cases – Council’s decision dated 2 nd August, 2006).
1.1.8(120) Where complainant audited the accounts of six Companies and
seven Trusts up to the year ended 31 st March, 2001 and was re-
appointed as auditors of these Companies in their respective
Annual General Meetings and also as auditors of these Trusts.
The Complainant never tendered any resignation. Later, the
Respondent (Incoming Auditor) informed the Complainant by
letter, of their appointment as auditors of the above Companies
and Trusts, to which the Complainant endorsed by mentioning
their objection and gave the same to the bearer who brought the
letter. The provisions of Section 225 of the Companies Act, 1956
were not complied with and the previous Auditor’s Fee was also
outstanding. The Council held the Incoming Auditor guilty of
Professional Misconduct under Clauses (8) and (9) of Part I of the
First Schedule and also guilty under Notification No. 1-
CA(7)/46/99 dated 28 th October, 1999 issued under Clause (ii) of
Part II of the Second Schedule read with Sections 21 and 22 of
(Prakash Chand Surana of M/s. Prakash Surana & Associates vs.
Pratap Singh Surana of M/s. Pratap Singh Surana & Co. - Page
466 Vol.X-2A-21(4) of Disciplinary Cases – Council’s decision
dated 6th October, 2005).
Non-Communication despite repeated follow Ups
1.1.8(121) Where a Chartered Accountant accepted the Tax Audit u/s 44AB
of the Income-Tax Act without first communicating with the
previous auditor. The complainant wrote a letter to the
Respondent to bring the aforesaid default to his notice but did not
received any reply from the Respondent. The Respondent had
telephonically talked to the complainant and said that the client
explained him that the previous auditor had gone out of station
and therefore he wanted him to audit his firm’s account. The
Respondent accepted the said explanation of the client without
communicating with the complainant in writing. Held that he was
guilty of professional misconduct under Clause (8) of Part I of the
First Schedule of the Chartered Accountants Act, 1949.
52
(H.M. Kataria vs. R.K. Malpani – Page467 Vol.IX-2A-21(4) of

December, 2002).
Where removal not informed to the Previous Auditor
1.1.8(122) The Complainant was the Statutory Auditor & Tax Auditor of five
Companies/firms and part audit was done for two entities. The
Complaint sent four letters to the management for commencement
of remaining period/remaining firms. The complainant was then
informed by the management that the audit statement had been
already issued by the Respondent firm. Neither the firms/
Companies had sent any prior information/board/AGM resolution
regarding the change of auditor nor the Respondent had sent any
intimation regarding the acceptance of audit.
(8) and (9) of Part I of the First Schedule of the Chartered
(Sunil Kashyap of M/s P.C. Bafna & Co. vs. Deepak Batra –
Page435 Vol.IX-2A-21(4) of Disciplinary Cases – Council’s
decision dated 26 th to 28th December 2002).
1.1.8(123) Where a Chartered Accountant had signed the Balance sheet of
three Companies which had common Directors. The Balance
Sheet was still subject to audit and was never signed by the
previous Auditor. He had not even communicated with the
outgoing Auditor for NOC before accepting the appointment of
Statutory Auditor.
Held guilty of “professional and other misconduct” under Clauses
(8) and (9) of Part I and Clause (2) of Part IV of the First Schedule
to the Chartered Accountants Act, 1949.
(Anil Kumar Goel vs.A. Anurag Nirbhaya Re : Page 356 of Vol II
Part-I of Disciplinary Cases, Judgement delivered on 6th February,
2014).
Communication made after signing the Balance Sheet
1.1.8(124) Where a Chartered Accountant, even before informing the
complainant who was the auditor of the Company and doing the
53
audit, signed the balance sheet and informed the complainant

after signing the balance sheet.
Held that he was inter alia guilty of professional misconduct under
the Clause.
(Ashok Kumar Pathak of M/s A.K. Pathak & Associates vs.
Yogesh Bansal of M/s Y.K.B. Associates – Page 564 Vol.IX-2A-
21(4) of Disciplinary Cases – Council’s decision dated 26 th to 28th
December, 2002).
1.1.8(125) Where the Respondent had accepted the position as Tax Auditor
of his client without first communicating in writing with the previous
auditor. Later, he hadsent a letter to the previous auditor for
seeking no objection and the letter was received by the previous
auditor after 7days of signing the Audit Report by the Respondent.
Hence, no time was given to the previous auditor for raising any
objection.
within the meaning of Clause (8) of Part I of First Schedule to the
(Siddheshwar Vithal Mali in Re: Page 82 of Vol I Part I of
Disciplinary Cases, Judgement Delivered on 3 rd February, 2011).
1.1.8(126) A Chartered Accountant had accepted the Tax Audit assignment
without any written communication to the previous auditor and at
the behest of two directors, and one employee of the Company,
despite the knowledge and information that the complainant had
already completed the Audit. The Respondent not even cared to
know the reasons for change of Tax Auditors by the Company. He
despite full knowledge and information that the Complainant’s
legitimate professional fee was not paid by the said Company
acted in collusion with the Directors and employee of the
Company.
Clause.
54
(Suresh S. Thakkar vs. Virendra S. Nayyar – Page 759 Vol.IX-2A-

September, 2003).
Non-communication on the pretext of completing work on
time
1.1.8(127) Where a Chartered Accountant accepted the Tax Audit of two
mills without first communicating with the previous auditor. When
the matter was taken up by the complainant with the Respondent,
the latter replied that he had started the audit work without
communicating with the former only in the interest of completing
the work in time.
Clause.
(M. Gopalasamy vs. N. Raja – Page 834 Vol.IX-2A-21(4) of
Disciplinary Cases – Council’s decision dated 16th to 18th
September, 2003).
Communication sent through some other Modes
1.1.8(128) Where a Member carried out the Tax Audit of a firm and sent the
communication through a letter and not by Registered Post
Acknowledgement Due (RPAD).
The Council held the Member guilty of professional misconduct
under Clause (8) of Part I of the First Schedule to the Chartered
(S. S. Ajmera vs. S. R. Ghatge of M/s S. R. Ghatge & Co. - Page
417 Vol.X-2A-21(4) of Disciplinary Cases – Council’s decision
dated 7th July, 2005).
1.1.8(129) A Member accepted the position of Tax Auditor without
communicating with the previous auditor when the previous
auditor was acting as Tax Auditor without having appointment
letter for the same. The Council held him guilty of professional
misconduct under Clause (8) of Part I of the First Schedule of the
Chartered Accountants Act, 1949 but not under Notification No. 1
CA (7)/46/99 dated 28 th October, 1999 as payment of fees
55
outstanding towards internal audit does not fall the requirement of

the notification.
(J.R. Shah of M/s J.R. Shah & Co. vs. Rajiv B. Pethkar of M/s
Rajiv Pethkar & Associates - Page 380 Vol.X-2A-21(4) of
Disciplinary Cases – Council’s decision dated 29 th August, 2005).
1.1.8(130) The Complainant conducted the Statutory Audit of a Company and
issued the Auditor’s Report. Subsequently, the Company
conducted its AGM and requested the complainant to conduct
Statutory Audit for the subsequent year. But, the Respondent-firm
accepted and conducted the Statutory Audit, without first
communicating with the previous auditor in writing and also
without ascertaining whether the requirements of Section 224 and
225 of the Companies Act, 1956 had been complied with, and
signed the accounts and audit report (through its partner) without
knowledge of the Complainant. The Council held the incoming
auditor guilty of professional misconduct under Clauses (8) and
(9) of Part I of the First Schedule read with Sections 21 and 22 of
(Sanjay Kalra of M/s S. Kalra & Associates vs. B.M. Goel of M/s.
Kapoor Bhushan & Co. - Page 525 Vol.X-2A-21(4) of Disciplinary
Cases – Council’s decision dated 22 nd June, 2006).
Non-communication & Non - Payment of pending undisputed
Audit Fees of Previous Auditor
1.1.8(131) A Member accepted the position as Auditor without first
communicating with the previous auditor. He accepted the
appointment even before the undisputed fees payable to the
Complainant was paid. The compliance with Section 224 and 225
of the Companies Act, 1956 were not complied with by the
Incoming Auditor.
The Council held the Incoming Auditor:
(a) guilty of professional misconduct falling within the meaning
of Clauses (8) and (9) of Part I of First Schedule to the
Chartered Accountants Act, 1949 and also
(b) guilty within the meaning of Notification No.1-CA(7)/46/99
dated 28th October, 1999 under Clause (ii) of Part II of
Second Schedule to the Chartered Accountants Act, 1949.
56
(D.G. Chandak vs. S.D. Chauhan of M/s. S.D. Chauhan & Co.,
Mumbai - Page 492 Vol.X-2A-21(4) of Disciplinary Cases –
Council’s decision dated 5 th January, 2006).
1.1.8(132) A Member accepted Tax Audit, without communicating with the
previous auditor. Also, he was negligent while auditing as he was
required to check as to how and by what mode the fees had been
finally paid to the previous auditor, which was earlier appearing
under the list of sundry creditors. He further failed to check the
facts and look into the documentary details before signing the
report. The Council held him guilty of:
(a) professional misconduct under Clause (8) of Part I of the
(b) professional misconduct under Clause (7) of Part I of the
(Bhushan Khot of M/s. Bhushan Khot & Co. vs. Mahesh M. Bhatt -
Page 424 Vol.X-2A-21(4) of Disciplinary Cases – Council’s
decision dated 7 th July, 2005).
1.1.8(133) A Member without communicating with the previous auditor and
without ascertaining that the undisputed fees payable to the
previous auditor was duly paid, was held by the Council, as guilty
of:
(a) professional misconduct under Clause (8) of Part I of the
First Schedule to the Chartered Accountants Act, 1949 and
(b) under Notification No.1-CA(7)/46/99 dated 28 th October,
1999 issued under Clause (ii) of Part II of the Second
Schedule read with Sections 21 and 22 of the Chartered
(Jugal Kishore Soni of M/s J. K. Soni & Associates vs. Abhijit
Matilal - Page 323 Vol.X-2A-21(4) of Disciplinary Cases –
Council’s decision dated 7 th July, 2006).
1.1.8(134) A Chartered Accountant accepted Tax Audit of firm without
communicating with the complainant, who was the previous
auditor in writing. The Respondent accepted the aforesaid
assignment inspite of audit fee remaining outstanding.
57
It was held that the Chartered Accountant was guilty under clause
(8) of Part I of First Schedule and not under Notification No. 1–CA
(7) 46/99 read with Section 21 & 22 of The Chartered Accountants
Act, 1949.
(Har Narayan Rathi vs. Deepak Mehta (25-CA(107)/2004). - to be
published later under Disciplinary Cases Volume X-2B-21(4).
Council decision of 277 th Meeting held in March – April 2008).
1.1.8(135) Where a Chartered Accountant accepted the audit of three
companies for three consecutive F.Y.s without any information to
the previous auditor and without first ascertaining whether the
outstanding audit fees of Rs. 15,640/- had been paid to the
previous firm.
(Ram Pyare Pandey vs. Praveen Anand Singh Re: Page 122 of
Vol I Part I of Disciplinary Cases, Judgement delivered on 1 st
August, 2011).
1.1.8(136) The Respondent failed to make a written communication with the
Complainant and accepted audit even though the Complainant’s
outstanding balance/fees of Rs. 3,57,963/- was due.It was noted
that the Complainant was given a postdated cheque by the
Company whereas, the Respondent had signed the audit report
before the date of cheque which clearly proved that the audit fee
of the Complainant was due on the date of accepting the audit by
the Respondent and the same remained unpaid on the date of
signing of the audit report. Thus, the Respondent has contravened
the Council Guidelines, 2008 as undisputed audit fees of the
previous auditor was outstanding on the date of accepting the
audit and signing the audit report.
within the meaning of Clause (8) Part I of the First Schedule and
Clause (1) Part II of Second Schedule to the Chartered
(Ajay Kumar Singhal vs. Anil Kumar, - Page 517 of Vol. II of Part I
of the Disciplinary Cases of April, 2015 judgement delivered on
21th August, 2014).
58
1.1.8(137) Where the Respondent had accepted the Tax Audit of a company
for the Financial Year 2009-10 relevant to the assessment year
2010-11 without communicating and taking no objection certificate
from the previous Auditor. The huge amount of audit fees and
other professional charges were also pending as payable to the
Complainant.
Clause (8) of Part I of the First Schedule and Clause (1) of Part II
ofthe Second Schedule to the Chartered Accountants Act, 1949
(Jatinder Kumar Jain vs. Sundeep Kumar Re: [PR-65/2011-
DD/62/11/DC/328/14] Judgement delivered on 25 th July, 2016).
1.1.8(138) Where a Chartered Accountant had accepted the position as an
auditor of a company without communicating with the previous
auditor in writing and could not produce any documentary
evidence of that. Further he had not paid the professional fees of
the outgoing Auditor.
Part I of First Schedule to the Chartered Accountants Act,
1949.Further, he was not guilty of professional misconduct with
respect to second charge falling under Clause (1) of Part II of
(B. L. Goyal vs. Suresh Advani Re: Page 12 of Vol I Part I of
Disciplinary Cases, Judgement delivered on 3 rd February, 2011).
Partner of Firm subsequently accepting the work in Individual
Capacity
1.1.8(139) The Respondent being a partner of a Firm, had left the Firm and
subsequently influenced the clients to switch over to his personal
practice. Moreover, he did not communicate with the previous
auditor while accepting the appointment of the Companies.
(Manindra Chandra Poddar vs. Manas Ghosh - Page 21 of Vol. II
Part I of Disciplinar Cases, Judgement delivered on
11thSeptember, 2013).
59
Non-Communication in case of Audit of a Private Bank

1.1.8(140) Where a Chartered Accountant had accepted appointment as a
Statutory Auditor of a Private Limited company without
communicating in writing with the previous auditor.
(Dinesh Gupta vs. Amit Gupta - Page 32 of Vol.II Part I of
Disciplinary Cases, Judgement delivered on 11 th September
2013).
Non-Communication and Collusion with the Client in
irregularities
1.1.8(141) Where a Chartered Accountant was appointed as a Statutory
Auditor of a housing society where the Committee Members
beside doctoring and fabricating records, committed innumerable
illegalities in accounts of the Society to manipulate the huge funds
and was also hand in glove with the Committee. Beside this he
accepted the appointment of the auditor without any
communication with the previous Government Certified Auditor.
(Gautam R. Patel vs. Bharat Kumar Haridas Mehta - Page 80 of
Vol.II Part I of Disciplinary Cases, Judgement delivered on
4thOctober 2013).
Non-Communication & giving different opinion in respect of a
same set of transaction
1.1.8(142) Where the Respondent had failed to communicate with the
previous auditor before accepting the position of Statutory Auditor
of the Company and he certified the financial statements of two
companies which gave different opinion in respect of a same set
of transaction relating to waiving off loan amount:
(i) In case of one company, the Respondent gave his opinion
based on legal opinion given by the Complainant, and
60
(ii) In case of another company, the Respondent expressed his

inability to express an opinion which was substantial
amount in the financial statement as required by AS -28.
within the meaning of Clause (8) of Part I of First Schedule and
Clauses (6) and (7) of Part I of the Second Schedule to the
(H.N. Motiwalla vs. Nanalal Vishanji Parmar- Page 273 of Vol. II of
the Disciplinary Cases of April, 2015 judgement delivered on 15 th
October, 2013).
Communication through Courier
1.1.8(143) Where a Chartered Accountant had couriered the letter to seek
the NOC from the previous auditor but failed to produce the POD
of the said courier as a documentary evidence before the Board.
(Sunil Prakash Goyal vs. Balraj Kalia - Page 1 of Vol. II Part I of
Disciplinary Cases, Judgement delivered on 8 th August, 2013).
1.1.8(144) Where a Chartered Accountant failed to communicate with the
previous auditor and conducted the audit of certain client without
obtaining the NOC. Though he submitted that the letter was
couriered but could not produce any documentary evidence.
(Sudhanshu Sharma vs. Pankaj Kumar Goyal - Page 307 of Vol. II
Part I of Disciplinary Cases, Judgement delivered on 31stJanuary,
2014).
Acknowledgement Proof not preserved
1.1.8(145) The Respondent had been appointed by the client as Statutory
Auditor. Although, the Respondent sent some letters to the
Complainant seeking his ‘no objection certificate’, but the
Respondent had neither preserved nor produced any proof of
acknowledgement towards receipt of such letter(s) by the
61
Complainant. Hence, it was clear that there was no proper

communication by the Respondent with the Complainant before
accepting the position of the Statutory Auditor.
the Chartered Accountants Act 1949.
(Vasant Gopiram Torka vs. Piyush H. Baxi Re: [PR-216/13-
DD/214 /2013/BOD /180/ 2014]).
Personal visit not material as a Proof
1.1.8(146) The Respondent had accepted the appointment as an auditor of
the proprietorship firm and had sent a letter to the Complainant for
seeking No Objection Certificate by the ordinary post but the letter
did not reach the Complainant’s office. For the same, the
Respondent apologized to the Complainant both on phone as well
as personally by visiting his office and assured him that in future
such kind of mistakes will not be repeated. In the opinion of the
Council, communication by a letter sent through “Registered
Acknowledgement due” or by hand against a written
acknowledgement would, in normal course provide such evidence.
The Respondent wasguilty of “Professional Misconduct” falling
(Atul Jindal vs. Vivek Gupta Re: [PR-79/2015-DD/81/2015/BOD
/266/2017])
---------
62
1.1.9 Clause (9) Accepts an appointment as auditor of a company

without first ascertaining from it whether the requirements of the
Companies Act, in respect of such appointment have been duly
complied with;
Some Decisions of the Council and High Courts :-
Failure to ascertain the requirements of Companies Act
1.1.9(147) Where a Chartered Accountant applied in response to an
advertisement in a newspaper for appointment as auditor and was
appointed by the Directors and failed to communicate with the
previous auditor and ascertain from the Company whether the
requirements of the Companies Act as regards the appointment of
the auditors were duly complied with.
Held the Respondent, was guilty on both the counts under clauses
(8) and (9).
(B.N. Mohan vs. K.C.J. Satyawadi - Page 11 of Vol. II of the
Disciplinary Cases and page 494 of May, 1955 issue of the
Institute’s Journal-Judgement delivered on 10 th March, 1955).
1.1.9(148) A Chartered Accountant accepted the appointment as Statutory
Auditor of the Company on the basis of resolution of Board of
Directors. There was no compliance with the requirement of
Section 224 of the Companies Act, 1956 which in the present case
required the appointment by the Central Government as the
Company did not make appointment in the general meeting.
misconduct under the Act.
(M.K. Biswas in Re:- Page 979 of Vol.IV of the Disciplinary
Cases - decided on 11th September, 1962).
1.1.9(149) A Chartered Accountant accepted the appointment as auditor of
the Company without first ascertaining whether the requirement of
the Companies Act, 1956 in respect of such appointment have
been complied with. The Central Government agreed to the
removal of previous auditor and the appointment of the Chartered
Accountant as auditor in his place subject to the approval of the
63
shareholders in the general meeting. However, the Chartered

Accountant accepted the audit on the basis of the resolution of the
Board of Directors and before the General Meeting ratified of the
resolution of the Board of Directors.
(D.L. Sukhadia in Re: - Page 279 of Vol. V of the Disciplinary
Cases - decided on 22nd& 23rdDecember, 1976).
1.1.9(150) A Member had been appointed the First Auditor of a Company
within 30 days of the incorporation as required by Section 224(5)
of the Companies Act. Later another Member was appointed as
the joint auditor nearly after 8 months of the incorporation of the
Company, by a resolution of the Board of Directors. It was found
that the appointment of the second Member was not valid in terms
of Section 224(5) of the Companies Act. It was also found that the
second Member did not ascertain whether there was compliance
with the provisions of Sections 224(5) and 225 of the Companies
Act. The second Member was therefore found guilty in terms of
this Clause. It was also found that Respondent had not
communicated with the complainant as required by Clause (8) and
in so far as he had not done so, he was guilty.
(C.L. Tomson vs. K.A. Chandrasekhara Menon - Page 357 of Vol.
VI(2) of Disciplinary Cases - Decided on 18th, 19th and 20th
December, 1989).
1.1.9(151) A Chartered Accountant had accepted the appointment as Auditor
of a Private Limited Company without communicating with the
previous auditor. He accepted the audit and surprisingly
completed the audit on the same day and signed the balance
sheet on the very next day. He did not ensure that the client
Company had complied with the provisions of Section 225, or
224(6) of the Companies Act, 1956, in changing its auditor.
He was held guilty under Clauses (8) & (9).
(S.I. Majumdar vs. Vinod Rana - Page 484 of Vol VII(2) of
Disciplinary Cases – Council’s decision dated 5 th to 6th December
1996).
64
1.1.9(152) A Chartered Accountant had accepted the appointment of a

Company to carry out the Statutory Audit for the FY 2006-07 as
decided in the AGM of the Company. The previous Auditor was
appointed in the AGM of 2006 to carry out the Audit of the
Company for the FY 2006-07.To remove the duly appointed
Auditor before the expiry of the next AGM, the Company needs to
follow the provisions under Section 224(7) of Companies
Act,1956. He failed to ensure that the provisions of Sections
224/225 of the Companies Act,1956 had been duly complied with.
However, he did communicate with the previous Auditor through
registered post with AD and signed the Balance Sheet after one
month of sending the letter.
He was however held not guilty of professional misconduct falling
within the meaning of Clause (8) of Part I of First Schedule to the
(Dipak Kumar Mitra in Re:- Page 128 of Vol I Part I of Disciplinary
Cases,Judgement delivered on 1st August, 2011).
1.1.9(153) The Respondent has not ensured the compliance of the provisions
of Section 224, 224A & 225 of Companies Act, 1956 before
accepting the appointment as Statutory Auditor of the Company.
Moreover, the letters/correspondence with the existing Statutory
Auditor showed that they had neither resigned nor had given any
NOC to the Respondent and had never shown unwillingness to act
as auditor of these Companies.
On the other hand, the Respondent conducted the audit without
carrying out detailed checks and did not give a reasonable period
for obtaining the necessary information before expression of his
opinion. Also, the Respondent did not collect necessary
documents which were the basic requirements for carrying out the
audit (i.e. details of funds transferred from banks, sales of
Investments, Investments made etc.), were in possession of the
Complainant. In these respects, the Respondent ought to have
qualified his audit report or draw the attention to the management.
Instead, he only mentioned in the Notes to Accounts the
transactions which were unknown to him.
65
The Respondent was held guilty of ‘Professional Misconduct’

falling within the meaning of Clauses (8) & (9) of Part I of First
Schedule and also under Clauses (7), (8) & (9) of Part I of Second
(B.B. Singhal vs. Rajesh Kumar – Page 321- of Vol. II of the
Disciplinary Cases of April, 2015 judgement delivered on 7 th
October, 2013).
1.1.9(154) A Chartered Accountant did not communicate with the previous
auditor and failed to ensure the compliance with the provisions of
Section 224 and 225 of the Companies Act, 1956 before accepting
the appointment as a statutory auditor of the Company.
Held guilty of “Professional Misconduct” falling within the meaning
of Clauses (8) and (9) of Part I of the First Schedule to the
(Bomkesh Sett & Pratha Pratim Sett vs. Pradip Kumar Agrawal
Re: [PR-226/14/DD/238/2014/BOD/355/2017]- Judgement
delivered on 19 th April, 2018).
Acting as Auditor in spite of disqualification under Co. Act
1.1.9(155) A Chartered Accountant who was indebted to the Company
towards a loan for a sum exceeding Rs. 1000/- taken for the
purchase of a car, in the ordinary course of financing business of
the Company against the hire purchase agreement and thus was
disqualified under Section 226(3) of the Companies Act, 1956 to
be appointed as auditor of the Company, acted as the Auditor of
the Company.
Held on borrowing loan, he would be deemed to have vacated his
office as auditor but inspite of that he acted as the auditor of the
Company. The Chartered Accountant was guilty of professional
misconduct under the clause. The word ‘indebted’ occurring in
Section 226(3) means the obligation to pay.
(Ram Parshad Handa & Hari Krishan Khosla vs. B.K. Choudhury -
Page 1013 of Vol. IV of the Disciplinary Cases - decided on 14th
September, 1968).
66
1.1.9(156) A Chartered Accountant accepted the position as auditor of a

private limited Company for a year which was previously and
continuously held by the Complainant without communicating with
him in writing. He had accepted the appointment as auditor of the
above Company without ascertaining whether the requirements of
Sections 224 and 225 of the Companies Act, 1956 had been
complied with. It was also charged against him that while
accepting the said appointment, he had been grossly negligent in
the conduct of his professional duties. The Council found that this
charge had been misconstrued by the Complainant. This clause
would apply only where it is found that the auditor has been
negligent in the conduct of his professional duties while
discharging his obligations as an auditor and the same would not
be applicable in the matter of failure to communicate with the
previous auditor or failure to ascertain compliance with Sections
224 and 225 of the Companies Act, 1956 which are covered by
different Clauses of the Schedule to the Act. The Complainant had
not brought out any material to establish the charge of gross
negligence.
Therefore, he was held guilty under Clauses (8) and (9). The
charge of gross negligence in the conduct of professional duties
was not established.
(V.K. Gupta vs. Rajiv Savara - Page 517 of Vol. VII(2) of
1996).
1.1.9(157) A Chartered Accountant had accepted the appointment as auditor
of a Company without first ascertaining whether the requirements
of Section 225 of the Companies Act, 1956 had been duly
complied with. Neither the notice for original annual general
meeting nor the notice for adjourned annual general meeting was
received by the Complainant and even the purported special
notice under Section 190(1) for removal/ replacement of the
Complainant’s firm was received by the Company after the original
Annual General Meeting was adjourned without appointing an
auditor.
67
As per Code of Conduct, adjourned meeting is in continuation of

the original meeting. The Company cannot act on the special
notice received by it in between the period of original meeting and
the adjourned meeting. The Company had not received special
notice before 14 days of the original meeting. It was held that he
had not properly verified the procedure to be followed under
Sections 224 and 225 of the Companies Act, 1956 and hence was
guilty under Clause (9).
(V.K. Dhingra vs. Satish Tandon - Page 541 of Vol. VII(2) of the
1996).
1.1.9(158) The Respondent by letter dated 19thJanuary, 1987 had informed
the Complainant that at the adjourned General Meeting of a
Company held on 28 th February, 1986, he had been appointed as
Statutory Auditor of the Company for the year ended 31 st
December, 1985. The Complainant had received the notice for
holding the Annual General Meeting of the said Company which
was fixed for 28th September, 1985. The meeting was adjourned
and the adjourned Annual General Meeting was held on 28 th
February, 1986. The Complainant had received the notice for the
adjourned Annual General Meeting also. In both the notices, there
was no mention of any proposed change in the auditors of the
Company for the year ended 31 st December, 1985. In response to
the Respondent’s letter dated 19 th January, 1987, the Complainant
informed the Respondent about his continuance as Statutory
Auditor because neither he had resigned nor the Company had
issued any notice for the intended change.
The Respondent was held guilty of violation of Clauses (8) & (9).
The Council felt that in view of the facts and circumstances of the
case, and the repentant attitude of the Respondent, there was
insufficient justification for imposing any penalty on him.
(T. Ravindra vs. K.F. Jetsey - Page 762 of Vol. VII(2) of
December, 1997).
68
1.1.9(159) While the audit was pending, the complainant came to know that
the Respondent had signed the accounts of the Company for the
two years. The Respondent never communicated with that
complainant. The complainant had never resigned from the
Auditorship of the Company. No notice for the complainant’s
removal was sent by the Company. The provision of the Section
225 of the Companies Act, 1956 were not complied with properly
by the Company and all this was ignored by the Respondent.
within the meaning of Clauses (8) & (9) of the Part I of the First
Schedule of the Chartered Accountants Act, 1949.
(J.P. Gupta vs. Charanjit Malhotra - Page 113 of Vol. IX-2A –
November, 2002).
1.1.9(160) Wherein the complainant’s firm was appointed as auditors of a
company at its Annual General Meeting and re-appointed for the
subsequent year, in absence of any resignation from previous
auditor or notice for removal and the change of auditors, the
incoming auditor accepted the appointment without first
communicating. The incoming auditor did not verify the
compliance of Section 224 and 225 of the Companies Act, 1956.
misconduct under Clauses (8) and (9) of Part I of First Schedule
read with Sections 21 and 22 of the Chartered Accountants Act,
1949.
(Rajeev Mittal of M/s Mittal Rajeev & Associates vs. Rajeev Shah
of M/s Bihani & Shah - Page 454 of Vol. X-2A–21(4) of
Disciplinary Cases – Council’s decision dated 6 th October, 2005).
1.1.9(161) The Complainant-firm was the statutory auditors of a company
since its incorporation and audited and certified the Company’s
Accounts up to 1994. They completed the routine audit of the
Company’s Accounts for the year ending 31st March, 1995 and
the trial balance along with the schedules and draft accounts was
handed over to the Company for approval of the Board of
Directors. Later, the incoming auditor took up the audit and
69
certified the accounts for the same year, without communicating

and ascertaining the compliance of provisions of Section 225 of
Companies Act, 1956.
misconduct under Clauses (8) and (9) of Part I of First Schedule to
(Vinod Somani vs. M.L. Agarwal - Page 511 of Vol. X-2A – 21(4)
of Disciplinary Cases – Council’s decision dated 2 nd August,
2006).
1.1.9(162) Where a Chartered Accountant did not communicate with the
previous Auditor before accepting the appointment as Statutory
Auditor and signed the Balance Sheet of that company. In this
case, the previous auditor had not resigned. The incoming Auditor
claimed that he was appointed in the EGM. However, the
permission of the Central Government had not been obtained for
this purpose.
Held guilty of “professional misconduct” under Clauses (8) and (9)
of Part I of First Schedule to the Chartered Accountants Act,1949.
(Rajeev Nathwani vs. Rajan Sharma - Page 240 of Vol. II Part I of
Disciplinary Cases, Judgement delivered on 13 th January 2014).
1.1.9(163) Where a Chartered Accountant had carried out the audit of several
companies without first communicating with the previous Auditor.
She accepted the appointment as Auditor in those Companies
without first ascertaining from it whether the requirements of
Section 225 of the Companies Act, 1956 in respect of such
appointment has been duly complied with. She could not produce
any documentary evidence in her defence.
Held guilty of “professional misconduct” falling under Clauses (8)
and (9) of Part I of First Schedule to the Chartered Accountants
Act, 1949.
(Rinku Shaw Kesharwani In (on the basis of letter received) Re :
Page 42 of Vol I Part I of Disciplinary Cases, Judgement delivered
on 3rdFebruary, 2011).
70
1.1.9(164) Where a Chartered Accountant had not communicated with the

previous auditor before accepting the audit of a company and had
not taken note of his undisputed outstanding dues. He accepted
the appointment without first ascertaining whether the requirement
of Section 225 of the Companies Act, 1956 in respect of the
appointments have been duly complied with.
Clauses (8) and (9) of Part I of the First Schedule and Clause (1)
of Part II of the Second Schedule to the Chartered Accountants
Act, 1949.
(Narendra Kumar Shah vs. Amrit Kumar Chakrabarty - Page 191
of Vol II Part I of Disciplinary Cases, Judgement delivered on 1 st
October, 2013).
1.1.9(165) The Respondent claimed to have been appointed as the Statutory
Auditors of the Company in the AGM and thereafter reappointed
for next years and signed the reports with ante dates. Further, it is
obligatory on the incoming auditor, before accepting appointment,
to obtain a copy of such communication sent by previous auditor
that establishes professional reasons connected with his
resignation or not offering himself for re-appointment. The
incoming Auditor ought to obtain this from the Board of Directors
and consider the same before accepting the appointment.
The Respondent had also failed to produce any such letter from
the previous Auditor that establishes previous Auditor’s
unwillingness.Hence, it was clear that the Respondent had failed
to check that the Company had ensured compliance of Section
225 of the Companies Act, 1956.
The Respondent was held guilty of professional and/or other
misconduct falling within the meaning of Clauses (9) of Part I and
Clause (2) of part IV of the First Schedule to the Chartered
(D. Srinivasa Rao & Others, Hyderabad vs. K. Ranganathan of
M/s. P. Srinivasan & Co., Chartered Accountants, Hyderabad [PR-
161/09-DD/195/2009 /DC/149/2011]).
71
1.1.9(166) The Respondent had accepted Statutory Audit of a Private Limited

Company without first communicating in writing with the
Complainant.As per Clause (8) of Part I of the First Schedule to
the Chartered Accountants Act, 1949 an incoming auditor should
communicate with the outgoing Auditor in writing first before
accepting the position of an Auditor which was not complied by the
Respondent.
As a incoming Auditor of a Company, the Respondent had to
ensure the compliances with the provisions of Section 224 and
225 of the Companies Act, 1956(or Section 139 and 140 of the
Companies Act, 2013) before accepting the said appointment but
the Respondent failed to comply with the same.
within the meaning of Clauses (8) and (9) of Part I of the First
(Shekhar A Parkhi vs. Harshal Govind Jethale PPR-17/15-
DD/33/2015/BOD /330/2017).
---------
72
1.1.10 Clause (10):charges or offers to charge, accepts or offers to

accept in respect of any professional employment, fees which are
based on a percentage of profits or which are contingent upon
the findings, or results of such employment, except as permitted
under any regulation made under this Act;
1.1.10(167) Where a Chartered Accountant had charged fees at certain
percentage of the expected relief.
Held, he was guilty of the charges.
(R.B. Basu vs. P.K. Mukherji - Page 137 of Vol.III of the
Disciplinary Cases and pages 184-194 of October, 1956 issue of
the Institute’s Journal - Judgement delivered on 17 th July, 1956).
1.1.10(168) A Chartered Accountant had arranged accounting bills raised by
16 parties amounting to Rs.14.09 Crores and made entries which
were not genuine. He had charged commission @ 0.25% to 1%
of the transactions for arranging accounting entries. He had been
involved in arranging bogus bills, accommodation entries and
circular transactions for trading in coal through bank LC limits for
various other parties.
Held guilty of Professional and Other Misconduct falling within
the meaning of Clause (10) of Part I and Clause (2) of Part IV of
the First Schedule to the Chartered Accountants Act, 1949.
(S S S B Ray, Commissioner of Income Tax (Central), Nagpur vs.
Durga Prasad Sarda, Nagpur [PR-142/2013-DD/260/2013/ BOD
/197/2016] Judgement delivered on 18 th August, 2017).
---------
73
1.1.11 Clause (11): engages in any business or occupation other than

the profession of chartered accountants unless permitted by the
Council so to engage:
Engaged in Business
1.1.11(169) A Chartered Accountant engaged himself in carrying on a
business known as Shivaji Engineering Works.
(D.S. Sadri vs. B.M. Pithawalla - Page 300 of Vol.V of the
Disciplinary Cases - decided on 14th, 15th, 16th & 17th September,
1977).
1.1.11(170) A Chartered Accountant in practice entered into Partnership with
persons who were not the Members of the Institute, for the
purpose of carrying on business. The share of the Chartered
Accountant in the profit and losses was 25%. He was to take part
in the business and was entitled to represent the firm before
Govt. Authorities also. He was operating the Bank account of the
firm, was receiving moneys from the customers and was also
looking after the affairs of the Partnership
Held he was guilty of professional misconduct under the clause,
as he was engaged in the business, without the permission of the
Council.
(K.S. Dugar in Re: - Page 1 of Vol. VI(2) of the Disciplinary
Cases - decided on 2 nd, 3rd and 4th April,1980).
1.1.11(171) The Respondent entered into a partnership with the Complainant
for running the business of manufacturing readymade garments.
He was held guilty for violation of Clause (11).
(D. Hemalatha vs. P.N. Malolan – Council’s decision dated 15 th to
17th December, 1999 – Page 87 of Volume VIII(2) of Disciplinary
Cases).
1.1.11(172) A Chartered Accountant who was enrolled as a fellow Member of
the Institute disclosed in the form “entry of record” that he was
engaged as partner of “M/s X Group of Magazines”. He was also
74
working as a Director of “M/s. A & Co.”. On enquiry, the

Respondent informed the Institute that he was engaged as a
partner of the said M/s. X Group of Magazines since 1978. The
Respondent had never disclosed about this even while he was
holding Certificate of Practice in all these years and nor did he
seek permission from the Institute to engage himself as a partner
in any other occupation.
misconduct under Clause (11) of Part I of the First Schedule to
(Rajkumar H. Advani in Re: - Pages 373 of Volume VIII (2) of
Disciplinary Cases – Council’s decision dated 1 st to 3rd August,
2001. Also published in the December 2002 issue of Institute’s
journal at page 627).
1.1.11(173) Where a Chartered Accountant was engaged in business other
than the profession of Chartered Accountancy without taking
prior permission of the Institute.
Held that he was guilty of professional misconduct within the
meaning of Clause (11) of Part I of First Schedule to the
(Sri Nath Prasad vs. Vineet Aggarwal – Page 23 of Vol. IX – 2B –
21(4) of Disciplinary Cases – Council’s decision dated 2 nd to 4th
February, 2004).
Substantial Interest and seeking permission subsequent to
engagement in Business
1.1.11(174) A Member in practice was authorised by a resolution of the Board
of directors of a Company held on 4.9.81 to look after the day to
day affairs of the Company and other Directors were requested
to give maximum co-operation to him. Also the Member held
more than 51% of the shares of the said Company. Later on
8.5.82, he applied to the Council for permission to hold the office
of the Executive Chairman of the said Company.
It was held on the basis of facts and circumstances of the case
that during the period 4.9.81 to 8.5.82 the Member had engaged
himself in “other occupation” without the permission of the
Council and was found guilty in terms of this Clause.
75
(M.K. Abrol and S.S. Bawa vs. V.P. Vijh - Page 256 of Vol. VI(2)
of Disciplinary Cases - Decided on 11th, 12th and 13th February,
1988).
1.1.11(175) A Chartered Accountant had helped private Financial Services
Company through his friends in Mumbai to investment in equity
and they had invested to the tune of Rs. 30 Lakhs for a limited
company. The Financial Services Company which was a
consultancy firm was run by his wife.
(11) of Part I of the First Schedule to the Chartered Accountants
Act, 1949.
(M. Hariharan in Re: - Page 1 of Vol. IX-2A–21(4) of Disciplinary
Cases – Council’s decision dated 2 nd to 4th July, 2002).
1.1.11(176) Where a Chartered Accountant was engaged in business of
purchase and sale of imported glasses other than profession of
Chartered Accountant without taking prior permission of the
Institute.
Held that he was inter alia guilty of professional misconduct
within the meaning of Clause (11) of Part I of First Schedule to
(Chintamany Abhyankar in Re: – Page 53 of Vol. IX – 2B – 21(4)
of Disciplinary Cases– Council’s decision dated 2 nd to 4th
February, 2004).
In Employement alongwith COP without permission of
Council
1.1.11(177) A Member having a certificate of practice and having 2 Articled
Clerks with him was simultaneously working as a Financial
Controller of a Company without the permission of the Council.
He was held to be guilty in terms of this Clause in so far as he
was engaged in other occupation without the permission of the
Council.
(S.K. Kaul vs. S.C. Mangal - Page 132 of Vol. VI(2) of
Disciplinary Cases - Decided on 9th and 10th August, 1988).
76
1.1.11(178) A Chartered Accountant had been in full-time employment in a

Company besides holding Certificate of Practice without
obtaining Institute’s permission and in the Bank Empanelment
Form, he had given declaration to the effect that he was not
devoting any time to any occupation/vocation/business etc. other
than the profession of Chartered Accountant.
He was held guilty for violation of Clause (11)
(N.K. Gupta in Re: - Council’s decision dated 1 st to 4th July, 1998
- Page 1 of Volume VIII(2) of Disciplinary Cases).
1.1.11(179) Two Members, while holding Certificate of Practice, had been in
full time employment with an Insurance Company without
obtaining the Institute’s permission to be so engaged. They also
did not disclose the particulars of their full time salaried
employment at the time of furnishing particulars in the prescribed
Form for registration of the articled clerks.
They were held inter alia guilty for violation of Clause (11) of Part
I and Clause (1) of Part III of the First Schedule.
(C.M. Mehrotra in Re: - Council’s decision dated 11th to13th
October, 1999, Page 76 of Volume VIII(2) of Disciplinary Cases
and A.P. Gupta in Re:- Council’s decision dated 15 th to 17th
December, 1999, Page 134 of Volume VIII(2) of Disciplinary
Cases).
1.1.11(180) Where a Chartered Accountant was in full time employment with
a Company and had continued his services even after intimating
the Institute that he had resigned from service. He had shown
himself in full time practice while applying for bank empanelment
for 3 years.
under Clause (11) and Regulation 190A of Chartered Accountant
Regulations 1988.
(S.C. Srivastava in Re: – Page 194 of Volume VIII(2) of the
Disciplinary Cases – Council’s decision dated 1 st to 3rd August,
2001).
77
1.1.11(181) The Respondent, while in employment with a Company, passed

Chartered Accountancy Examination and sought permission in
the year 1987 to do practice, on a part time basis from the
complainant Company.While still in employment, he wrote a letter
to the Institute that he had resigned, which was false and
misleading.
Held that the Respondent was inter alia guilty of professional
(Managing Director, A.P. Handicrafts Dev. Corpn. Ltd. vs. A.
Bhimeswara Swamy – Page 590 of Vol. IX – 2A – 21(4) of
Disciplinary Cases – Council’s decision dated 7 th to 8th& 24th to
25th April, 2003).
1.1.11(182) Where a Chartered Accountant besides being in practice acted in
the capacity as Manager in the Company without informing the
Institute.
He was also the Signatory of the the Financial Statements of the
Company.
Held guilty of “professional misconduct” falling within the
(Ajush Kumar Kalra vs. Kapil Agarwal - Page 313 of Vol. II Part I
of Disciplinary Cases, Judgement delivered on 31 st January
2014).
1.1.11(183) Where a Chartered Accountant took up an assignment with a
Private Limited Company out of dire necessity as a part time job
and he continued his professional practice on part time basis and
had two articled clerks under him without intimating the Institute.
It was noted that the same cannot be termed as a part time
engagement, more so, when he was on the payroll of the
Company since beginning, deriving other benefit viz. Insurance
and was subjected to all statutory deductions from his
remuneration which can only be the case of full-time
employment.
78
Held guilty of “professional misconduct” falling under Clause (11)

of Part I of the First Schedule to the Chartered Accountants Act,
1949.
(Soumen Sanyal vs. Paramjeet Singh Sethi - Page 319 of Vol. II
Part I of Disciplinary Cases, Judgement delivered on 31 st
January, 2014).
1.1.11(184) Where a Chartered Accountant was appointed as Chief Municipal
Accountant of a Municipal Corporation.
Despite the rules of the Corporation that the full time worker of
the Corporation cannot do any other job where as he was
appointed as the Chief Auditor of the said Corporation
Held guilty of “Professional Misconduct” falling within the
(Ambarish Ratikant Galinde (based on e-mail received) - Page
117 of Vol I Part I of Disciplinary Cases, Judgement delivered on
3rdFebruary ,2011).
1.1.11(185) Where a Chartered Accountant while holding his full time COP
was working in a company as an Accounts Officer.
Although he had surrendered his COP before the Institute a long
time after joining the Company.
of Clause (11) of Part I of the First Schedule to the Chartered
(Anil Kumar Dixit vs. Sourabh Kumar Shukla - Page 272 of Vol. II
Part I of disciplinary Cases, Judgement delivered on 31 st January
2014).
1.1.11(186) Where a Chartered Accountant while in service holding full time
COP and conducted Bank Audit. He was also charged with
running a business but after verification of Balance Sheet, Profit
& Loss Account, Tax Audit Report and Income Tax Return of that
company it was found in the name of his wife who was the
proprietor.
79
Held guilty of ‘professional misconduct’ falling under Clause (11)

1949. Further, he was not guilty of professional misconduct with
respect to the charge of running a business.
(Arun Kumar Agarwal (on the basis of received letter) - Page 27
of Vol I Part I of Disciplinary Cases, Judgement delivered on
3rdFebruary, 2011).
1.1.11(187) The Respondent had carried out the audit of the Company and
signed his Audit Report when he was holding full time COP and
was also in full time employment.
Further, the Respondent did not seek permission from the
Council of the Institute.
The Respondent was held guilty of professional misconduct
falling within the meaning of Clause (11) of Part I of the First
(J. K. Teotia vs. Mahendra Kumar Hingar Re: [PR/171G/2010-
DD/172/ 2010-BOD /161/2014]).
1.1.11(188) The Respondent was that besides holding Certificate of Practice
(COP), he was employed in company as the Deputy General
Manager, Finance of a Limited Company without seeking the
specific permission of the Council in this regard.
Held, the Respondent violated the Chartered Accountants
Regulations, 1988, and held guilty of professional misconduct
falling within the meaning of Clause (11) of Part I of First
(Viplove Kaushik in Re: [PPR/35/C/13/DD/28/C/INF/13/ BOD/222
/2016]).
1.1.11(189) Where a Chartered Accountant had been in full time employment
and held certificate of practice as well. He was appointed as
General Manager (Finance) on 1 st November, 2007 by the
Complainant Company and was subsequently elevated as Chief
Financial Officer “CFO” of the Company and thereafter he
submitted his resignation in May 2012. It has also been noted on
perusal of his membership records with ICAI that he had been
80
holding COP without any cancellation for a period between

19/01/2001 and 12/12/2012.
Held guilty of professional misconduct falling within the meaning
of clause (11) of Part I of the First Schedule to the Chartered
(Dr. Kesab Nandy, Director, Tilak Nagar Industries Limited,
Mumbai vs. Lalit Sethi Re: [PR-170/2012-DD/
186/2012/DC/277/2013] Judgement delivered on 19 th October,
2015).
1.1.11(190) Where a Chartered Accountant had designated himself as the
Manager of the School/Society whereas he was just appointed as
Consultant/Advisor and he along with his accomplice, forged and
fabricated the documents and took charge of the affairs of the
Society & School.
Held guilty of other misconduct falling within the meaning of
Clause (2) of Part IV of First Schedule to the Chartered
Accountants Act, 1949. He was also guilty of professional
misconduct falling within the meaning of Clause (11) of Part I of
(Dr. Renu Sharma vs. Surya Prakash Jalan - Page 104 of Vol I
Part I of Disciplinary Cases, Judgement delivered on 3 rdOctober,
2011).
Practising CA as Karta of Hindu Undivided Family
1.1.11(191) A Member as a Karta of his Hindu Undivided Family entered into
partnership business for a short period with non-Chartered
Accountants for engaging in business other than the profession
of Chartered Accountants, without prior permission of the
Council.
Therefore, he was found guilty in terms of clauses (4) and (11).
(R.D. Bhatt vs. K.B. Parikh - Page 191 of Vol. VI(2) of
1988).
1.1.11(192) Where a Chartered Accountant was Karta of the HUF and was
engaged in the business of a firm without permission of the
81
Council. Held that he was guilty of professional misconduct under

the Clause.
(V. Krishnamoorthy vs. T.T. Krishnaswami - Page 192 of
Vol.VII(2) of Disciplinary Cases – Council’s decision dated 27 th to
29th September, 1992).
1.1.11(193) Where a Chartered Accountant acted as Karta of a Hindu
Undivided Family (HUF) without taking prior permission of the
Council.
under the clause.
(B.L. Asawa, Chief Manager, Punjab National Bank, Delhi vs.
P.K. Garg – Page 728 of Vol. IX – 2A – 21(4) of Disciplinary
Cases – Council’s decision dated 16 th to 18th September, 2003).
Clause (4) be read with Authority of the Council as contained
in Clause (11)
1.1.11(194) The Bombay High Court in WP No. 4906 of 1985 dt. 9th February,
1989 has held that:-
The prohibition to enter into any partnership with any person
other than a Chartered Accountant under Clause (4) of Part I of
the First Schedule is absolute but not so under Clause (11).
According to the Court, Clause (11) enables the Chartered
Accountant to engage in any business or any occupation other
than the profession of Chartered Accountancy provided the
Council grants permission to engage in such business or
occupation.
According to the Court, it is obvious that the Council desired to
retain the power to permit a Chartered Accountant to engage in
any business or occupation which may be incidental or would be
useful for carrying on the profession of chartered accountancy.
In pursuance of Regulation 166, the Council of the Institute has
resolved that permission would be granted to the Chartered
Accountants engaged in any business or occupation other than
the profession of Chartered Accountancy in the cases set out in
the Appendix 9.Clause (4) and (11) contemplate two distinct and
82
separate contingencies and Clause (4) cannot be so read as to

make Clause (11) and the power retained by the Council to grant
permission redundant.
(Nalin S. Sualy vs. Institute of Chartered Accountants of India -
Bombay High Court WP No. 4906 of 1985 dated 9 th February,
1989).
Reasonableness of restrictions under Clause (11)
1.1.11(195) Allahabad High Court in CWP No. 1823 of 1988 has decided on
10th July, 1990 that;
It is always open to place reasonable restriction or to regulate
any professional activity. Such restrictions are not new; they are
to be found in many fields where it is provided that a person
practising any particular profession shall not be engaged in any
other business.
According to the Court, it may be necessary to have such
regulatory provision so that proper and undivided attention of the
person practising a profession is available to those to whom they
are supposed to render their services. Such professional services
should be available to the needy with full and proper care and
attention. The profession also requires to maintain certain
standard of efficiency which it may not be possible to acquire if a
person has his interest somewhere else.
(Iqbal Hamid vs. Institute of Chartered Accountants of India-
Allahabad High Court - W.P. No. 1823 of 1988 dated 10 th July,
1990).
Working as Partner/Proprietor of Non-CA Firm without
permission of the Council
1.1.11(196) Where a Chartered Accountant had not disclosed to the Institute
at any time about his engagement as a Proprietor of a non-
Chartered Accountant’s firm while holding certificate of practice
and had not furnished particulars of his engagement as a
Director of a Company despite various letters of the Institute
which remained unreplied.
Held that he was guilty under clause (11) of Part I and clauses
(1) and (3) of Part III of the First Schedule.
83
(P.S. Rao in Re: - Page 110 of Vol. VII(2) of the Disciplinary

Cases – Council’s decision dated 9 th to 11th April, 1992).
1.1.11(197) Where a Chartered Accountant was a partner in a business firm
without disclosing his interest and obtaining permission from the
Council of the Institute. Held that he was inter alia guilty of
professional misconduct under the Clause.
(R.K. Gupta of M/s Gupta Rajendra & Co. vs. M.G. Baig – Page
158 of Vol. VIII(2) of Disciplinary Cases decided by the Council
on 1st to 3rd August, 2001).
1.1.11(198) A Chartered Accountant had engaged himself as a partner in two
business firms and Managing Director in two Companies and was
also holding Certificate of Practice without obtaining permission
of the Institute.
under Clauses (4) and (11).
(Harish Kumar in Re: – Pages 286 of Vol. VIII (2) of Disciplinary
Cases – Council’s decision dated 1 st to 3rd August, 2001).
Involvement in Share Business /Transfers of Shares
1.1.11(199) Where a Chartered Accountant had offered to help the
Complainant in disposing of odd lot shareholding, sold the shares
of the Complainant at much lower rates than the prevailing
market rates, had sent to the Complainant contract notes etc.
and the said Chartered Accountant was personally involved in
the share transfers and broker’s business besides his
professional activities.
(Pradeep R. Ghatge vs. Ashvin Bajaria - Page 423 of Vol.VII(2)
of Disciplinary Cases – Council’s decision dated 13th to 15th June,
1996).
1.1.11(200) The Souvenir published on the occasion of “Navaratrotsav” by
‘Parel Paschim Vibhag Va Tata Mills Welfare Centre 1991’
contained an advertisement with a caption;
“With best compliments from Abhiraj R. Ranawat B.Com., A.C.A.
(Chartered Accountant) Share and Stock Sub-Broker.
84
The said advertisement also contained office timing 8 A.M. to 10

A.M., telephone nos. of market and residence and addresses of
office and market. Arising out of the above, the Respondent inter
alia held guilty in not taking Institute’s permission for engaging in
other occupation i.e. share and stock sub-broker while holding
certificate of practice in violation of Clause (11) of Part I of
(A.R. Ranawat in Re: - Pages 414 of Vol. VIII(2) of Disciplinary
1.1.11(201) Where a Chartered Accountant was doing the brokership of
shares apart from holding Certificate of Practice without taking
permission from the Council.
Held that he was inter alia guilty of Professional Misconduct
under Clause (11) of Part I of the First Schedule of the Chartered
(A.C. Sharma & Mrs. Indu Sharma, Proprietor, M/s Sharma Share
Trading Co. vs. Sandeep Abbot – Page 22 of Vol. IX – 2A – 21(4)
of Disciplinary Cases – Council’s decision dated 11 th to 14th
September, 2002).
1.1.11(202) The Respondent was engaged in business of Share Dealer and
Financial Advisor in which he was Sole Proprietor and was also
Practicing as CA from the same address.
Held that the Chartered Accountant was inter alia guilty of
professional misconduct within the meaning of Clause (11) of
(Chatar Lal Mantri vs. Vinod Kumar Agarwal – Page 869 of Vol.
IX – 2A – 21(4) of Disciplinary Cases – Council’s decision dated
16th to 18th September, 2003).
1.1.11(203) Where a Chartered Accountant had been carrying on business on
“Share Market” at the Calcutta Stock Exchange being a Member
of the said exchange and was also holding Certificate of Practice
without taking prior permission of the Institute.
Held that he was guilty of professional misconduct within the
85
(S.K. Sharma vs. V.K. Kandoi – Page 122 of Vol. IX – 2B – 21(4)

of Disciplinary Cases – Council’s decision dated 2 nd to 4th
February, 2004).
1.1.11(204) The Respondent, apart from being a full time practicing
Chartered Accountant, also conducted Business of Finance and
the Business of Brokerage through a Company. It was observed
that he was the only person who looked after the Company and
he did not take prior approval of the Council for engaging in other
occupation apart from being in practice.
falling within the meaning of Clause (11) of Part I of the First
schedule to the Chartered Accountants Act, 1949 for not
obtaining specific and prior approval of the Council in terms of
the requirements of Part-B of Regulation 190A of the Chartered
Accountants Regulations, 1988.
(Shiv Kumar Ramnarain Sharma in Re: PPR-4/W/13-DD/7/W
/INF/2013/BOD/276/2017)
1.1.11(205) Where a Chartered Accountant had done arbitrage activity in
National Stock Exchange of India through another person and he
incurred a loss of Rs. 10,00,713/-. That person had taken Rs.
1,15,000/- as security deposit from him but the balance of Rs.
8,50,713/- had not been paid by him. He explained this income
as fees of an advisor but could not produce any documentary
evidence.
Held guilty of professional misconduct falling under Clause (11)
of Part I and Clause (2) of Part IV of First Schedule to the
(Harish L. Sampat in Re: Page 71 of Vol I Part I of Disciplinary
Cases, Judgement delivered on 3rdFebruary 2011).
Practising CA involved as LIC Agent
1.1.11(206) Where a Chartered Accountant in practice had engaged himself
in other occupation as an LIC Agent without obtaining permission
of the Council.
Held that he was held guilty under the clause.
86
(Chief Commissioner (Admn.) & Commissioner of Income-tax,

Karnataka-I, Bangalore vs. H. Mohanlal Giriya - Page 443 of
Vol.VII(2) of Disciplinary Cases – Council’s decision dated 13 th to
15th June, 1996).
Holding Substantial Interest in a Company
1.1.11(207) The charge against a Chartered Accountant, inter alia, was that
he had more than 20% shareholdings in a finance and
Management Consultancy Private Company and he could not
enter into the business of brokering. It was held that he had to be
considered to be a Managing Director or a whole-time Director
under the provisions of Section 2(26) of the Companies Act,
1956, since he was entrusted with the whole or substantially the
whole of the management of the affairs of the Company.
Since he failed to obtain specific and prior approval of the
Council for the above, he was held guilty under the Clause.
(J.P. Gupta vs. T.C. Garg - Page 670 of Vol. VII(2) of Disciplinary
Cases – Council’s decision dated 21st to 23rd July, 1997).
Looking after General Administration
1.1.11(208) A Chartered Accountant had entered into partnership in a firm
with the husband of the Complainant and others and agreed to
look after general administration, appointment of office staff,
finance and legal matters of civil and taxation nature. He was
held guilty of violation of Clause (11).
(Satwant Kaur vs. Rakshit Khosla - Page 696 of Vol. VII(2) of
Disciplinary Cases – Council’s decision dated 21 st to 23rd July,
1997).
Consultancy services applied for but not approved by
Institute
1.1.11(209) The Complainant alleged that the Respondent had engaged in
business and occupation other than the profession of Chartered
Accountancy and carried on consultancy services under a name
which though applied for by him was not approved by the
Institute.
87
Thus, he was guilty under the Clause.

(Amalendu Gupta vs. R.N. Kapur - Page 726 of Vol. VII(2) of
December, 1997).
Working as Managing Director/Whole Time Director/Director
1.1.11(210) The Respondent accepted the position of Director and of Auditor
of a Company for the year 1992 from May 1992 till March 1993. It
was argued that the Respondent audited the accounts of the
Company only after March 1993 when he was not the Director of
the Company. However, the appointment of the auditor, having
been made when he was director of the Company, the
Respondent was disqualified under Section 226(3)(b) of the
Companies Act and that he should not have accepted the
position as auditor being the Director of the Company.
Held that the Respondent was guilty under the Clause for not
having obtained the prior permission of the Council for engaging
himself in other occupation as director of the Company despite of
the fact that he was interested in the Company as auditor and
has also contravened the provisions of section 224-A read with
section 226 of the Companies Act, 1956.
(A.V. Deshmukh vs. J.D. Sanghvi – Page 491 of Vol. IX – 2A –
December 2002).
1.1.11(211) Where a Chartered Accountant continued to remain as a Director
of a Company when one of his partners was interested in that
Company as an Auditor.
Held that he was guilty of professional misconduct by continuing
to hold office as a Director of the Company,
(Registrar of Companies, West Bengal vs. K.C. Lunawat – Page
819 of Vol. IX-2A-21(4) of Disciplinary Cases – Council’s decision
dated 16th to 18th September, 2003).
1.1.11(212) A Chartered Accountant was Whole Time Director of a Company
and managing day to day affairs of Company along with another
person. Respondent was having Certificate of Practice. In equity
88
issue, the respondent along with another person siphoned out

the money leaving the shareholders valueless and also, solicited
clients by advertisements.
Held, the Respondent was guilty under Clause (11) of Part I of
First Schedule and was not guilty of remaining charges.
(Dr. Abhijit Sen, Alliance Credit & Investment Ltd. vs. Parmanand
Tiwari of M/s Tiwari & Co. –Page 83 of Volume X -2B–21(4) of
Disciplinary Cases -Council decision of 278 th Meeting held in
May, 2008).
1.1.11(213) Where a Chartered Accountant was appointed as the retainer in
AGI India to carry out the task of preparing and filing Income Tax
Returns, TDS Returns and Service Tax Returns, handling of
scrutiny cases relating to Income Tax, TDS, Service Tax and
advised the Company on the aforesaid matters.
Further, he was appointed as the director of AGI India for the
limited purpose of authenticating the financial statements of the
Company in the absence of the other directors of the Company.
He along with other fellow associates took advantage of the
corporate name, trademark, goodwill and business connections
of AGI India in performing certain illegal and unlawful activities
with intent to transfer the existing business of AGI India in the
name of AG Freight Carriers Private Limited.
He was appointed as the Executive Director of the Company in
the capacity of the Chartered Accountant in full-time practice. For
which he did not inform the Institute. The Member was
associated with the said companies in a dual capacity i.e. both as
a Director and as a Retainer. Said position should have been
ratified by way of passing of a special resolution as contemplated
in Section 314 of the Companies Act, 1956 which was not done.
Directors of the Company AG Freight work in a fiduciary capacity
and Section 211 of the Companies Act, 1956 clearly bestows the
responsibility of preparation of accounts on the Directors of the
Company. Further, there is no provision in the company law for
the appointment of a conditional Director.
89
In spite of the objections raised by ROC to his appointment as

conditional Director, he continued his acts and went on to sign
the Balance Sheet of AGI India for further financial years as a
Director of the Company.
Held guilty of ‘Professional Misconduct’ falling within the meaning
of Clause (11) of Part I of First Schedule and ‘Other Misconduct’
falling under Clause (2) of Part IV of the First Schedule to the
(Agi Logistic Inc. vs. Sher Jang Bahadur - Page 343 of Vol. II
Part I of Disciplinary Cases, Judgement delivered on 6 th
February, 2014).
1.1.11(214) Where a Chartered Accountant was one of the Promoters and a
Whole Time Director of Private Limited Company, drawing
remuneration besides practicing on a full time basis and besides
holding full time COP.
of Part I of First Schedule to the Chartered Accountants Act,
1949.
(Rohit B. Jain vs. Kishore Kumar Poddar - Page 22 of Vol I Part I
of Disciplinary Cases, Judgement delivered on 3rdFebruary,
2011).
1.1.11(215) Where a Chartered Accountant entered into partnership for profit
with non-Chartered Accountants and was its ‘Managing Director’
whilst continuing being in full time practice as a Chartered
Accountant. Further, even after cessation of status as ‘Director’
from the Company, the Respondent continued misrepresentation
of status as ‘Director’, wrongly continues retention of all the
books and records of said Company at a place other than the
registered office, continued to operate the bank accounts and
indulged in fraudulent acts for personal gain as the Director of
the Company.
Accountants Act 1949.
90
(Ashok Nanda, Jalandhar vs. Gurcharan Singh Syal Re:- [PR-

96/2012-DD/113/2012/BOD/182/2014] Judgement delivered on
9thFebruary, 2016).
1.1.11(216) Where a Chartered Accountant had floated various
Companies/Firms and availed huge limits from various Banks in
the name of the said Companies/firms. The limits were availed
fraudulently by him against factory, land & building, machineries
and other fixed assets in his name and others were already
mortgaged with a Bank. Furthermore, besides holding full time
COP he was also the Proprietor/Directors of Firms/Companies for
which he did not inform the Institute.
Held guilty of ‘Other Misconduct’ falling under Clause (2) of Part
IV of First Schedule to the Chartered Accountants Act, 1949, and
‘Professional Misconduct’ falling under Clause (11) of Part I of
(Deputy General Manager, Canara Bank vs. Prasanta Kumar Roy
Burman - Page 47 of Vol I Part I of Disciplinary Cases,
Judgement delivered on 3 rd February, 2011).
1.1.11(217) The Respondent was the Promoter Director and Chairman of the
Company as well as was holding COP and Partner in M/s Kumar
Mahajan & Co., Chartered Accountant. However, the Respondent
had not sought any prior approval of the Council before engaging
in other business.
The Respondent was held guilty of professional misconduct as
per Clause (11) of Part I of First Schedule & Clause (4) of Part I
of Second Schedule to the Chartered Accountants Act, 1949.
(Anil Kosha vs. Mahendra Kumar Mahajan - Page 421 of Vol. II of
Part I of the Disciplinary Cases of April, 2015 judgement
delivered on 1 st February, 2012).
1.1.11(218) Where a Chartered Accountant being the Statutory Auditor of a
company had been corresponding with outsiders as Director-
Finance of the Company even prior to his appointment as
management consultant thus using this designation before the
said appointment and before resigning from the firm as Statutory
Auditor.
91
Held guilty of ‘professional misconduct’ falling within the meaning

of Clause (11) of Part I of First Schedule to the Chartered
(Vemuri Krishna Prasad vs. Chigurupati Tirupathaiah Chowdary -
Page 121 of Vol. II Part I of Disciplinary Cases Judgement
delivered on 9th October 2013).
Engaged as Lecturer without permission of Council
1.1.11(219) A Member, without surrendering her Certificate of Practice, and
without obtaining prior permission from the Council of the ICAI,
accepted the job of a full time lecturer and as HOD (18 hrs per
week) in a College.
The Council held that the Member guilty of professional
misconduct under Clause (11) of Part I of the First Schedule read
with Sections 21 and 22 of the Chartered Accountants Act, 1949.
(Saraswati Gurunath Joshi vs. Himangi S. Prabhu - Page 555 of
Vol. X – 2A – 21(4) as decided on 21 st June, 2006)
1.1.11(220) Where it was established that a Chartered Accountant had
deceived a person by assuring that he can sanction a loan to him
for business purpose. He had taken a sum of Rs 15,000/- for
doing the same and thereafter, started avoiding that person.
Apart from that he was in full time employment with a University
in spite of holding full time COP and never disclosed about his
employment to the Institute.
He surrendered his COP only after issuance of information letter
from the Institute. He represented this as a mistake.
of Part I of First Schedule to the Chartered Accountants Act,
1949.
(Shivaputra Mohan Jotawar in Re: [DD/2/S/INF/11/Bod/113/13]
Information letter received from Shri Anant K. Kshirsagar Re:
Page 136 of Vol. II Part I of Disciplinary Cases, Judgement
delivered on 9th October, 2013).
CA Firm and Company operating from same premises
1.1.11(221) A Chartered Accountant’s was made Chairperson of a Company
92
and the Company and the respondent firm operated from same
premises.
The respondent as MD of Company, executed an agreement for
appointment of the Complainant as a stockist and accepted
deposit as security money.
Respondent was held guilty under clause (11) of Part I of First
Schedule.
(Atul K. Gupta vs. Swadesh C. Srivastava (25-CA(57)/99). –
Page 69 of Volume X -2B–21(4) of Disciplinary Cases -Council
decision of 277 th Meeting held in March – April 2008).
Working as Recovery Agent without permission
1.1.11(222) A Chartered Accountant firm was working as Recovery Agent for
Housing Finance Company without taking any permission from
the Council to engage in any work other than the profession of
Chartered Accountancy. The Respondent had written a letter to
the Complainant for recovery of money wherein he represented
himself as an agent of LIC housing Finance Ltd. He intimidated
the Complainant with harsh and coercive method of recovery.
Held that the Respondent was guilty under clauses (7) & (11) of
Part I of First Schedule.
(Yogesh Kumar Sharma vs. O. P. Maheshwari of M/s O. P.
Maheshwari & Co. (25-CA(212)/2003) - to be published later
under Disciplinary Cases Volume X-2B–21(4). Council decision
of 281st Meeting held in October, 2008).
Business relationship with the Auditee
1.1.11(223) Where a Chartered Accountant as Auditor of the related concern,
had taken undue advantage of his position and entered into a
business relation with partners/relatives of partners and formed a
Company. He neglected in performing his duties resulting in loss
to the Company and also carried away the original records. He
signed MOA and AOA of the said Company as subscriber with
his occupation as Business, Audited Financial Statements of the
Company also signed by the him on behalf of the Directors of the
Company
93

1949.
(Ashish S. Kulkarni vs. Mahen J. Dholam - Page 154 of Vol I Part
I of Disciplinary Cases, Judgement delivered on 3rd February,
2011, further Judgement delivered on 28thJanuary 2012 By
Appellate Authority).
1.1.11(224) Where a Chartered Accountant maintained the accounts and also
acted as the Tax Auditor of a firm. Besides holding the COP, he
was also in active business association with a company being a
Director of the company without taking the permission of the
Council.
of Clause (11) of Part I of the First Schedule and Clause (4) of
Part I of the Second Schedule to the Chartered Accountants Act,
1949.
(Sharadchandra M. Kulkarni vs. Mahen J. Dholam - Page 1 of Vol
I Part I of Disciplinary Cases, Judgement delivered on 12 th
September, 2011).
---------
94
1.1.12 Clause (12): allows a person not being a member of the Institute
in practice, or a member not being his partner to sign on his behalf
or on behalf of his firm, any balance-sheet, profit and loss
account, report or financial statements.
---------
95
PART II OF THE FIRST SCHEDULE
Professional Misconduct in Relation to Members of the Institute in Service.

1.2.1 Clause (1): pays or allows or agrees to pay directly or indirectly to
any person any share in the emoluments of the employment
undertaken by him;
---------
96
PART II OF THE FIRST SCHEDULE – CLAUSE (2)
1.2.2 Clause (2): accepts or agrees to accept any part of fees, profits or
gains from a lawyer, a chartered accountant or broker engaged by
such Company, firm or person or agent or customer of such
Company, firm or person by way of commission or gratification;
---------
97
PART III OF THE FIRST SCHEDULE
Professional Misconduct in Relation to Members of the Institute

Generally
A member of the Institute, whether in practice or not, shall be deemed to be
guilty of professional misconduct, if he:-
1.3.1 Clause (1): not being a fellow of the Institute, acts as a fellow of
the Institute.
---------
98
PART III OF THE FIRST SCHEDULE – CLAUSE (2)
1.3.2 Clause (2):does not supply the information called for, or does not
comply with the requirements asked for, by the Institute, Council
or any of its Committees, Director (Discipline), Board of Discipline,
Disciplinary Committee, Quality Review Board or the Appellate
Authority;
Not Supplying Information sought by the Institute
at any time about his engagement as a proprietor of a non-
Chartered Accountants’ firm while holding certificate of practice
and had not furnished particulars of his engagement as a Director
of a Company despite various letters of the Institute which
remained unreplied.
Held that he was guilty under clause (11) of Part I and clauses (1)
and (3) of Part III of the First Schedule.
(P.S. Rao in Re:- Page 110 of Vol. VII(2) of the Disciplinary Cases
– Council’s decision dated 9 th to 11th April, 1992).
1.3.2(226) Where a Chartered Accountant had continued to train an articled
clerk even though his name was removed from the Membership of
the Institute and he had failed to send any reply to the Institute
asking him to send his explanation as to how he was training as
his articled clerk when he was not a Member of the Institute.
Held that he was guilty under clause (3) of Part III of the First
Schedule.
(S.M. Vohra in Re:- Page 151 of Vol.VII(2) of Disciplinary Cases –
Council’s decision dated 16 th to 18th July, 1992).
----------
99
1.3.3 Clause (3): While inviting professional work from another

chartered accountant or while responding to tenders or enquiries
or while advertising through a write up, or anything as provided for
in items (6) and (7) of Part I of this Schedule, gives information
knowing it to be false.
---------
100
PART IV OF THE FIRST SCHEDULE – CLAUSE (1)
PART IV OF THE FIRST SCHEDULE
Other misconduct in relation to members of the Institute generally

guilty of other misconduct, if he —
1.4.1 Clause (1): is held guilty by any civil or criminal court for an
offence which is punishable with imprisonmentfor a term not
exceeding six months.
----------
101
1.4.2 Clause (2): in the opinion of the Council, brings disrepute to the
profession or the Institute as a result of his action whether or not
related to his professional work.
Floating Companies and Firms for availing credit limits
1.4.2(227) Where a Chartered Accountant had floated various
Companies/Firms and availed huge limits from various Banks in
the name of the said Companies/Firms. The limits were availed
fraudulently by him against factory, land & building, machineries
and other fixed assets in his name and others were already
mortgaged with a Bank. Furthermore, besides holding full time
COP he was also the Proprietor/Director of Firms/Private Limited
Company for which he did not inform the Institute.
Held, guilty of ‘Other Misconduct’ falling under Clause (2) of Part
IV of First Schedule to the Chartered Accountants Act, 1949 with
respect to the charge of being Proprietors of other Firms he was
guilty of ‘Professional Misconduct’ falling under Clause (11) of
(Deputy General Manager, Canara Bank vs. Prasanta Kumar Roy
Burman - Page 47 of Vol I Part I of Disciplinary Cases, Judgement
delivered on 3 rdFebruary, 2011).
Nexus with Chairman of the Company
1.4.2(228) Where a Chartered Accountant had not acted merely as an
Auditor of a Company, but it seemed that he was acting in nexus
with the Chairman of the company and thus aiding and abetting in
the rigging and creation of artificial market in the shares of the
Company.
Held guilty of ‘Other Misconduct’ falling within the meaning of
(Rajiv Sharma in Re:- Page 76 of Vol II Part I of Disciplinary
Cases, Judgement delivered on 12 th September, 2011).
102
Engagement in same business by using business Information

of Ex -Client
1.4.2(229) Where a Chartered Accountant being in practice, engaged himself
with a partnership concern dealing in electrical contracting without
seeking prior permission of the Council for the same besides
holding Certificate of Practice.He used the business information of
his ex-client to promote his own business.
Held, guilty under the Clause (11) of Part I of First Schedule &
‘Other Misconduct” falling under clause (2) of Part IV of the First
(Vikas B. Pathakar vs. Atul Chandrakant Vaishali Ghorpade -
Page 292 of Vol. II Part I of Disciplinary Cases, Judgement
delivered on 31 st January, 2014).
Signing Balance Sheets being subject to Audit
1.4.2(230) A Chartered Accountant had signed the Balance Sheet of three
Companies which had common Directors. The Balance Sheet was
still subject to Audit and was never signed by the previous Auditor.
He had not even communicated with the previous Auditor for NOC
before accepting the appointment of Statutory Auditor.
Held, guilty of ‘professional and other misconduct’ under Clauses
(8) and (9) of Part I and Clause (2) of Part IV of the First Schedule
(Anil Kumar Goel vs. A. Anurag Nirbhaya -- Page 356 of Vol II Part
I of Disciplinary Cases, Judgement delivered on 6th February,
2014).
Inaccurate reporting and hiding material Facts
1.4.2(231) The Respondent as the Statutory Auditor of the associate
companies did not carry out the due diligence exercise instead, he
reported inaccurate particulars and hid material facts without
disclosing the transactions between the associate companies.
He did not carry the audit of the companies with the responsibility
of ensuring that the audit was conducted in an independent, fair
and unbiased manner taking necessary steps for verifying of
accounts before certifying the accounts are true and fair.
103
Moreover, he filed information with the ROC wrongly and

thereafter rectified it without any basis.
The Respondent was guilty of professional misconduct falling
within the meaning of Clauses (7) and (8) of Part I of the Second
Schedule and Clause (2) of Part IV of the First Schedule to the
(Col. S.K. Ahuja vs. Dinesh Gupta -- Page 355 of Vol. II of Part I
of the Disciplinary Cases of April, 2015 judgement delivered on 7th
October, 2013).
Endorsing Signature of a dead Person and issuing experience
certificate on its basis
1.4.2(232) The Respondent had issued an experience certificate on behalf of
a person without proper evidence & verifying the facts. Moreover,
he had endorsed the signature of a person who already expired
which was forged by the person on whose behalf the Respondent
had issued certificate. Here, it was observed that the Respondent
has also failed to carry out his duties in a diligent manner and
failed to obtain necessary information/documents before issuing
the certificate dated and the same had brought disrepute to the
profession of Chartered Accountancy.
Held, guilty of ‘Other Misconduct’ falling within the meaning of
Clause (2) of Part IV of First Schedule and also guilty of
professional misconduct falling within the meaning of Clauses (7)
and (8) of Part I of Second Schedule to the Chartered Accountants
Act, 1949.
(Vivek Priyadarshi, Addl. Supdt. of Police, New Delhi vs. Kamal
Kumar Grover -- Page 383 of Vol. IIof Part I of the Disciplinary
Cases of April, 2015 judgement delivered on 12 th October, 2011).
Wrongful use of Proprietorship/Partnership of a Firm to carry
out Audit
1.4.2(233) The Respondent had conducted the audit of a Housing Society for
the different Financial Years and signed the Audit Reports as a
Proprietor as well as a Partner of two different firms where the
Respondent neither was the Proprietor/Partner nor was authorized
104
by the CA Firm to carry out the said audit on its behalf. Further,
the Respondent had earlier worked as Administrative Officer in
National Insurance Company during the period of audit of the
Housing Society.
The Respondent was held guilty of ‘Other Misconduct’ falling
within the meaning of Clause (2) of Part IV of First Schedule and
Clause (1) of the Part II of the Second Schedule to the Chartered
(Anand Prakash Gupta in Re:- Page 471 of Vol. II of Part I of the
Disciplinary Cases of April, 2015 judgement delivered on 21 st
August, 2014).
Continued to practice after removal of name from Register
1.4.2(234) Where a Chartered Accountant did not reveal the important
information that his name has been removed from the Register of
Members w.e.f. 01.10.2005 due to non payment of fees and he
was not authorised to practice as a Chartered Accountant but he
continued to sign the audit report and conducted audit of the firm.
Held, guilty of professional and other misconduct falling within the
meaning of Clause (2) of Part IV of First Schedule, and Clause (1)
of Part II of the Second Schedule to the Chartered Accountants
Act, 1949.
(Naresh Mohan Mittal vs. Gulshan Kumar -- Page 20 of Vol I Part I
of Disciplinary Cases, Judgement delivered on 12 th September,
2011).
Signing documents on behalf of the Firm even after
resignation from the Firm
1.4.2(235) Where a Chartered Accountant had signed several official
documents on behalf ofthe Firm even after his resignation from
the firm. He had also conducted the Statutory Audit of M/s
Ordinance Cable Factory by using the name and stamp of the firm
even after the dissolution of their partnership and got the Audit
fees cheque in his personal name.
Held guilty of Other Misconduct falling within the meaning of
Clause (2) of Part IV of the First Schedule to the Chartered
105
(Manoj Kumar in Re: Page 37 of Vol I Part I of Disciplinary Cases,

Judgement delivered on 12 th September, 2011).
Procured Audits in the name of Firm without the knowledge of
the Firm
1.4.2(236) Where a Chartered Accountant had obtained Tax Audit
assignment in the name of another firm without knowledge of the
that firm. He prepared letter head and seal of the firm and
stamped on Audit Reports and annexures with the affixed
signatures of other partners. He raised invoice under his signature
and managed to obtain the payment.
Held, guilty of other misconduct falling within the meaning of
(Yogesh Mishra vs. Om Prakash Prajapati - Page 89 of Vol I Part I
of Disciplinary Cases, Judgement delivered on 3 rd October, 2011).
Submission of wrong Tax Return
1.4.2(237) Where a Chartered Accountant had submitted a wrong Tax Return
prepared by him to the Tax Authorities without the approval of the
Director(s) of the client company. He was in the possession the
important documents and information of the Company and was not
returning the same.
Held, guilty of professional and other misconduct falling within the
meaning of Clause (2) of Part IV of First Schedule, Clause (7) of
Part I and Clause (1) of Part II of the Second Schedule to the
(Kired Mahadew Singh, Director, Viramah Real Estate India Pvt.
LTD. vs. Shiv Chandra Shrestha - Page 135 of Vol I Part I of
Disciplinary Cases, Judgement delivered on 3 rd October, 2011).
Taking Bribe from Bank Customers
1.4.2(238) Where a Chartered Accountant was demanding and taking bribe
from the borrower customers of the Bank in return of maintaining
the ‘Standard Category’ of the borrower accounts.
106
Held, guilty of Other Misconduct falling within the meaning of

Clauses (2) of Part IV of the First Schedule to the Chartered
(K. Ravichandran, Deputy General Manager, Indian Bank, New
Delhi vs. Raj K. Aggarwal, M/s Raj K. Aggarwal & Associates,
New Delhi [PR-239/2013-DD/262/ 2013/BOD/210/2016]).
Submission of wrong information with ROC
1.4.2(239) Where a Chartered Accountant had filed Form No. 32 with ROC
showing removal of the Complainant from Directorship of the
Company without any acknowledgement and consent of the
Complainant and said Forms were certified by the Respondent.
Clauses (2) of Part IV of the First Schedule to the Chartered
(Jairam Mandal, New Delhi vs. Chinmoy Ghatak, Kolkata [PR-
119/12/DD/135/12/BOD/203/2016] Judgement delivered on 2 nd
December, 2017).
1.4.2(240) Where a Chartered Accountant had falsely verified Form No.32
filed with ROC in respect of appointment of Directors of a
company. He also had affixed fraudulently obtained digital
signature in his name.
(Ashish Pradeep Deora, Mumbai vs. Jawahar Lal Beriwal, Delhi
[PR-171/13-DD/165/2013/BOD/198/2016] Judgement delivered on
13thDecember, 2018).
Accepting Bribe in respect of Penalty Matter
1.4.2(241) Where a Chartered Accountant was caught red-handed by the Anti
Corruption Bureau (ACB) Ahmedabad Police while accepting bribe
of Rs.1.5 lakhs from the complainant in respect of penalty matter
of Complainant Company.
Accountants Act, 1949
107
(Dilip C. Patel vs. Ronak S. Dawda [PR-112/12-

DD/155/12/BOD/186/2014] Judgement delivered on 10 th
December, 2016).
Acting as Middleman for arranging Accommodation Entries
1.4.2(242) Where a Chartered Accountant had acted as a middleman for
arranging accommodation entries of share application money and
had issued bogus bills to certain entities in and outside Mumbai
and for the same he got a fixed percentage of commission.
Held guilty of Other Misconduct falling within the meaning of
(The Director of Income Tax (Inv.) Nagpur vs. Anand
Shyamsunder Daga Re:- [PR65/13-DD/91/13/BOD/183/2015]
Judgement delivered on 10 th December,2016).
Non-return of Cheques held as Escrow Agent
1.4.2(243) Where a Chartered Accountant was appointed as an Escrow
Agent whereby the complainant issued 10 numbers of cheques
amounting to Rs.12,05,56,314/- drawn on Standard Chartered
Bank on the condition that those cheques would be held by the
Respondent in Escrow as security until the conditions given are
fulfilled.However, the said cheques were not returned by the
Respondent and he issued a false notice by making claims on the
said cheques.The Respondent also filed a suit claiming a sum of
Rs.10,37,502/- to be his escrow fees without substantiating the
said claims by producing any agreement in that regard.
Held guilty of “Other Misconduct” falling within the meaning of
(Aditya Raheja, Bangalore vs. H V Gowthama, Bangalore [PR-
21st August 2017).
108
Censuring order by PCAOB

1.4.2(244) Where PCAOB (Public Company Accounting Oversight Board)
had passed an order censuring a Chartered Accountant and
barring him from being an Associated Person of a registered
Public Accounting Firm and also imposed a penalty of $10,000 on
the Respondent’s firm.PCAOB in its report held that M/s Parikh &
Associates (firm registered with ICAI) was also registered with
PCAOB pursuant to Section 102 of the Act and PCAOB Rules.
By virtue of their registration, the Respondent firm was allotted
audit of Mahanagar Telephone Nigam Limited (MTNL) for the
years ending March, 2006 to March, 2012.PCAOB in the said
order held that the staff and partners of the firm M/s Parikh &
Associates had no formal training and experience as per PCAOB
Standards. US-GAAP Principles relating to quality control policy
and procedure to provide reasonable assurance that the work
performed by engagement of personnel, meet applicable
professional standards. That being the case, the firm/Respondent
Member failed to check the Assets balances during Audit period.
Accountants Act, 1949 read with section 22 of the said Act.
(Sandeep P S G Nair in Re:- [PPR/20/W/13-DD/17/W/INF/13-
BOD/302/2017] Judgement delivered on 22 ndMay, 2018).
Wrongfully obtaining the Service Charges
1.4.2(245) Where a Chartered Accountant despite there had been no
reduction/refund of wharfage charges and the Complainant-
Company has paid the full sum of INR 61 Million as wharfage
charges to Enmore Port Limited, the Respondent in contrary to the
terms of agreement sought and obtained his full payment of
Service Charges as well as Service Tax thereon.
Held guilty of ‘Other Misconduct’ falling within the meaning of
Accountants Act, 1949 read with Section 22 of the said Act.
109
(Simon Tipet vs. Ashok A Jain [PR-110/2015-DD/139/2015/BOD

/270 /2017] Judgement delivered on 12 th January, 2019).
Wrongful refusal to work, handover of Books and change of
Password of Client
1.4.2(246) The accounts of the Complainant were maintained and audited by
a Chartered Accountant. Even after the full payment of fees he
refused to complete the work and to file the Income Tax Returns.
The Respondent Firm was in the possession of all the original
accounts and refused to hand over the same. Further on seeking
for the payments against the work done for the interior of the new
office of the Firm, the Complainant was abused and threatened.
The Password of Income Tax account was also changed by him
without knowledge of the Complainant. The Respondent refused
to accept the payment made by cheque.
Accountants Acts, 1949 read with section 22 of the said Act.
(Kanchan Bhagchandani vs. Vaibhav Kumar Mehta. [PR-
12th January, 2019).
Dealing in Conversion of Black Money on Commission Basis
1.4.2(247) As per sting operation carried out by News India 18 Channel
published and aired on 17 th November, 2016, it had been
observed that a Chartered Accountant had been shown as talking
about conversion of black money and advising use of Jan Dhan
Accounts and Gold to convert old high denomination currency
notes on commission basis.The manner in which the conversation
had taken place, it was clear that the Respondent was advising
the person about the various illegal means to convert black money
into white.
(Vinodray Vithaldas Donga in Re:- [PPR/412/2016/DD/141/INF
/2016/BOD/242/17] Judgement delivered on 30 th May, 2017).
110
1.4.2(248) Where a Chartered Accountant allegedly propagating his services

subsequent to demonetization, an objective of Government of
eradicating black money, through mass SMS alongwith his mobile
number offering his services towards conversion of cash with
minimum tax liability.
of Clauses (6) & (7) of Part I and ‘Other Misconduct’ falling within
the meaning of Clause (2) of Part IV of First Schedule read with
section 22 of the Chartered Accountants Act, 1949.
(Kailash Shankarlal Mantry in Re:- [PPR/392/2016/DD/
135/INF/2016/BOD/240/17] Judgement delivered on 30 th May,
2017).
Circulating Mass emails of Professional services even after
surrender of COP
1.4.2(249) Where a Chartered Accountant had surrendered his Certificate of
Practice and conveyed his intention to take up spiritual ideology
yet, he had circulated the mass e-mails offering therein various
professional services such as preparation of financial statements,
ITRs, etc, and quoting fees for the same.
Accountants Act, 1949 read with Section 22 of said Act.
(Manish Kumar Neemain in Re:- [PPR-18/16/DD/9/INF /16/BOD
/232/2016] Judgement delivered on 22 nd May, 2018).
Creating false documents to evade Tax
1.4.2(250) Where a Chartered Accountant was involved in creating false
documents showing gifts of various amounts of money by various
persons in the name of a person and his wife.
(Nagendra Prasad, Superintendent of Police, Kolkata vs. Umesh
Kumar Dokania, [PR-243/2013-DD/240/2013/BOD/217/2016]
Judgement delivered on 2 nd February, 2019).
111
Seeking Bribe from other Chartered Accountant

1.4.2(251) It came to the knowledge of the Institute from newspaper reports
that a First Information Report (FIR) was registered by the Central
Bureau of Investigation (CBI) against the Respondent alleging that
he had demanded Rs. 37.5 lakhs from another Chartered
Accountant and an amount of Rs. 30 lakhs was delivered to the
Respondent for getting undue favour in the matter of M/s. Lavasa.
(Maninder Singh Johar in Re:- [PPR/11/N/10/DD/6/INF/10/BOD
/117/13] Judgement delivered on 30 th June, 2015).
Cheating and Ransom
1.4.2(252) A charge against a Chartered Accountant was noticed from the
newspaper reportand news item aired on a News Channel where
in it was reported that the Respondent alongwith his associates
had cheated an American National, who wanted to exchange his
old currency into the new one amounting to Rs. 1 Crore on
payment of commission of 27% to 30%. He was advised to
approach the Respondent. According to the Police, the
Respondent alongwith 4 others, took Rs. 1 crore from the
American National in cash and disappeared. Thereafter, they
reported to the American National that the Police had seized the
money and hence they are unable to pay him. The American
National reported the matter to the Police who took the concerned
persons to the Police Station. The Police confiscated the money
under the provisions of Section 102 of Cr.P.C and the matter was
informed to the Income Tax Department.
(Vinit Kumar Mantri in Re:- [PPR/P/121/16/DD/136/
INF/16/BOD/241/2017] Judgement delivered on 8 th January,
2019).
1.4.2(253) Where a Chartered Accountant held his Partnership Firm to
ransom and demanded for increase in Share of Profit. He
112
manipulated the arbitration process and Hon’ble Mumbai High

Court passed strictures and levied cost of Rs. 2 lakhs against him.
Further, he refused to sign the cheques for making salary
payments to employees and other payments as per Consent Order
passed by Hon’ble High Court, Bombay. He also while holding
Certificate of Practice was engaged in other Business as a
Director and had signed the Balance Sheet of the said Company.
Held, guilty of Professional and Other Misconduct falling within the
meaning of Clause (11) of Part I and Clause (2) of Part IV of the
First Schedule to the Chartered Accountants Act,1949 read with
Section 22 of the said Act.
(Vinay Dattatray Balse vs. Yogendra N. Thakkar Re:- [PR-208/14-
DD/242/14/BOD/229/16] Judgement delivered on 12 th
January,2019).
Failure to refund the amount for the flat as Partner of
Construction Firm
1.4.2(254) Where a Chartered Accountant being one of the Partners of the
Construction Firm had failed to refund the amount to the
Complainant which was paid by him as the booking amount for the
flat. Later, due to financial problem the Complainant was unable to
pay the remaining amount so he decided to cancel the bookings of
the flat. The partners of the Construction Firm however, failed to
pay money back to the Complainant.
Accountants Act, 1949 read with section 22 of the said Act.
(Manohar G Bhujbal vs. Atish Vikas Phulphagar Re:- [PR-
12th January, 2019).
Prepared Two Balance Sheets from same Data
1.4.2(255) Where a Chartered Accountant had prepared two Balance Sheets
of the Company one for submitting to the Bank and another for
submitting to Income Tax Department. Both the sets of Accounts
had been audited and signed by him as the Statutory Auditor of
113
the Company. Moreover, he had submitted forged and fabricated

documents with an intention to avail enhanced credit facility from
the Bank.
of Clause (2) of Part IV of the First Schedule and Clause (7) of
1949.
(Mool Chand vs. Kamal Bhushan Jhamb Re:- [PR-93/10-DD/92/
2010/DC/151/2011] Judgement delivered on 14 th September,
2014).
Non-verification of Details and tampering of Documents
1.4.2(256) The Respondent had been appointed to carry out the audit,
Income Tax and ROC related work viz preparation and filing of
various Forms like Form No. 32, Form 18, 23 AC and 23 ACA, DIN
3 and 20B. The Respondent did not verify any other document,
contract, etc.to filing e-forms with the ROC which had certain
incorrectness on account of the same being filed on the basis of
tampered and forged documents which resulted in bringing
disrepute to the Chartered Accountancy Profession.
within the meaning of Clause (2) of Part IV of the First Schedule to
the Chartered Accountants Act, 1949 read with Section 22 of the
said act.
(Gopal Bhatter in Re:PPR/7/W/13/DD/10/W/INF/13/BOD/225/
2016).
Filing of Director details with ROC without Board Resolution
1.4.2(257) The Respondent had certified Form 32 filed with ROC regarding
the appointment of two Directors of Company without attaching
the copy of any resolution appointing as Directors of the
Company.It had been observed that the persons who had been
certified as the Directors of the Company were not the legal
shareholders of the Company. There had never been any Board
Resolution to induct these fraudulent shareholders as Directors
and hence the Respondent had brought disrepute to the
114
profession of Chartered Accountancy.

within the meaning of Clause (2) of Part IV of the First Schedule to
the Chartered Accountants Act, 1949 read with Section 22 of said
Act.
(Kamal Banerjee vs. Chinmoy Ghatak Re: [PR-151/14-DD/167
/2014/BOD/329/2017]).
Preparation and Certification of Fake Documents
1.4.2(258) The Respondent prepared and certified Fake Financial Statements
and other documents of certain persons to whom loans had been
sanctioned through a Branch of Bank of Maharashtra, Mumbai.In
addition to above, the Respondent availed vehicle loan from the
same Branch of the above Bank and it was found that assets had
not been purchased, mis-utilised Bank funds and account became
Non Performing Assets.
Held, guilty of Professional Misconduct falling within the meaning
of Clauses (6), (7) and (8) of Part I of the Second Schedule and
also of ‘Other Misconduct’ falling within the meaning of Clause (2)
of Part IV of the First Schedule to the Chartered Accountants Act
1949.
(Shashank V. Kamath, Deputy Regional Manager, Bank of
Maharashtra, Mumbai vs. Rishi Anmol Sekhri Re: [PR-153/2011-
DD /169/2011/DC/276/2013] Judgement delivered on 6 th January,
2016).
1.4.2(259) Where the Respondent as a General Manager Commercial of a
private limited Company had purchased raw materials at
exorbitant prices, taken unauthorised loans at usurious interest
rates, manipulated the MIS(Management Information System)
Report, pressurised fellow employees to prepare bogus invoices
and misguided the Statutory Auditor of the Company.
The Respondent as a Member of the Institute certainly owed a
duty to the Statutory Auditors of the Company and to the
shareholders and creditors at large to present a true and fair view
of the financial statements and he should not have been a party to
any attempt on falsification of accounts whether at the instance of
115
the Complainant or otherwise.

(Cyrus Maneck Bahadurji, Chairman, M/s Tytan Organics Pvt.
Ltd., Mumbai vs. Mustafa Abdulla Surka Re: [PR-157/09-
DD/185/09/DC/148/11] Judgement delivered on 7 th November,
2017).
1.4.2(260) The Respondent had defrauded the Complainant by showing
different figure in Returns of Income for the Assessment Year
2009-10 of his late father.Moreover, the Respondent had failed to
claim the tax advantage of Double Taxation Avoidance Treaty
between India and Canada in the said Return of Income and the
Complainant was forced to pay excess tax. It was noted that the
Respondent did not exercise due care and diligence while carrying
out professional duties as a Chartered Accountant even after so
many reminders from the Complainant.
of Clause (2) of Part IV of First Schedule and Clause (7) of Part-I
of the Second Schedule to the Chartered Accountants Act, 1949.
(Sunil Kaplash, Canada vs. Balraj Kalia, New Delhi Re:
[PR/209/12/DD/227/12/DC/340/2014] Judgement delivered on 18 th
September, 2018).
Manipulation of Financial Statements/Returns/Reports
1.4.2(261) The Respondent had manipulated the financial statement of the
Assesseefor the Financial Year 2005-06, 2006-07 and 2007-08 by
certifying a second set of the financial statements which were
submitted by the Assessee to the Service Tax Department andhad
resulted in evasion of Service Tax to the tune of Rs.2.13 Crores.
During the course of audit by the Service Tax Department, it was
revealed that the same were different from the sets submitted
earlier by the Assessee to the Service Tax Department. The
Respondent also certified worksheet prepared by the assessee,
wherein the Service Tax liability worked out by the Assessee in
the said worksheet and certified by the Respondent was found to
116
be much lower than the actual liability.

Held, guilty of professional and/or other misconduct falling within
the meaning of Clause (2) of Part IV of the First Schedule and
(Madhu Mohan Damodhar, Commissioner, Central Excise, Pune-1
vs. Likhesh Vasanji Shah Re: [PR-179/11-DD/01/2012/DC/368/14]
Judgement delivered on 7 th November, 2017).
1.4.2(262) Where a Chartered Accountant certified a Return of Income in the
name of his client which was filed with the Income Tax Office,
Meerut with his official stamp where a TDS certificate has been
issued fraudulently with forged documents and later issued the
confirmatory letter on behalf of the company also to execute his
plan of claiming the TDS as a refund fraudulently. He personally
collected the refund amount on behalf of his client from the
Income Tax Department.
Clause (2) of Part IV of the First Schedule and guilty of
Professional Misconduct falling within the meaning of Clause (7)
of Part I of Second Schedule to the Chartered Accountants Act,
1949.
(The Commissioner of Income-Tax, Meerut vs. Sanjay Sud - Page
41 of Vol II Part I of Disciplinary Cases, Judgement delivered on
2ndAugust, 2011).
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117
PART I OF THE SECOND SCHEDULE
Professional Misconduct in relation to Chartered Accountants in

Practice:
A chartered accountant in practice shall be deemed to be guilty of
professional misconduct, if he –
2.1.1 Clause (1): discloses information acquired in the course of his
professional engagement to any person other than his client so
engaging him, without the consent of his client or otherwise than
as required by any law for the time being in force;
Disclosure of Information without Client consent
2.1.1(263) Disclosure of information where a Chartered Accountant disclosed
to the Income-Tax Officer information acquired in the course of his
professional engagementwithout the consent of his clients.
Held, he was guilty under clause (1).
(Jamnadas Harakchand and Others vs. P.C. Parekh - Page 492 of
Vol. IV of the Disciplinary Cases and pages 26-44 of July, 1967
issue of the Institute’s Journal, Judgement delivered on
12/16thJanuary, 1967).
2.1.1(264) Where a Chartered Accountant had disclosed information acquired
by him in the course of his professional engagement to persons
other than his clients without the consent of his client and without
requirement in any law.
It was held that he was guilty of professional misconduct under
Clause (1) of Part I of the Second Schedule to the Chartered
Accountants Act.
(Bank of India vs. Ved Prakash - Page 458 of Vol.VI(1) of
Disciplinary Cases - Judgement dated 13 th July, 1989).
2.1.1(265) Where a Chartered Accountant discloses to the Registrar of
Companies (ROC) information acquired during the course of his
professional engagement without the consent of the Client and
without there being any requirement in Law to disclose the same.
118
PART I OF THE SECOND SCHEDULE – CLAUSE (1)
The Court rejected the contention of the respondent that the

voluntary disclosure made by him to the ROC was in public
interest and that the same was done with a view to bring home the
circumstances under which he was wrongfully removed from the
auditorship.
The Court observed that:
“From the facts on record it is evident that the respondent was
aggrieved by the action of the company in removing him from the
Auditorship and there were disputes regarding non-payment of his
professional fees and in these circumstances the letter was written
more out of vengeance rather than public interest.
If the public interest was the paramount consideration, then the
respondent would have made a report disclosing all such
information to the shareholders/creditors. The fact that no such
report was made and the fact that after his removal from the
Auditorship on 14.12.1982, the respondent chose to write a letter
on 28.12.1982 to the ROC without there being such obligation,
clearly shows that the plea of public interest raised is only a ruse
and not a bonafide action on the part of the respondent.
It cannot also be stated that the letter was written with a view to
protect his own interest. No action was contemplated by the ROC
against the respondent and hence there was no question of
addressing a letter to protect his own interest. Therefore,
addressing a letter to the ROC was neither in public interest nor
with a view to protect his own interest.”
Held that the respondent had committed gross professional
misconduct under Clause 1 of Part I of the Second Schedule of
(Director, M/s Shree Industrial Rubber Works Pvt. Ltd. vs. S.R.
Khanna - Page 437 of Vol. VIII–1–21(6) of Disciplinary Cases-
---------
119
2.1.2 Clause (2): certifies or submits in his name, or in the name of his
firm, a report of an examination of financial statements unless the
examination of such statements and the related records has been
made by him or by a partner or an employee in his firm or by
another chartered accountant in practice;
False Certificates/Due Diligence
2.1.2(266) Where a Chartered Accountant issued false certificates to several
parties for past exports for monetary consideration without
verifying any supporting records or documents. On the strength of
these false certificates, certain unscrupulous importers were able
to obtain import license, effect imports and clear these free of
duty, perpetuating a fraud on Government revenue and depriving
the Government of its legitimate revenue to the tune of several
Crores of Rupees.
On his statements to the Department he confessed the above fact
and disclosed that he had issued these certificates for monetary
consideration and without verification of supporting documents on
record.
Held that the respondent was guilty of professional misconduct
within the meaning of clauses (2), (7) & (8) of Part I of the second
schedule of the Chartered Accountants Act, 1949 in terms of
section 21 & 22 of the said Act.
(P.N. Vittal Dass, Addl. Collector of Customs, Mumbai vs. P.U.
Patil -Page 827 of Vol. VIII – 1 – 21(6) of Disciplinary Cases -
2.1.2(267) The Respondent had issued a clean report in respect of the his
client Company which involved in shipping services who had been
enjoying working capital facilities from the Complainant Bank and
subsequent to the submission of the original report, the
Respondent submitted a revised Audit Reportand provided a copy
of the same to the Institute and stated that he had directed the
Company also to revise the Financial Statement.
The account of the Company turned to NPA in due course of time
and the Complainant Bank decided to carry out a Due Diligence
120
Audit of the accounts of the Company pertaining to that period in

which the irregularities were happened.
The major differences observed from Due Diligence Review
Report as against the Clean Audit Report issued by the
Respondent which had a material effect on the decisions taken by
the Bank as under:
(a) The Company had granted and taken loan which was
against his earlier view as revealed from the register
maintained u/s 301 of the Companies Act, 1956.
(b) The Company did not have an internal audit system, which
was a negation of his earlier view.
(c) The Company had accumulated losses of Rs. 67.38 crores
whereas the original Financial Statement showed a
reasonably good profitand it was observed that the loss
arose due to exclusion of proceeds of bill discounted
(d) The Company had defaulted regarding payment to the
banks/financial Institutions.
(e) The Company had given guarantee to another Company
which was earlier not brought out in the original Audit
Report.
(f) The short-term funds had been used for meeting longterm
investment and the opinion was contrary to his original
opinion.
(g) The Company had discounted a lots of accommodation bills
for meeting its financial needs which was not stated earlier.
Other than above, it was also observed in the original report that a
wrong age-wise classification & disclosure was made in the
Financial Statement as far as Sundry Debtors were concerned and
the Insurance Premium on the life of the Directors was debited to
the Company.
Thus, it was enough to prove that the Respondent did not exercise
due diligence while carrying out the initial audit and issued a
revised audit report to cover up the transactions carried out by the
121
entity.
within the meaning of Clause (2),(5),(6),(7),(8) and (9) of Part I of
(K. George Varghese vs. K.J. Thomas, Kochi Re:
[PR/81/10/DD/89/10 /DC/260/2013] Judgement delivered on 9 th
September, 2014).
---------
122
2.1.3 Clause (3): permits his name or the name of his firm to be used in
connection with an estimate of earnings contingent upon future
transactions in a manner which may lead to the belief that he
vouches for the accuracy of the forecast;
2.1.3(268) A Chartered Accountant issued 97 Projection Statements for
certain Individuals without verifying the basic documents and on
the basis of which the Bank had extended the loan amount.
Afterwards, the Bank revealed that persons for whom the
Respondent had issued Financial Statements did not have any
business/source for repayment of loan.
of Clauses (3), (7) and (8) of Part I of the Second Schedule to the
(The DGM (Inspection), Tamilnad Mercantile Bank Ltd. vs. R. B.
K. Samuel - Page 126 of Vol I Part I of Disciplinary Cases,
Judgement delivered on 3 rd October, 2011).
---------
123
2.1.4 Clause (4): expresses his opinion on financial statements of any

business or enterprise in which he, his firm or a partner in his firm
has a substantial interest;
Lecturer conducting the Audit
2.1.4(269) Where a Chartered Accountant conducted the Audit of Accounts of
an evening college in Mangalore besides working in the same
college as Lecturer/Vice-Principal.
Held that he was guilty of Professional Misconduct under the
Clause.
(H.R. Shetty in Re: – Page 402 of Vol. VIII–1–21(6) of Disciplinary
Cases– Judgement delivered dated 17 th December, 2003 and
published in the April, 2004 issue of Institute’s Journal at page
1122).
Director in Company also its Auditor
2.1.4(270) Where a Chartered Accountant was Auditor of a private limited
Company in Ambala City since its inception, while his wife held 65
per cent of the shares in the said Company and was the Director
of the Company.
Held that the Respondent was inter alia guilty of Professional
Misconduct under Clause (4) of Part I of the Second Schedule.
(Promila Jain vs. Hardesh Kant – Page 416 of Vol. VIII – 1 – 21(6)
of Disciplinary Cases – Judgement delivered dated 6 th May, 2004).
2.1.4(271) Where a Chartered Accountant accepted the Audit of a company
inspite of the fact that his wife was the Director of the company
and also holding substantial interest in that Company. He had also
not disclosed such interest in his report while expressing his
opinion on the Financial Statements of such Company.
within the meaning of clause (4) of Part I of the Second Schedule
to the Chartered Accountants Act, 1949 in terms of section 21
read with section 22 of the said Act.
124
(Bharat D. Bhatia vs. Vijay R. Ashar - Page 807 of Vol. VIII – 1 –

21(6) of Disciplinary Cases- Judgement dated 13 th August, 2004).
2.1.4(272) The Respondent along with his family as on 30.09.1997 was
holding 21.85% shares in the Company where he continued to be
the Director and also one of the partners of the firm which was
carrying the Statutory Audit of the Company. The said conduct of
the Respondent was unbecoming of a Chartered Accountant and
against the provisions of the Companies Act, 1956 and the
Chartered Accountants Act.
within the meaning of Clause (4) of Part I of Second Schedule to
(Anil Kosha vs. Mahendra Kumar Mahajan –Page 421 of Vol. II of
Part I of the Disciplinary Cases of April, 2015 Judgement
delivered on 1 st February, 2012).
Tax Audit and Maintenance of Accounts simultaneously
2.1.4(273) Where a Chartered Accountant maintained the accounts and also
acted as the Tax Auditor of a firm. Besides holding the COP, he
was also in active business association with a company being a
Director of the company without taking the permission of the
Council.
Clause (11) of Part I of the First Schedule and Clause (4) of Part I
of the Second Schedule to the Chartered Accountants Act, 1949.
(Sharadchandra M. Kulkarni vs. Mahen J. Dholam - Page 1 of Vol
I Part I of Disciplinary Cases, Judgement delivered on
12thSeptember, 2011).
2.1.4(274) Where a Chartered Accountant was the Statutory Auditor of a
Bank and he being the Statutory Auditor also conducted the
Revenue Audit of the same Bank. In the Bank Empanelment Form
submitted by the Firm he had provided wrong information to the
Institute, as the firm was already closed.
Clause (4) of Part I and Clause (3) of Part II of the Second
125
(Manish Jajoo in Re:- Page 14 of Vol I Part I of Disciplinary

Cases, Judgement delivered on 12 th September, 2011).
2.1.4(275) The two Respondents had been practicing in their Individual
names and the Respondent No.1 had been appointed to be the
Treasurer for a period of two years i.e. 2007-2009. Previously he
had worked as a Treasurer of the Complainant Church for 2003-
2005 as well.
The Respondent No. 2 signed the Balance Sheets as Auditor from
2003-2004 to 2010-2011 including the periods when the
Respondent No. 1 signed as Treasurer, in his personal name.
Their appointment was on honorary basis and hence, no
appointment letter was issued to them.
Further, the Respondents had mentioned that the Pastor of the
Church was aware that both the Respondents were partners in the
CA Firm and neither of the Respondents declared their
partnership to the Church members orally or in writing.
Respondent No. 2 was held guilty of professional misconduct
falling within the meaning of Clause (4) of Part I of the Second
Schedule and the Respondent No. 1 was guilty of other
misconduct falling within the meaning of Clause (2) of Part IV of
the First Schedule to the Chartered Accountants Act, 1949.
(Brig. George Mathew and Others, Chennai vs. Livingstone J
Nallathambi and M. H. Selvaraj of M/s Selvaraj & Livingstone,
Chennai - [PR-92/2012-DD/105/2012/DC/341/2014] Judgement
delivered on 6th September, 2015).
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126
2.1.5 Clause (5): fails to disclose a material fact known to him which is
not disclosed in a financial statement, but disclosure of which is
necessary in making such financial statement where he is
concerned with that financial statement in a professional capacity;
Failed to disclose non-creation of a Sinking Fund
2.1.5(276) Where a Chartered Accountant failed to report to the shareholders
of a Company about the non-creation of a Sinking Fund in
accordance with the Debenture Trust Deed and did not make clear
that the amounts shown as towards Sinking Fund were borrowed
from the Managing Agents of the Company.
Held, that the Chartered Accountant was in duty bound to see that
the nature and subject matter of the charge over a security and
the nature and mode of valuation of the Sinking Fund Investments
were disclosed in the Balance Sheet in accordance with Form F
and he was found guilty of misconduct.
(Davar & Sons Ltd. vs. M.S. Krishnaswamy - Page 120 of Vol.I of
the Disciplinary Cases and pages 33-40 of June, 1952 issue of the
Institute’s bulletin - Judgement delivered on 3 rd October, 1952).
False Certification of circulation figures of Newspaper
2.1.5(277) Where a Chartered Accountant had falsely certified the circulation
figures of a newspaper by stating that he had checked inter alia
the newsprint sheets and machine room returns when they had
not at all been maintained by the publisher.
Held he was guilty under Clauses (5) and (9).
(Audit Bureau of Circulations Ltd. vs. K.L. Agarwal - Page 616 of
Vol.IV of the Disciplinary Cases and Page 438 of February, 1968
issue of the Institute’s Journal - Judgement delivered on 24 th July,
1967).
Failure of disclosure of irregularities in Audit even though
disclosed to Company
2.1.5(278) Where a Chartered Accountant had not disclosed the fact that a
large amount of loan had been given out of the funds of an
Employees Provident Fund to the Employer Company in
127
contravention of the Rules of the Provident Fund and had failed to

report on the default in clearing the cheques received in re-
payment of the loan.
Held by the High Court that he was not guilty of any non-
disclosure to the individual subscribers of the Provident Fund
because he owed no duty to disclose to them and he was well
within his rights to have disclosed the irregularities to the Trustees
themselves and to the Company which had appointed him.
Held by the Supreme Court on appeal that it was no defence for
the Chartered Accountant to say that he had disclosed the
irregularities to the Company as it was his duty to have made a
disclosure thereof to the beneficiaries of the Provident Fund in the
statement of accounts signed by him as the legal position of the
Auditor in the present case was similar to that of the auditor
appointed under the Companies Act. He was therefore guilty of
professional misconduct under Clause (5).
(Kishori Lal Dutta vs. P.K. Mukherjee - Page 646 of Vol. IV of the
Disciplinary Cases and page 573 of April, 1968 issue of the
Institute’s Journal -Judgement delivered on 26 th February, 1968).
Failure to bring attention to Heavy Cash Transaction
2.1.5(279) Where a Chartered Accountant failed to bring attention to the
heavy cash transaction entered into by the assessee in his audit
report submitted in Form 3CD in terms of section 44AB of the
Income Tax Act, 1961 for the Assessment year 1988-89.
within the meaning of Clauses (5), (6), (7) and (8) of part I of the
second schedule to the Chartered Accountants Act, 1949 in terms
of section 21 read with section 22 of the said Act.
(V.C. Agarwal in Re:- Page 768 of Vol. VIII – 1 – 21(6) of
Disciplinary Cases- Judgement dated 13 th August, 2004).
Concealing known Material Facts
2.1.5(280) A Chartered Accountant failed to disclose the fact that a
significant amount had been spent by the client (on the digging of
a new tube-well) and which had not been capitalized in their books
of accounts. Also, the Respondent, audited the accounts of the
128
Society for four financial years altogether but Financial Statements

were prepared separately for each year and he signed undated
audit reports for the four consecutive financial years.
Moreover, the Respondent failed to prepare audit memorandum
for each year audited by him. Respondent not only had worked
negligently but also failed to disclose the said material fact known
to him which was not disclosed in the financial statement.
falling within the meaning of Clauses (5) & (7) of Part I of the
(A.N. Iyer & R.N. Iyer vs. Satish Chandra K. Parikh Page 299 of
Vol. II of the Disciplinary Cases of April, 2015 Judgement
delivered on 5th October, 2013).
2.1.5(281) The Respondent carried out the Statutory Audit of a Co-Operative
Credit Society Ltd. but did not perform his duties judicially against
the interest of Society members and depositors and compliance of
Maharashtra Co-operative Societies Act, 1960, Rules 1961, bye-
law of the Society and Standard Accounting Practice. The
Respondent did not mention anything about non-members
deposits, liquidity compliance by the Society, Credit–Deposit (CD)
ratio and huge NPA.
The Respondent did not submit any remark about the fact that the
Society had not submitted Audit rectification report as required u/s
82 of the Maharashtra Co-operative Societies Act, 1960. The
Respondent awarded wrong audit classification to the Society as
required under the circular of Commissioner for Co-operation &
Registrar of Co-operative Societies, Maharashtra State.
In view of the above, with respect to charge relating to Credit-
Deposit (CD) ratio, the Respondent was guilty of professional
misconduct under Clauses (5) & (8) of Part I of the Second
Schedule, and with respect to charge relating to grade assigned to
the Society, the Respondent was guilty of professional misconduct
falling within the meaning of Clauses (6), (7) & (9) of Part I of the
129
(Divisional Joint Registrar, Co-op. Societies (Audit), vs. K.S.

Ambardekar- Page 237 of Vol. II of the Disciplinary Cases of April,
2015 Judgement delivered on 5 th October, 2013).
2.1.5(282) Where a Chartered Accountant had signed two sets of Financial
Statements of a Company for Financial Year 2010-2011 and both
the audited Financial Statement reflects different Assets and
Liabilities, Profit & Loss Account with different figures.
Further, the liability to the Complainant Bank was not reflected in
the Balance Sheet submitted to Syndicate Bank. Likewise, the
liability to Syndicate Bank was not reflected in the Balance Sheet
submitted to the Complainant Bank. He failed to disclose the
material fact which was well known to him and also failed to
exercise due diligence and was grossly negligent in the conduct of
his professional duties.
Clause (5) and (7) of Part I of the Second Schedule to the
(The DGM, State Bank of India (Stressed Assets Management
Branch), Chennai vs. A. D. K. Manoharan - [ PR-91/2012-
DD/118/12/DC/349/14] Judgement delivered on 4 th July, 2016).
2.1.5(283) Where the Respondent failed to:
(a) verify the appointment as an auditor as per Rules and
Regulation of an Association.
(b) point out in his audit report discrepancies relating to
payment against Corpus Fund, Cash-in-hand and previous
year figures for comparison. Moreover, applicability of
Accounting Standards/Principles along with its non-
compliance, were not reported.
(c) reconcile cash balance between Receipt & Payment A/c
and Balance Sheet of the Association
(d) fail to report un-reconciled amount in the Subscription
Account in the Auditors’ Report.
130

Clauses (5), (6) & (7) of Part I of the Second Schedule to the
(Surajit Datta vs. Deb Kumar Dwibedi Re: [PR/16/13-DD/25/13-
DC/404 /2014] Judgement delivered on 8 th November, 2015).
2.1.5(284) Where the Respondent as Statutory Auditor of a company had
done the following mistakes:
(a) failure to point out that turnover was not shown net of
excise duty on the face of Profit & Loss Account as required
as per provision of para 10 of AS-9.
(b) failure to disclose the accumulated depreciation amount
separately for each category of asset and failed to follow
the format of fixed assets as prescribed in the Act.
(c) violation of disclosure requirement of turnover in Profit and
Loss account.
(d) non-disclosure of loan, term loan and salary, fringe benefit
etc. to directors number in the Balance Sheet and in the
Profit and Loss Account and non-adherence to format of
schedule VI of the Companies Act, 1956.
(e) failure to point out irregularity in payment of statutory dues
such as Provident Fund, ESI, Sales Tax.
Clauses (5), (6), (7) and (9) of Part I of Second Schedule to the
(N. Thirumurthy, Chennai vs. S.V. Sredharan Re: [PR-199-2012-
DD-218-2012-DC-378-2014] Judgement delivered on 4 thJuly,
2016).
2.1.5(285) Where the Respondent issued the Turnover Certificates for the
years 2007-08 and 2008-09 to the Company presented before the
South Central Railway, showing figures, which were not matching
with the Profit & Loss Account of the Company.
131
It was observed that the Respondent did not mention that the
certificates were issued on the basis of sample checking &
unaudited figures and did not give an appropriate disclaimer in the
said certificate.
In view of the same, the Respondent had issued a misleading
certificate and held guilty of professional misconduct falling within
the meaning of Clauses (5), (6) and (7) of Part I of the Second
(M. Sivaiahin in Re:- [PPR/2/W/13/DD/5/W/INF/13/DC/421/2014]
Judgement delivered on 20 th January, 2017).
2.1.5(286) The Respondent had attested in a very casual manner the two
sets of Financial Statements with Form No. 3CB & 3CD for the
Financial Years 2009-2010, 2010-2011 and 2011-2012 which
enabled the partners of the firm to avail credit facilities from
Syndicate Bank, Ambur Branch as well as SBI,Vellore Branch and
both the sets neither the place nor the date had been mentioned.
On further perusal and comparison of the Income Tax Return,
Balance Sheet & Profit and Loss Account, Form 3CB & 3CD filed
with the Banks, it was observed that the Respondent had
intentionally suppressed the facts in the Income Tax Returns
which were different from the ones submitted to Syndicate Bank,
Amburand SBI, Vellore Branch.
Moreover, the Respondent could not produce any working papers
related to certification of Financial Statements of the firm. Hence,
it was clear that the Respondent had been grossly negligent in
discharging his duties in the conduct of his professional
assignment by signing different balance sheets with different
figures of assets and liabilities, and Profit & Loss Account.
The Respondent was held guilty of Professional and Other
Misconduct falling within the meaning of Clause (2) Part IV of First
Schedule and Clauses (5) and (7) of Part I of the Second
132
(The Superintendent of Police, CBI– ACB, Chennai vs. D. K.

Manoharan Re: [PR-226/2013-DD/221/13/DC/408/14] 8th
February, 2016).
2.1.5(287) The Respondent failed to report on the significant value of land
sold by the Company(client) and did not exercise due care in
reporting theoutstanding amount of sale of the land to Directors &
their relatives which had been duly reflected in the Accounts under
the head ‘Advance for Plots’.
Moreover, the Respondent did not mention that the Company had
been consistently followed the practice of recording all
transactions of plot of sales in one consolidated account without
maintaining separate individual accounts of parties and the
practice of netting off the debit and the credits balance in the
name of the different parties in the ‘Advance for Plots A/c’ which
was not consistent with the basic principle of accounting even
though the Company.
within the meaning of Clauses (5), (7) and (8) of Part I of the
Second Schedule to the Chartered Accountants Act 1949.
(Ramesh Chand Jain vs. Giriraj Khandelwal - Page 482 of Vol. II
of Part I of the Disciplinary Cases of April, 2015 Judgement
delivered on 21 stAugust,2014).
2.1.5(288) The Respondent being an auditor of a Project which owed an
amount of Rs.8,48,640/- to the Complainant Company against the
goods supplied to them in June 2006 and they issued cheque
twice to clear the outstanding but with a fraudulent intent avoided
payment of these cheques and the said amount was still to be
recovered by the Complainant Company.
It was noted that said amount was shown in the Balance Sheet of
the company as Sundry Creditors as on 31.03.2009 and Nil as on
31.03.2010. Moreover, the Respondent further had not checked as
to whether the material was taken back by the creditor or not and
failed to reconcile the same from the concerned creditor. Thus, the
Respondent failed in discharging his professional duties of
certifying the true and fair view of the affairs of the company for
the relevant financial year.
133

Clauses (5), (7) and (8) of Part I of the Second Schedule to the
(Accounts Manager, M/s STP Limited, New Delhi vs. J.
Keerthivasan Re: [PR-13-2011-DD-10-2011-DC- 345-2014]
Judgement delivered on 4 th July, 2016).
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134
2.1.6 Clause (6): fails to report a material misstatement known to him to

appear in a financial statement with which he is concerned in a
professional capacity;
Did not Disclose Material Facts known to him
2.1.6(289) A Company did not provide for depreciation as required by Section
205 and Section 250 of the Companies Act, 1956 and although the
Chartered Accountant was aware that the Company had under-
provided depreciation, he did not bring out this fact in his report.
Held the Chartered Accountant was guilty of professional
misconduct under the clause. He had failed to disclose a material
fact known to him but disclosure of which was necessary to make
the financial statement not misleading.
A Chartered Accountant was charged under Clauses (5) and (6)
for failure to report that there was a reduction of capital with
corresponding reduction in the loans and advances on the assets
side, which contravened Section 59 of the Travancore Companies
Act and Form F prescribed under the Act. There was also a failure
on his part to report on the non- disclosure of the forfeiture and
cancellation of share.
Held the Respondents conduct was not proper.
(Registrar of Joint Stock Companies vs. S.S. Iyer - Page 94 of Vol.
IV of the Disciplinary Cases and pages 405-408 of April, 1960
issue of the Institute’s Journal - Judgement delivered on 25 th
January, 1960).
Heavy Cash transactions not reported
2.1.6(290) Where a Chartered Accountant failed to bring attention to the
heavy cash transaction entered into by the assessee in his audit
report submitted in Form 3CD in terms of section 44AB of the
Income Tax Act, 1961 for the Assessment year 1988-89.
within the meaning of Clauses (5), (6), (7) and (8) of part I of the
second schedule to the Chartered Accountants Act, 1949 in terms
of section 21 read with section 22 of the said Act.
135
(V.C. Agarwal in Re:- Page 768 of Vol. VIII – 1 – 21(6) of

Disciplinary Cases- Judgement dated 13 thAugust, 2004).
Accountant Cum Auditor and improper Audit
2.1.6(291) A Chartered Accountant wrote the books of account of the
Complainant Association apart from conducting the audit. While
preparing and auditing the accounts, he did not comply with the
decision of the Complainant Association taken in its Annual
General Body Meeting, thereby being grossly negligent in his
conduct.
He neither ensured nor qualified his report regarding non-
provision of various liabilities in the accounts such as salaries and
wages, electricity charges, water charges etc., which again shows
that he was grossly negligent in the discharge of his duties as
Chartered Accountant and Auditor. None of the figures in the
Balance Sheet and Income & Expenditure Account of the
Complainant-Association for the year 1998-99 certified by him
tallied with the balances in the unauthenticated Cash Book and
Ledger.
Further, he did not prove the accuracy of the accounts prepared
and audited by him nor furnished details of various items
appearing in the statements certified by him.
The Council held him guilty under Clauses (6), (7), (8) & (9) of
1949 and also guilty of ‘Other Misconduct’ under Section 22 read
with Section 21 of the Chartered Accountants Act, 1949.
The High Court also accepted the decision of the Council.
(Hon. General Secretary, Rohit House Occupants Welfare
Association, New Delhi vs. K.K. Gupta - Page 299 of Vol. IX – 1 –
21(6), Decision of the Council dated 22 ndJuly, 2004, 244 thMeeting
of the Council and Judgement of High Court dated 25thSeptember,
2007).
Incorrect Figure of Share Capital
2.1.6(292) The Respondent, being the Statutory Auditor of a Company
wrongly mentioned in his audit report the amount of Authorised
136
Capital of Rs. 5,00,000/- in place of Rs.50,00,000/-and also failed

to report that the allotment of 72,660 equity shares of Rs.10/- each
on 31st March, 2009. It was observed that the allotment had been
done beyond the Authorised Capital as on that date.
Moreover, the Authorised Capital was increased by the Company
only on 17th June, 2009. He did not check as to when resolution
for increase in Authorized Share Capital of the Company was
passed and when a form to this effect was filed with ROC. This led
to the Respondent filing an incorrect Share Capital details of the
Company in the Balance Sheet.
(Rajev M. Bhingarde vs. Gouri Shanker Chitlangia [PR-47/11-
DD/46/11-DC /354/2014]).
Improper Appointment not disclosed
2.1.6(293) The Respondent had signed the accounts of a Co-operative
Society for the Financial Years 2002-2003 to 2009-2010 without
being validly appointed at the Annual General Body Meeting of the
Members of the Society for the years under reference.
Under the Rules and Regulations of the Co-operative Societies of
Maharashtra only those Chartered Accountants of the Institute
who passed the relevant examinations and approved by the
Registrar of Co-operative Societies and further who were on the
panel of the Registrar/Housing Federation, alone could be
appointed as the Auditors of the Co-operative Societies.
The Respondent was not on the panel of the Auditors of the
Registrar/Housing Federation Co-operative Societies and
eventually he was not competent to Audit and certify the Accounts
of Co-operative societies, yet he had put his signature on all the
accounts of the Society for the years under reference.
Moreover, the said Audited Accounts had also been filed with the
Registrar of Co-operative Societies, by the Society.
137

of Clauses (6) (7) and (8) of Part I of the Second Schedule to the
(S. S. Marwah and Stanislaus Fernandes vs. Vipul Amodwala Re:
[PR-45/ 2011-DD/38/2011/DC/327/2014] Judgement delivered on
6th January 2017).
2.1.6(294) Where the Respondent had been found negligent in discharging of
professional dutiesin the following matters:
(a) failed to disclose the correct particulars in the Balance
Sheet and Profit and Loss Accounts for the Financial Years
2008-2009, 2009-2010, 2010-2011 and 2011-2012;
(b) failed to appear before the Income Tax Department for the
A.Y.2009-2010 in spite of being duly authorised for the
same which caused severe financial loss to the
Complainant;
(c) failed to file Income Tax Returns, Financial Statements and
Audit Reports with the Income Tax Department; and
(d) failed to handover all the financial records to the
Complainant.
Held, the Respondent was guilty of professional misconduct falling
within the meaning of Clause (2) of Part-IV of First Schedule and
(Dr. Narendra M Rege, Mumbai vs. Hiteshkumar Kishorbhai Joshi,
Mumbai Re: [PR-222/13-DD/211/2013/DC/475/2016] Judgement
delivered on 6th February, 2017).
False Certification in connivance with Management
2.1.6(295) The Respondent had shown an amount of Rs. 19,20,690/- as
deposit received under the head, Current Liabilities & Provision in
the Financial Statements of M/s Patel Holdings Limited for the
Financial Year 2008-2009 and as nil in its Financial Statements for
the next F.Y i.e. 2009-2010.
It was observed that the Respondent had deliberately in
connivance with the management falsely certified the Financials of
138
the Company with an intention to wriggle the said Company out of

its payment obligation. It was further observed that the
Respondent was aware as an auditor of the fact that the amount
outstanding was towards one of the related parties, yet he failed to
seek third party confirmation which was required in those
circumstances.
Hence, it was clear that he could not invite attention to the
material departure from the generally accepted procedure of audit
applicable in the said circumstances.
within the meaning of Clauses (6), (7) & (9) of Part I of the Second
(Ms. Vandita R. Agarwal, Company Secretary, M/s Wall Street
Finance Ltd, Mumbai vs. M.S. Parikh, M/s MSP & Co., Mumbai
[PR-14/2012-DD/49/2012-DC/405 /2014] Judgement delivered on
7th November,2017).
Share Capital received in Cash not reported
2.1.6(296) A Chartered Accountant had failed to point out the irregularity with
regard to details of the contributories to the Share Capital as the
amount had been received in cash.The Committee on perusal of
the Respondent’s limited reply is of the opinion that he had totally
disregarded the importance of working papers and had not
prepared them as such.
Further his casual approach in defending the charges makes it
clear that he had not taken the matter seriously. In this charge, it
had been alleged that Rs. 5,00,000/- was received in cash against
equity share capital without any details of contributors or entries in
equity share capital account, cash Book or any receipt voucher.
The Respondent failed to report that the transaction of sale of land
was recorded in the books of accounts after showing the same as
transfer from ‘Advance against Land Account’ to ‘Sales Account’
by way of a journal entry and failed to exercise due diligence as
Statutory Auditor in conducting his duties.
139
An amount of interest on deposits collected had been wrongly

shown as transfer from ‘MIS Account’ to 'Lease Rent Against
Land' so as to show the said amount as an expense, the
Committee noted that the Respondent in this regard had failed to
give any satisfactory response and such facts would have been
easily verified.
A credit balance of Rs. 7.74 crores in 'Advance Against Land'
account was adjusted by transferring Rs.5.25 crores to 'Sales
account' without narration and by withdrawing Cash of Rs.1.03
crores on 31.03.2009, leaving a closing balance of Rs.1.34 crores
(Approx) in the said account which the Respondent failed to report
in his audit report.
Held, guilty of Professional Misconduct falling within the meaning
of Clauses (5),(6),(7) and (8) of Part I of the Second Schedule to
(KS Kaushik, Deputy Director, SFIO, Ministry of Corporate Affairs
Government of India vs. Sunil Kumar Gupta Ray Re: [PR-
364/2014-DD/07/15/DC/643/2017] Judgement delivered on
30thNovember, 2018).
Contingent Liabilities not Reported
2.1.6(297) The Respondent had failed to give disclosure of Contingent
Liabilities in the Financial Statements for the period ending in
2012 against the Corporate Guarantee given in favour of a Group
Company. In this context, the Respondent should have verified
the charges created on the basis of material available with the
Company and Registrar of Companies.
Further, the charge of Rs.4.35 crores against the Balance Sheet
size of Rs.26.12 crores was significant. Hence, omission of such
information from the Financial Statements makes them misleading
and thereby reflects gross negligence on the part of the
Respondent in conducting audit and failing to report material
misstatement in the financial statements of the said period.
140

(Registrar of Companies, Ministry of Corporate Affairs vs.
Jitendra Nath Dhar Re: [PR-18/2014-DD/54/2014/DC/648/2017]
Judgement decidedon 28 th December, 2018).
---------
141
2.1.7 Clause (7): does not exercise due diligence, or is grossly

negligent in the conduct of his professional duties;
Furnishing wrong Certificates
2.1.7(298) Where a Chartered Accountant furnished a certificate under
Section 27 of the Insurance Act that there was no charge on the
securities held as investments by way of loan or overdraft while,
as a fact, one of the securities had been sold and the proceeds
thereof utilised for the discharge of a loan. -Held he was guilty of
misconduct.
(G.M. Oka in Re: - Page 35 of Vol. 1 of the Disciplinary Cases and
pages 40-42 of July, 1952 issue of the Institute’s Journal-
Judgement delivered on 19 th March, 1952).
2.1.7(299) A Chartered Accountant, without examination of Stock Register of
the firm and without examining other relevant matters connected
with the certificate, issued wrong consumption certificate in
respect of raw material and components on the basis of which,
licence of higher value, for which the unit was not entitled, was
issued by the Deputy Controller of Imports and Exports
Held, the Chartered Accountant was guilty of gross negligence
under the Clause (7).
(T.S. Vaidyanatha Iyer in Re:- Page 153 of Vol. V of the
Disciplinary Cases and pages 211-212 of April, 1977 issue of the
Institute’s Newsletter - Judgement delivered on 27 th January,
1977).
2.1.7(300) Where a Chartered Accountant wrongly certified the increase in
Paid-up Share Capital of a Private Limited Company in the
Balance Sheet without proper evidence.
Clauses (7), (8) & (9) of Part I of Second Schedule to the
Chartered Accountants Act,1949.
(Ajit Singh Ahuja vs. Dinesh Kumar Goyal - Page 26 of Vol II Part
I of Disciplinary Cases, Judgement delivered on 1 stFebruary,
2012).
142
Failure to indicate the mode of Valuation of Investments

2.1.7(301) Where a Chartered Accountant failed to indicate the mode of
Valuation of Investments in Shares as required by the Companies
Act and also to draw attention to the inclusion of uniforms in the
depreciation account.
Held that he was guilty under Clause (7).
(M.C. Poddar vs. P.S. Sodhbans - Page 259 of Vol. I of the
Disciplinary Cases and page 554 of May, 1954 issue of the
Institute’s Journal -Judgement delivered on 1 st April, 1954).
Non-verification of Cash Balance
2.1.7(302) Where a Chartered Accountant, in a Bank Audit reported to the
shareholders that he had not verified the cash on hand and that
he had also signed the balance sheet in anticipation of the receipt
of confirmation letters from the banks in respect of the cash said
to be lying with them and failed to report on the weakness of the
banks financial position.
Held, that he was guilty of the first and third charges falling under
Clause (7).
Verification of cash was an essential duty of an auditor which he
failed to discharge and in signing the report in anticipation of
receiving the confirmation letters from banks, he had failed to
perform his duties with the requisite skill and diligence.
(S.N.Das Gupta in Re:- Page 57 of Vol.II of the Disciplinary Cases
and pages 80-92 of September, 1955 issue of the Institute’s
Journal -Judgement delivered on 1 st August, 1955).
Failure to Report important information
2.1.7(303) Where a Chartered Accountant, appointed as Auditor of the
Madras Branch of a limited Company at Bombay, was charged
with failure to report to the Bombay Office that some entries in the
bank pass book had not been passed through the cash book of
the branch.
Held that he was guilty of gross negligence.
143
The High Court observed that a small fee paid to the Respondent
should not come in the way of his doing his duty without fear or
favour, although it involved unpleasant consequences, namely, he
might not be appointed again.
(The Fairdeal Corporation Ltd. Bombay vs. K.Gopalakrishna Rao -
Page 361 of Vol. III of the Disciplinary Cases and pages 196-203
of Oct. 1957 issue of the Institute’s Journal - Judgement delivered
on 23rd August, 1957).
Opening and Closing Stock not tallied
2.1.7(304) The Opening and Closing stock of Tea as well as Turnover of Tea
were not correctly reflected in the Profit and Loss Account and/or
Notes on Accounts of a tea Company for the years 1982, 1983
and 1984.
It was alleged that the Respondent had failed to bring out these
material discrepancies in his reports in the relevant years
accounts.
The Council found him guilty under Clauses (7) & (8) and decided
to recommend to the High Court that he be reprimanded. After
analysing facts of the case and various judicial pronouncements in
detail, the High Court was of the opinion that it was not a fit case
where the alleged misconduct on the Respondent demanded
imposition of any punishment.
(The Regional Director, Ministry of Industry, Department of
Consumer Affairs, Calcutta vs. Inderjit Roy – Page 218 of Vol.
VII(1) of the Disciplinary Cases - Judgement dated 19 th March,
1999).
Failure to point out discrepancies
2.1.7(305) A Chartered Accountant was found guilty of professional
misconduct under Clauses (5), (6), (7) & (9) of Part I of the
Second Schedule on the following grounds:
(a) that he failed to point out the contravention of Note (C) to
Schedule VI of the Companies Act, that is, the requirement
in the case of a subsidiary Company that the number of
144
shares held by the holding Company as well as by the

ultimate holding Company and its subsidiaries must be
separately stated;
(b) that he failed to point out the contravention of Part I Form of
Balance Sheet Schedule VI, that is share capital issued in
pursuance of a contract without payment being received in
cash and shares allotted as fully paid up by way of bonus
shares should have been shown separately;
(c) that he failed to point out, in his report, that the Company,
of which he was the auditor, was a public limited Company
or deemed to be a public limited Company by virtue of
Section 43A of the Companies Act;
(d) that he failed to comment in his report on the debit balance
in the current account with managing agents, in accordance
with Section 369 of the Companies Act;
(e) that he failed to report the non-maintenance of the contract
register required to be maintained under Section 360(3);
and
(f) that he failed to report the money value of the contract for
the supply of service with the associates of managing
agents as required under Schedule VI Part I.
(Registrar of Companies, West Bengal vs. V.V. Bapat - Page 8 of
Vol. V of Disciplinary Cases and Page 281 of December, 1974
issue of the Institute’s Journal - Judgement delivered on 21 st
August, 1974).
2.1.7(306) A Member was found guilty under this Clause (7) in the following
circumstances:-
(a) That he had indicated in his audit report that there was
inadequate provision for depreciation but had not disclosed
in his audit report the extent of arrears of depreciation.
(b) He had not dealt with in his audit report, the facts of arrears
of depreciation and the dividend recommended in the
context of the provisions of Section 205 of the Companies
Act.
145
(c) He had not dealt with in the audit report, the implications of
the provisions of the Companies (Temporary Restrictions on
dividends) Act, of 1974 which was then in force at the time.
(d) The above omissions represented significant defects of
substance and the Member has failed to act in the
discharging of his duties reasonably though his honesty
was not in question.
(Registrar of Companies, West Bengal vs. R.K. Gangopadhyay -
Page 202 of the Vol.VI(1) of Disciplinary Cases - Judgement dated
7th January, 1981).
. Discrepancy in Concurrent Auditor’s Report
2.1.7(307) Where a Chartered Accountant being the Concurrent Auditor did
not mention in his Audit Report as to the documentation defects of
non-compliance of KYC norms/AML Standards and irregularities in
cheque purchased portfolio of a Company.
(The Deputy General Manager (Inspection), The Dhanalakshmi
Bank Ltd., vs. S. Sathiavageeswaran - Page 198 of Vol II Part I of
Disciplinary Cases, Judgement delivered on 3 rd October, 2013).
NBFC Auditor did not report Non-Compliances
2.1.7(308) Where a Chartered Accountant was the Auditor of the Company
and he failed to report that the Company had carried on the
business of Non-Banking Finance Company without obtaining
Certificate of Registration from the RBI.
(Ajay Chhaya (based on information received from Deputy
General Manager, Reserve Bank of India) in Re:- Page 8 of Vol I
Part I of Disciplinary Cases, Judgement delivered on 12th
September, 2011).
146
Wrong reporting about Stock

2.1.7(309) Where a Chartered Accountant had not made a separate
disclosure regarding writing down of value of Stock of a company
as per AS-5. The Company had written off the Stock as scrap, the
same should have been disclosed in the Proft & Loss A/c as per
the requirement of AS-5, which the Respondent failed to do.
AS-22 requires that Deferred Tax should be recognized for all the
timing differences, subject to the consideration of prudence in
respect of deferred tax assets,the Respondent also failed to do so.
of Clauses (5) and (7) of Part I of Second Schedule to the
(The Deputy General Manager, State Bank of India, Stressed
Assets Management Branch, Ahmedabad vs. Mansukhlal
Bachubhai Thummar Re: [PR/124/2010/DD/127/2010/DC/215
/2012] Judgement delivered on 27 th July, 2016).
Wrong Information about Pricing
2.1.7(310) The Respondent provided wrong information as to the price of
goods in the market and the quantity to be purchased from the
vendor company wherein he had been auditor of which he did not
disclose the fact as required by Section 184 of the Companies Act,
2013. The said transaction was not at prevailing market price and
was not entered into the Register maintained under Section 189 of
the Companies Act, 2013.
The Respondent also violated the provisions of Section 143 of the
Companies Act, 2013 by giving wrong information about Internal
Control System of the Company.
Held that the Respondent was guilty within the meaning of
(Srinivas Rao, Vapi vs. Nikhil D. Sabharanjak-Page 288 of Vol. II
of the Disciplinary Cases of April, 2015 Judgement delivered on
15th October, 2013).
147
Dependency on Staff/Article Assistant

2.1.7(311) A Certificate issued by a Chartered Accountant to a Proprietor of a
Firm in respect of the turnover of betelnuts to enable the firm,
which was not dealing in betel nuts, to obtain import licence
without checking the books and documents himself, but relying on
his articled clerk for its correctness.
Held he was guilty of gross negligence.
(Sunderlal Fatehpuria in Re:- Page 591 of Vol.III of the
Disciplinary Cases and page 224 of January, 1959 issue of the
Institute’s Journal - Judgement delivered on 14 th November,
1958).
Failure to check the Bank Balances
2.1.7(312) Where a Chartered Accountant failed in his duty to check the Bank
Balances with the Pass Books of the banks and failed to obtain
certificates of balances from the bankers in respect of those
balances, the Council found him guilty of misconduct under
Clauses (7) and (8) of Part I of the Second Schedule
Held there being no proof of dishonesty or malafide on the part of
the Chartered Accountant and in view of the circumstances of the
case, the High Court took no more serious view of the matter than
to express disapprobation of the conduct of the Chartered
Accountant in the form of an admonition.
(Deptt. of Economic Affairs vs. D.B. Kulkarni - Page 185 of Vol.IV
of the Disciplinary Cases and pages 410-412 of April, 1960 issue
of the Institute’s Journal - Judgement delivered on 1 st March,
1960).
Gross Negligence and failure to obtain sufficient Information
2.1.7(313) The Disciplinary Committee having found that the main charges as
set out in the information letter were not substantiated if
proceeded with two new charges and found the Respondent guilty
under clauses (7) and (8) and for failure
(a) to invite attention to omission in the balance sheet about
information relating to the maximum amount due from the
148
directors and from the Companies under the same

management and
(b) to carry out the statutory duty to obtain sufficient
information before making his report inspite of it having
been brought to his notice by his assistants that there was
difference in the Trial Balance prepared by the Company.
Held in a matter like this brought out during the proceedings in
examination of the Respondent without it having been made the
subject matter of a clear and specific charge to the knowledge of
the Respondent with an opportunity to meet the same and to
disprove the same, cannot be, either according to the provisions
of the statute or having regard to the principals of natural justice,
the basis for an adverse finding against the Respondent.
(V.K. Verma in Re:- Page 425 of Vol.IV of the Disciplinary Cases
and pages 465-471 of February, 1966 issue of the Institute’s
Journal - Judgement delivered on 21 st September, 1964).
2.1.7(314) Where a Chartered Accountant failed to exercise sufficient care
and diligence in the discharge of his professional responsibilities
in not checking the cash memos and not verifying the alterations
in the trial balance with the original books in respect of one
Company and in not checking the journal entries and the final
figures of the balance sheet with the general ledger in respect of
another Company.
Held, he was guilty under Clause (7).
(Messrs. O.M. Agency Private Ltd. & Messrs. Oriental Mercantile
Distributors Private Ltd. vs. M. Surendra Sastry - Page 891 of Vol.
IV of the Disciplinary Cases and pages 452-455 of November,
1971 issue of the Institute’s Journal - Judgement delivered on 21st
April, 1971).
Delay in Completion of Audit
2.1.7(315) Where a Chartered Accountant had not completed his work
relating to the audit of the accounts of a Company and had not
submitted his audit report in due time to enable the Company to
comply with the statutory requirements in this regard.
149
Held, he was guilty of professional misconduct under Clause (7).

(Qaroon Trading & Finance Pvt. Ltd. vs. Laxmi Narain Saxena and
Jitendra Mohan Chadha - Page 828 of Vol. IV of the Disciplinary
Journal - Judgement delivered on 12 th February, 1969).
2.1.7(316) Where a Chartered Accountant firm failed to complete the audit of
a Bank without any justification and being a grossly negligent.
Held that, Respondent firm was guilty of professional misconduct
within the meaning of clause (7) of Part I of the Second Schedule
(R.K. Goswami, Administrator, Delhi Nagrik Sehkari Bank Ltd. vs.
M/s. Dayal Singh & Co. – Pg.288 of Vol. IX (1) of the Disciplinary
Cases- Judgement of Hon’ble High Court dated 7 th August, 2008.)
Failure to point out Irregularities
2.1.7 (317) Where a Chartered Accountant being the Concurrent Auditor of a
Bank did not comment on the fraudulent transactions in his Audit
Report where the Bank allowed huge amount of loan without any
actual deposit.
Clauses (7), (8) and (9) of Part I of Second Schedule to the
(Tamilnad Mercantile Bank Ltd. vs. V.U. Gangolli - Page 1 of Vol II
Part I of Disciplinary Cases, Judgement delivered on 1 st February,
2012).
2.1.7(318) A Member had issued Certificates in regard to consumption of
materials and book value of production in connection with an
application for import which was later found to be false.
He was found guilty of gross negligence by the Council which
finding was confirmed by High Court with the following
observations:-
(a) The Member was unable to produce any working papers or
any evidence of the work done by him.
150
(b) Evidence showed that he had not himself examined the

records. Even if he had examined the records, he could not
confirm the accuracy of the figures.
(c) He had not examined the Exchange Control copy of the
licence without the examination of which the certificates
could not have been issued.
(d) There need not be element of dishonesty on the part of a
Member in case of gross negligence.
(C.S. Hariharan page 265 Vol.-VI-1-21(6) and S.B. Pathak in Re.
page 272 Vol.-VI-21(6)).
2.1.7(319) A Member in Practice, while Auditing the Accounts of a Hospital
committed the following mistakes:-
(a) Repayment of loan of Rs.2,940/- to the Trustees had not
been entered in the Receipts and Payment Accounts though
shown in the Cash Book and Ledger. This was explained as
an inadvertent omission.
(b) Professional fee of Rs.450/- paid to an Advocate was found
to be bogus and no voucher was available. The Member
had not verified the vouchers and no explanation was given
by the Member.
(c) Stock of medicines as on 31.3.73 and 31.3.74 was shown
as identical figures and no verification of the stock of
medicine or stock register or other records had been made.
(d) The cash balance in cash book was different from that
shown by the balance-sheet. The cash balance was not
admittedly verified during audit nor any written confirmation
regarding cash had been obtained.
(e) The figures of the amount of grant as shown by the books
and the Income and Expenditure Statement differed and the
explanation given by the Member was found neither true nor
reasonable.
(f) The High Court held that the Member was guilty of gross
151
negligence in so far as he has not exercised due care and

caution which is expected of a Chartered Accountant.
(P.D.J. Solomon vs. L.A. Patnaik - Page 334 of Vol.VI(1) of
Disciplinary cases - Judgement dated 23 rd January, 1984).
Auditor taking part in Management of society
2.1.7(320) Where a Chartered Accountant was appointed Auditor of a Co-
Operative Society, it was alleged that he took active part in the
Management of the Society and issued false certificates regarding
the verification of cash on hand.
Held that there was nothing unprofessional in helping the
administration of the Society by rendering occasional services. As
regards the issue of the false certificate, he was found guilty of
misconduct.
(Paradise Co-operative Housing Society Ltd., Bombay vs. R.
Viraswami - Page 1 of Vol. III of the Disciplinary Cases and pages
87-88 of August, 1956 issue of the Institute’s Journal - Judgement
delivered on 24 th November, 1955).
Disbursed Loan on Proforma Balance Sheet certified by CA
2.1.7(321) Where the Complainant had sanctioned an additional loan to a
Company on the basis of a Proforma Balance Sheet duly certified
by a Chartered Accountant while the Audited Balance Sheet of the
Company for the same period duly certified by the statutory
auditors revealed a completely different picture.
Held that the Chartered Accountant was guilty under clauses (7) &
(8).
(Assam Financial Corporation vs. S.K. Beria – Page 17 of Vol.VII
(1) of Disciplinary Cases - Judgement dated 10 th July, 1992).
Material and Substantial Amount wrongly reported
2.1.7(322) The Respondent had certified a profit and loss account wherein
the total expenditure was shown at Rs. 3,19,163/- but the correct
amount of total expenditure worked out to Rs. 2,19,163/- only.
Accordingly, the total expenditure had been over-stated by
152
Rupees one lakh and instead of a profit, a loss of Rs. 153.38

appeared in the said profit and loss account. The correct position
was that there was a net profit of Rs. 99,846.62/- (Rs. 1,00,000/-
minus Rs.153.38).
The Council took into consideration two reports of the Disciplinary
Committee viz. Majority Report and Dissenting Report by one
Member. Agreeing with the Majority report, the Council was
satisfied that on the facts of the case, the aforesaid difference was
a very material difference. The Council also noted the admitted
position that no reconciliation of Capital Account was made by the
Respondent which could have enabled him to discover the error.
The Respondent had taken the plea that he did not conduct the
audit and his certificate only stated that the said profit and loss
account was prepared from the books of account.
The Council was of the view that when a Chartered Accountant
prepares a Profit and Loss Account from the books of account and
signs the certificate to that effect, he was expected to verify the
accuracy of the figures appearing in the profit and loss account
with reference to the relevant books of account and he cannot
escape the responsibility in this behalf by pleading that he did not
conduct the audit.
The Council also found that though the Chartered Accountant was
entitled to place reliance upon the work of his assistants, he had a
professional duty and responsibility for the certificate signed by
him and he must take reasonable steps to satisfy himself that the
work has been carried out in a proper and efficient manner.
Considering the facts of the case, the Council found that the
mistake of Rs. 1 lakh in total figure of Rs. 3,19,163/- was not only
material but also very substantial.
He was held guilty under this clause.
(Commissioner of Agricultural Income Tax vs. T.S. Ranganathan –
Page 266 of Vol. VII(1) of Disciplinary Cases - Judgement dated
9th February, 2000).
153
2.1.7(323) The Respondent had certified an application by a Company in

accordance with the requirements of Import and Export Policy,
certifying the F.O.B. value of exports at Rs.4,44,77,996/- instead
of the correct figure of Rs.4,14,69,925/-.
It was held that the Respondent had not exercised due care and
skill which he should have done while discharging his professional
duties and should have indicated the correct figure.
He was held guilty under this clause.
(B.L. Khanna in Re:- Page 372 of Vol. VII(1) of Disciplinary Cases
– Council’s decision dated 8 th, 9th and 10th April, 1987 - Judgement
dated 5th September, 2000).
2.1.7(324) A Chartered Accountant issued certificates certifying the utilization
of funds by the Company for the amount granted and disbursed by
a bank without verifying the records properly before issuing the
aforesaid certificates.
Also, the said certificate did not reflect the end use of the funds.
He was grossly negligent in issuing the said certificate(s).
The auditor knowingly certified the end use of money received by
the auditee incorrectly and improperly which is undoubtedly an un-
pardonable act on the part of the Respondent and thus was held
guilty by the Council under Clauses (5), (6), (7) and (8) of Part I of
the Second Schedule which was accepted by the High Court.
(Thampy Mathews, Dy. General Manager, IIBI vs. R.K. Tayal,
Delhi – Page 254 Vol. IX – 1 – 21(6) Decision of the Council on
25th June, 2004, 243rd Meeting of the Counciland Judgement of
High Court dated 23 rd July, 2007).
2.1.7(325) The charge against the Respondent was that he while conducting
the Statutory Audit of the Complainant Bank (SBI), had certified
the consolidated claim statement pertaining to Agricultural Debt
Waiver & Debt Relief Scheme, 2008 as true and correct in
respect of Bhubaneswar Old Town Branch which formed the basis
of amount being claimed as reimbursement from the Govt. of
India.
154
During re-verification exercise to ascertain the correctness of the

said consolidated claim statement of ADW & DRS, 2008, it was
found that excess benefit amounting to Rs.4,44,683/- had been
extended in eighteen (18) Accounts under Debt Waiver Scheme.
The Branch Manager had prepared the certificate for 1535
Accounts and the claim was of Rs.95.72 Iakhs and during short
period of audit, the Respondent had checked nearly about 750
accounts and found correct. It appears that he had issued the
purported certificate without proper and reasonable verification of
all the accounts and the approach followed by the Respondent
also appears to be casual as it was felt he while carrying out his
professional assignment.
of Clauses (7) and (8) of Part I of the Second Schedule to the
(Shri V.G. Hegde, Dy. General Manager (Agri Business), State
Bank of India, Local Head Office, Bhubaneswar vs. Brahmananda
Sahu, Cuttack Re: [PR-85/14-D/114/2014/DC/547/17] Judgement
delivered on 6thApril 2018).
NBFC Company Registration not verified by Auditor
2.1.7(326) The Respondent had not scrutinized the relative records/
documents of the Company before issuing the certificateto the
effect that the Company was registered with RBI as a Non-
Banking Financial Company (NBFC)whereas no Company by said
name had been issued a Certificate of Registration as NBFC from
any of the offices of the RBI.
The Respondent had not been able to corroborate his contention
that the Company was in fact registered with the RBI and
moreover, he stated that the Company was listed as a NBFC
Company in the list of the ROC and the records of the MCA which
was verified by him during the issue of the report to the Company.
155
(Shakti Kumar in Re:- Page 535 of Vol. IIof Part I of the

Disciplinary Cases of April, 2015 Judgement delivered on 21th
August,2014).
Stock were reported without examination by Auditor
2.1.7(327) Where a Chartered accountant in his audit report had clearly
stated the Company was maintaining proper records of inventory
and they had examined it. But the Company during the course of
investigation had failed to produce any books of accounts relating
to stock and manufacturing and had stated that no such books of
accounts were being maintained.
(Tapan Sarkar, Assistant Commissioner of Sales Tax, Kolkata, vs.
O.P. Banka - Page 172 of Vol II Part I of Disciplinary Cases,
Judgement delivered on 1 stOctober, 2013).
Certificates issued by Auditor not based on Audited Financial
Statements
2.1.7(328) A Company had submitted two different certificates of Analysis of
Cost / Pricing structure based on the audited final accounts of the
financial year 2013-14 duly certified by two different Chartered
Accountants showing different value addition figures.
The Complainant has raised a question regarding how a Company
can have two separate value addition calculations just because
there are two separate Chartered Accountants and not following
the prescribed guidelines of Tripura Industrial Investment
Promotion Scheme (TIIP Scheme), 2012.
One of the aforesaid certificates had been issued by the
Respondent.
It was observed that the date of issue of the certificate in question
was on 25th April, 2014 and the date of issuance of Audit Report
by M/s S Basu Thakur & Co. for the financial year 2013-14 was 2nd
June, 2014 which was much beyond the date of issuance of the
certificate by the Respondent. Therefore, it was clear that the
156
Certificate issued by the Respondent could not be based on the

Audited Accounts of the Company for the financial year 2013-14.
within the meaning Clause (7) of Part I of the Second Schedule to
(Chief Operating Officer, Vishal Pipes Ltd., New Delhi vs. Tapan
Kumar Saha Re: [PR-50/15-DD/56/2015/DC/626/17] Judgement
delivered on 6thApril 2018).
Auditor wrongly reported that NBFC Company complied with
RBI Guidelines
2.1.7(329) Where the Respondent had wrongly certified in respect of an
Investment Company. In terms of letter received,with reference
from RBI, it was alleged that the Respondent vide his certificate
dated 27th November, 2014 certified that the Company had
complied with the prudential norms and provisions of the RBI Act,
1934 for the financial year 2013-14 although as per audited
financial statements of the Company which were also certified by
the Respondent, NBF (Non-deposit Accepting or Holding)
Companies Prudential Norms (Reserve Bank) Directions, 2007
were not complied by the company due to non-provision against
diminution in value of investments and doubtful loans and
advances.
RBI alleged that in view of the above, the Respondent had
violated “Non-Banking Financial Companies Auditor’s Report
(Reserve Bank) Directions, 2008.
of Clause (7) of Part I of the Second Schedule to the Chartered
(Kedar Laddha, Ahmedabad in Re:- PR/P/42/16/DD/45/INF/2016/
DC/654/2017 Judgement delivered on 20 th November, 2018).
Certified Two Sets of Balance Sheet
2.1.7(330) The Respondent had certified two sets of Balance Sheet and
Profit and Loss Account for the financial year 2001-02 of M/s
Modern Enterprise.
157
One set of Balance Sheet and Profit and Loss Account for the
Financial year 2001-02 was submitted before the Income Tax
Authority wherein the turnover as Rs.71,00,380/- and another set
of Profit and Loss Account and Balance Sheet was deposited in
connection with the tender, wherein the Respondent certified an
inflated turnover of Rs.91,00,380/-which contained the signatures
of the Respondent for the same financial year i.e. 2001-02.
Subsequently, it was observed that the figure mentioned in the
Balance Sheet and Profit and Loss A/c was different by significant
amount and the Respondent could not properly explain why he
had certified the same.
within the meaning of Clause (7) of Part I of the Second Schedule
(S. K. Kalimuddin, Distt. Birbhum, West Bengal vs. Subrata
Tapadar Re: [PR-177/11-DD/29/2012/DC/446/2016] Judgement
delivered on15th September, 2017).
2.1.7(331) Where a Chartered Accountant had mentioned different amount of
term deposit in his two Audit Reports. It was observed that he had
signed two different Assets and Liability Statement.
In the first Report, deposits were shown as Rs. 2,47,530/- and
fixed deposit was shown as Rs. 30,000/-. In the 2nd revised Report
the term deposit was shown as Rs.2,47,530/- which includes the
fixed deposit amount of Rs. 30,000/- which was inadvertently
shown as separate head under fixed deposits in the first report.
The same was rectified in the 2nd revised Audit Report.
It was observed that amount shown was a Fixed Deposit and for
the certification of the same the Respondent was required to verify
basic documents such as (i) name of bank where said deposit was
made (ii) terms of maturity and (iii) interest accrued etc., but
Respondent failed to check these basic documents. Hence, he
was grossly negligent in performing his professional duties.
158
(Jayanta Basu vs. Sumit Dasgupta Re: [PR-03/14-DD/29/

2014/DC/525 /17] Judgement delivered on 6 th April, 2018).
Not attended Income Tax Proceedings
2.1.7(332) The Respondent failed to appear before the ITO in response to
the notice under Section 143(2) and 142(1) of the Income Tax Act
for A.Y. 1988-89 on behalf of the client despite adjournments
granted/postponements of dates of hearing made by the
Department, resulting in the assessment being made ex parte
under Section 144 of Income Tax Act, 1961.
The Respondent failed to appear before the CIT (Appeals) before
whom an appeal against the said ex parte order of ITO had been
filed, resulting in the dismissal of the appeal.
The Respondent confirmed to the Complainant by informing her
that stay of demand applied for had been granted whereas the fact
was that the Complainant was served with a demand notice for
payment, failing which recovery proceedings would be initiated. An
appeal to be filed before the Tribunal against the order of CIT
(Appeals) was got signed from the complainant. Later on, it was
found and admitted by the Respondent that no such appeal was
filed. Even the amount paid as appeal fee was not refunded.
Respondent had not done the needful in spite of repeated
requests for collecting Income-Tax records for the subsequent
years and an explanation of the basis of the return filed by him for
the assessment year 1988-89. In spite of receiving amount from
the Complainant, the Respondent did not pay the Income Tax to
the Income Tax Department, for the assessment year 1989-90.
The Complainant who received the notice for payment from the
Income Tax Department, handed over the notice to the
Respondent, but despite his repeated assurances, no receipts had
been shown or whether the amounts were deposited with the
Income Tax Department and even if paid, the dates were not
intimated.
159
False assurances, gross negligence and lapses on the part of the

Respondent had resulted in the attachment of the Complainant’s
property and bank account, a heavy demand of additional tax,
which might be further increased due to the levy of penalties so
heavy as to beyond her capacity to pay even after liquidating her
total assets. Thus, the Respondent had been grossly negligent in
the conduct of his professional duties.
within the meaning of Sections 21 and 22 of the Chartered
Accountants Act, 1949 read with Clause (7) of Part I of the Second
Schedule.
(Smt. Sushma Shourie vs. Mahesh Taneja – Page 39 of Vol. VIII –
1 – 21(6) of Disciplinary Cases – Judgement delivered on 21 st
December 2001 and published in the March, 2002 issue of
Institute’s Journal at pages 1126 to 1128).
2.1.7(333) A Chartered Accountant was held guilty under Clause (7) of Part I
of the Second Schedule and “other misconduct as being a tax
consultant and a tax auditor he failed to appear before the Income
Tax Authorities for his client even after having instructions from
his client.
In spite of being fully paid for his professional services and
provided all the books of account and other documents, he failed
to satisfy the Income Tax Officer because of his negligence and
careless attitude. There were several anomalies in the books of
account. The opening and closing balances as per the bank
statements and pass-books were not re-produced correctly in the
cash book.
(R.C.Dutta vs. Kailash C.Mishra - Page 143 of Vol. IX – 1 – 21(6)
Council’s decision dated 5 th January, 2005, 247th Meeting of the
Council and Judgement of High Court dated 1 st March, 2007).
Manipulations in Audit Report
2.1.7(334) The Respondent had been making glaring manipulations in the
Balance Sheet and P & L account of the Company such as;
(i) He has signed the balance Sheet for the year ended on 31-
160
3-1993 without the same being authenticated by the

Directors of the Company under Section 215 of the
Companies Act, 1956.
(ii) The Balance Sheet as at 29.11.1993 and 30.11.1993
prepared and certified by the Respondent shows glaring
inconsistencies unmatched by the books of account
(iii) (As per the Balance Sheet ended on 31.3.1993 and
29.11.1993 Term Loans amounting to Rs. 50,000/- which
although were not paid off by the Company but in the
subsequent Balance Sheet this figure was not shown by the
Respondent.
misconduct under Clauses (7) and (8) of Part I of the Second
Schedule.
(Promila Jain vs. Hardesh Kant – Page 416 of Vol. VIII – 1 – 21(6)
of Disciplinary Cases – Judgement delivered dated 6 th May, 2004).
Wrong Reporting in Audit Report
2.1.7(335) Where a Chartered Accountant had given report in Form No. 3CD
stating that he disclaimed to report on Balance Sheet and
compiled the Financial Statements from the information given by
contractor for the purpose of estimation of profit & loss, assets
and liabilities.
He had mentioned that the books of accounts were maintained in
Mercantile System knowing fully well that no regular books of
accounts were maintained. He did not disclose that the account
was not in conformity with the guidelines issued for auditing Under
Section 44AB.
Clauses (7), (8) and (9) of Part I of the Second Schedule to the
(T N C Sridhar, DY. Commissioner of Income Tax, Tumkur vs.
C.S. Prahallada - Page 214 of Vol II Part I of Disciplinary Cases,
Judgement delivered on 3 rd October, 2013).
161
2.1.7(336) In ‘Auditor’s Report’ of a Charitable Trust, a Chartered Accountant

had mentioned that Tenders for repairs or construction involving
expenditure exceeding Rs.5,000/- were not invited as there were
no repairing or construction done by Trust during previous year.
But, in Form 16A, it was clear that the Trust had paid
Rs.2,86,241/-to the contractor for construction work.
Held guilty of professional mis-conduct falling under Clauses (7) &
(8) Part I of the Second Schedule to the Chartered Accountants
Act, 1949.
(Pritesh B. Shah Ahmedabad vs. Ashvin Dashrathlal Panchal
Ahmedabad [PR/18/09/DD/40/09/DC/146/2011] Judgement
delivered on 6th January, 2016).
Audit not done as per GAAP / AS
2.1.7(337) Where the Respondent failed to point out that the client had not
followed accrual assumptions of accounting in respect of interest
income and lease rental payable to the party which was
mandatory for the Company as per requirement of AS-1.
The Committee further noted that the Respondent had failed to
quantify the quantum of effect of not taking into account the
provision for interest on loan lent and lease rental payable on the
financial statements of the Company in his Audit Report.
Accordingly, in the view of the Committee, the Respondent had
failed to perform his professional duties as per Generally
Accepted Accounting Practices.
within the meaning of Clauses (7) and (9) Part I of Second
(M. Gandhi in Re:- [PPR/08/S/2009/DD/07/S/INF/2009/DC/240
/2012]).
2.1.7(338) The Respondent had enabled the Managing Director of the
Company(client) to secure Trade Finance Limit from M/s. Global
Trade Finance Limited (or M/s GTFL) by dishonestly certifying the
false and bogus audited financial statements in respect of the
Company certifying huge turnover and net profits, whereas the
162
Company had no such business transactions and thus facilitated

the Managing Director of the Company in perpetrating the fraud.
It was observed that the Respondent failed to comply the
requirements of AAS-3 and as per that Standard, the working
papers are the property of the Auditor and he ought to have
retained the same for a period of time sufficient to meet the needs
of his practice which the Respondent failed to do so.
The Committee also noted that the Respondent also failed to bring
on record any action taken by him in respect of non-returning of
documents by Mr. E. Mathan who was supposed to be mere
Accountant of the concerned Company.
The Respondent was held guilty ofprofessional misconduct falling
(V. Ajay in Re:- [PPR/P/6/S/12/DD/5/S/INF/12/DC/296/13]
Judgement delivered on 20 thJanuary, 2017).
2.1.7(339) The Respondent certified the Receipt & Payment Account, Income
Expenditure Account along with the Balance Sheet of a company
as true and correct without examining the related records.
Subsequently, it was observed that he had failed not only to report
the known material mis-statement appearing in the Receipt &
Payment Account, Income Expenditure Account and the Balance
Sheet after audit of the above financial statement but also to invite
attention to any material departure from the generally accepted
procedure of audit. Hence, he seemed to have failed to exercise
due diligence while discharging his duties as statutory auditor.
(Pujari Sudhakar Bachu Channa vs. Purushottam Ramesh
Narayanapethkar Re: [PR/139/12-DD/158/12-DC/338/2014]
2.1.7(340) Where a Chartered Accountant being the Auditor of a firm for two
consecutive financial years had shown taxable security service
163
income under head ‘Other Income’ instead of showing the same

under head Security Charges as shown in the previous Financial
Years.
Further, the said Security Income had been shown as net of
expenses and hence, he had changed the method of presentation
of financial statements of the firm from the previous years with an
intention to avoid taxable Security Services Income.
Held guilty of professional misconduct for not exercising due
diligence within the meaning of Clause (7) of Part I of Second
(The Asstt. Commissioner of Central, Excise & Customs Surat-I
vs. Noshir Pestanji Bharucha Re: [PR/36-G/2011/DD/34/2011/
DC/324/2014] Judgement delivered on 6 th January, 2016).
Original B/S had major differences with Provisional B/S
2.1.7(341) A Chartered Accountant being the Statutory Auditor of the Society
for the Financial Year 2009-10 had signed the Balance Sheet on
14.05.2010 and thereafter signed the Provisional Balance Sheet of
the Society for the Financial Year 2009-10 on 10.08.2010. It was
observed that the previous Balance Sheets were having lot of
differences and provisional Balance Sheet was not authenticated
by the Management.
(John Mathew in Re:- [PPR/12/S/12/12/DD/5/S/INF/13/DC
/423/2014] Judgement delivered on 20 th January, 2017).
Revision of Audit Report without due Procedure
2.1.7(342) The Respondent had wrongly claimed the exemption u/s 10A of
the Income Tax Act, 1961 for the A.Y. 2004-05 and 2005-06.
The Committee noted that the deduction u/s 10A was restricted
from 100% to 90% only for the one Assessment Year A.Y. 2003-
04.
164
The Respondent gave the Audit Report(s) u/s 92E of the Income
Tax Act, 1961 for the Assessment Years 2004-05 and 2005-06
wherein he had certified that the amount of deduction u/s 92E was
90% only and calculated the deduction accordingly.
All the audit reports were undated.The Respondent did not check
as to whether the export done by the entity was entitled to
exemption and to what extent.The Respondent was unable to offer
any satisfactory explanations as to why the amount of deduction
was restricted to 90%.The Company filed the revised Income tax
returns for both the aforesaid assessment years claiming the
deductions at 100% u/s 10A of the Income Tax Act, 1961.
The Respondent was held guilty of professional misconduct, with
respect to this charge, falling within the meaning of Clause (7) of
Part I of Second Schedule to the Chartered Accountants Act,
1949.
(V. Ayyadurai vs. M. Rajkumar- Page 408 of Vol. II of Part I of the
Disciplinary Casesof April, 2015 Judgement delivered on 10th
December, 2013).
2.1.7(343) The Respondents certified the Accounts of a Trust for financial
years 2004-05 to 2010-11 and also certified the revised accounts
of the Trust for the same year.
Subsequently, it was observed that the Respondent had not
followed the ICAI guidelines on “Revision of the Audit Reports”
and failed to state not only the reasons for revising the audit report
issued by him but also failed to inform the Charity Commissioner
of Trust that his earlier report should not longer be relied upon.
Moreover, the Respondent could not bring on record any
documentary evidence including working papers to establish that
before signing the revised financial statements he had verified the
relevant records and documents relating to assets and liabilities of
the Trust.
165
(Shekhar Purushottamrao Kannao vs. Sanjay S. Khandekar Re:

[PR-125/13-DD/121/2013/DC /428/2014] Judgement delivered on
7th November, 2017).
Failure to obtain sufficient information for Audit
2.1.7(344) Where a Chartered Accountant had not exercised due diligence
while auditing the accounts of the Firm and had accepted the
retirement of the Complainant from the Firm without verifying the
relevant documents. He failed to obtain sufficient information
which was necessary while making statement on Form No. 3CB
on 30th in respect of the Firm.
(Krishnendu Ghosh vs. Rakesh Kumar Agarwal - Page 181 of Vol
II Part I of Disciplinary Cases, Judgement delivered on 1st
October, 2013).
Failed to disclose requirements of applicable Standards
2.1.7(345) Where the Respondent being the Statutory Auditor of the
Company failed to qualify his opinion in the Auditor’s Report as
regards to related party transactions in the Company’s accounts
as per the requirements of Companies Act 1956 and AS-18 i.e. a
number of Company’s transactions with its group/associate
companies had been shown under the head ‘Sundry Debtors’ and
a number of associate companies under the head ‘Advances
recoverable in Cash or kind or for the value to be received’.
Moreover, the Respondent did not follow the requirement of AAS-
3 which was applicable on his client and also failed to qualify his
opinion in the Auditors’ Report. As per AAS-3, working papers are
the property of the auditor who ought to retain the same for a
period of time sufficient to meet the needs of his practice which
the Respondent had failed to do so and further he failed to retain
a copy of the same for his future requirement.
under Clauses (7) & (9) of part I of the Second Schedule to the
166
(Addl. Director (Tax-II) Serious Fraud Investigation Office, Ministry

of Corporate Affairs, New Delhi, vs. V. Subramanian, Re:
[PR/61/09/DD/71/2009 /DC/119/2010]).
2.1.7(346) The Respondent had included the deferred income in free
reserves in calculation of net-worth, where the Respondent failed
to disclose the net-worth inclusive of deferred income of Rs.
216,10,81,142/- and on account of that treatment, the
accumulated losses at the end of 31 st March, 2008 become more
than 50% of its net-worth.
Accordingly, it was observed that the Respondent did not comply
the requirement of Companies (Auditor’s Report) Order, 2003 and
the Respondent wrongly mentioned in his Audit Reportthat the
accumulated losses of the Company had not exceeded fifty
percent of its net-worth as at the end of financial year.
within the meaning of Clauses (6), (8) and (9) of Part I of Second
(A.S. Ramanathan in Re:- [PPR/9/S/11/DD/6/S/INF/11/DC/283
/13] Judgement delivered dated 5 th January, 2016).
2.1.7(347) Where a Company had been carrying on the business of housing
finance by granting housing loans etc. without registration under
the National Housing Bank Act, 1987 and the Respondent had
failed to provide information relating to public deposit as a part of
his report to the National Housing Bank (NHB).
He also failed to give satisfactory explanation that report sent to
Board of Directors as per Directions to the Auditor of the Housing
Finance Company (NHB) Director, 2010 was duly sent to the NHB
by the Company. It was also observed that the Respondent failed
to comply with the requirements of AAS-28, CARO, 2003 and
Accounting Standards.
The Respondent was guilty of professional misconduct falling
167
(Shri G. N. Somdeve, Assistant General Manager, National

Housing Bank, New Delhi vs. S.K. Gupta Re: [PR-105/13-
DD/126/2013/DC/429/2014] Judgement delivered dated:15 th
December, 2016).
2.1.7(348) Where value of stock in respect of fabrics had been taken at cost
which was in violation of requirements of AS-2. The Chartered
Accountant had mentioned that Company adopted cost of goods
for its valuation as it was lower and for various reasons the net
realizable value could not measure.
On perusal of balance sheets, it was observed that the stocks
were valued at cost and the Respondent had also not mentioned
in the financial records that the valuation of stock at cost or net
realizable value whichever was lower.
Hence, he failed in his duties to qualify his report appropriately so
as to make the readers/users of the Financial Statements to
understand the exact implication.
(B.L. Sinha, Joint Director (Inspection), Office of the Regional
Director, Kolkata vs. Jitendra Prasad Re: [PR-80/09-
DD/90/09/DC/201/2012] Judgement delivered on 23 rdDecember,
2015).
Certifying Fake / Forged Financial Statements & Documents
2.1.7(349) It had been noticed that a Company claimed to have exported
textile fabrics and readymade garments, with a declared value of
Rs. 287.53 Crores whereas the actual value of the goods exported
appeared to be Rs. 8.66 Crores.
The inflation of export value was done to avail ineligible export
incentives like duty drawback and DEPB licenses. It was found
that the Company was involved in over-invoicing of their export,
so, it was called and asked to produce the purchase invoices, in
support of the value of the goods which it failed to produce stating
the non- availability of the purchase invoices.
168
Thereafter, when the Balance Sheet was perused, it was found

that the same had been audited by a Chartered Accountant.
Held guilty of professional misconduct within meaning of Clauses
(6), (7) and (8) of Part I of Second Schedule to the Chartered
(Tilak Devji Dedhia in Re: [PPR-P-2-W-11-DD-3-W-INF-11-DC-
242-2012] Judgement delivered on 27th July, 2016).
2.1.7(350) Where a Chartered Accountant falsely certified inflated Balance
Sheet and Profit & Loss of a company. On the basis of the false
audit report of the Respondent, the company was technically
qualified in a tender and was finally awarded the contract work
although the company was ineligible.
Held guilty of Professional Misconduct falling under Clauses (7) &
(8) of part I of the Second Schedule to the Chartered Accountants
Act 1949.
(The Superintendent of Police, CBI, Anti-Corruption Branch,
Kolkata vs. S.K. Kalimuddin [PR-22/09-DD/30/09/DC/167/2011]
Judgement delivered on 15 th December, 2016).
2.1.7(351) Where a Chartered Accountant had certified the copies of forged
retirement deed wherein Complainant’s father was shown as
retired from partnership.
His father had never signed any retirement deed and never made
any mention of the same in his lifetime. The deed had been filed
with the Registrar of Companies after the death of the partner.
Just as an Advocate certifies the copies in High Court, the
Respondent certifies the copies of retirement deed with the
Registrar of Companies and gives it the bonafide it requires.
His father had never signed in the presence of the Respondent
and all the documents had been prepared after the death of his
father.
The Respondent certified the retirement deed after a period of 30
years and had given authenticity to a forged document.
Clause (7) of PartI of the Second Schedule to the Chartered
169
(Kailash Kalantri, USA vs. Pankaj Prataprai Sanghvi Re: [PR-

112/10-DD/117/10/DC/206/12] Judgement delivered on 18 th
December, 2015).
2.1.7(352) A Chartered Accountant being the Statutory Auditor of the Air
Force Canteen since 2003-2004 to 2009-2010 had failed to detect
the cash fraud played by the staff members of the Unit Canteen.
He certified false Balance Sheets, false Trial Balance and Audit
Reports. It was observed that the Respondent did not verify the
basic documents of the Auditee like Cash Book, Bank Statement
and Bank Reconciliation Statement even he had not resorted to
any third party confirmation from the bank independently.
Thus, by not relying on the Bank Statements and merely accepting
the financials produced by the concerned officers and rubber-
stamping them in acceptance, he failed in his duties and the same
was not expected of a prudent professional.
Clauses (7) and (8) of Part I of Second Schedule to the Chartered
(Captain, Chief Admin Officer, Air Force Station, Bapatla vs. J.
Venkateswara Rao [PR-09/11-DD/25/12/DC/333/14] Judgement
delivered on 4thJuly, 2016)
2.1.7(353) The Respondent prepared and certified fake financial statements
and other documents of certain persons to whom loans had been
sanctioned through a Branch of Bank of Maharashtra, Mumbai.
In addition to above, the Respondent availed vehicle loan from the
same Branch of the above Bank and it was found that assets had
not been purchased, mis-utilised Bank funds and account became
Non Performing Assets.
of Clauses (6), (7) and (8) of Part I of the Second Schedule and
also of ‘Other Misconduct’ falling within the meaning of Clause (2)
of Part IV of the First Schedule to the Chartered Accountants Act
1949.
170
(Shashank V. Kamath, Deputy Regional Manager, Bank of

Maharashtra, Mumbai vs. Rishi Anmol Sekhri. Re: [PR-153/2011-
DD/169/2011/DC/276/2013] Judgement delivered on 6 th January,
2016).
2.1.7(354) Where the Respondent had certified the details of the source of
funds of Rs. 275 lakhs and the Bank had disbursed a sum of Rs.
275 lakhs in the Month of April, 1998 to the Company.
Moreover, the Promoters had infused Rs. 294.27 lakhs into the
Company by way of Share Capital and Share Application Money
which was certified by the Respondent. Subsequently, it was
observed that the Promoters had not infused the requisite funds
before seeking disbursement from IDBI in place of that they had
provided false certificate to IDBI regarding infusion of Promoters’
contribution towards the Project.
As per the Statement obtained from UTI Bank, total deposits in the
said account as on date of the Respondent’s certificate was only
Rs. 14.27 lakhs as against Rs. 294.27 lakhs certified by the
Respondent as funds infused by the promoters.Thus, it was
alleged that the Respondent had not exercised due diligence while
verifying the records and documents of the Company before
submitting the above certificate and incidentally, the said advance
to the Company had gone bad.
(General Manager, Industrial Development Bank of India, Kolkata
vs. Surendra Kumar Surana Re: [25CA(07)/2007/NEW DC/281/
2013] Judgement delivered on 26 th September, 2014).
2.1.7(355) Where a Chartered Accountant who was the Statutory Auditor of a
Private Limited Company had prepared false and fabricated
Financial Statements, CMA Datas, Provisional Balance Sheet etc
in connection with application of credit limits from the Complainant
Bank and also conducted the Stocks and Receivable Audit for the
Company during March, 2011. Based on aforesaid documents, the
Complainant bank released the cash credit limits to the Company.
171
In addition to above, the Respondent also certified the quarterly

stocks and books debts statement which were submitted by the
Company to the bank for the quarters ending June, September,
and December, 2011. When the Complainant bank conducted the
audit in January, 2012, it came to light that the books debts
certified by the Respondent were fictitious and were required to be
verified.
It was observed that the Respondentin collusion withthe Company
had prepared manipulated Balance Sheets for the past few years
to defraud the Bank by inflating the sales figure to avail enhanced
working capital and also showing profits earned continuously year
on year basis, showing healthy financial position of the Company
to avail finance from Bank.
Clause (7) of Part I of Second Schedule to the Chartered
(Sr. Manager, Indian Overseas Bank, Pune vs. Nalin Ramesh
Chavan Re: [PR-125/2012-DD/164/12-DC/389/2014] Judgement
delivered on 7th November, 2017).
2.1.7(356) While preparing the Balance Sheet as on 31 st March 2009, the
Respondent had directly taken the balance as on 31 st March 2007
of various Assets as the closing balances as on 31 st March 2009
and had done wrong calculations. The Financial Statements for
the subsequent financial years were also prepared by carrying
forwarding wrong balance which resulted into Income Tax
Demands for the Assessment year 2009-2010 and 2010-2011.
The Respondent had failed to provide requisite details to the
Income Tax Department and had made various additions to the
income which resulted into ‘Unexplained Investments’ under
Section 69 of the Income Tax Act, 1961 in the assessment orders.
It was further observed that the Respondent was negligent in
attending the hearings before the Income Tax Department as at
many places moreover, he did not provide the relevant details
before the Income Tax Officer on behalf of the Complainant being
the assessee. As a consequence, the Income Tax Officer had
172
passed an Order raising a Tax Demand of Rs. 63,39,440/-.

Besides that penalty proceedings u/s 271(1)(c) were initiated
separately for furnishing inaccurate particulars.
within the meaning of Clause (2) of Part-IV of First Schedule and
(Dr. Meera N Rege, Mumbai vs. Hiteshkumar Kishorbhai Joshi Re:
[PR 223/13-DD/212/2013/DC/462/16] Judgement delivered dated
6th February, 2017).
Forgery in Signature
2.1.7(357) Where the resignation letter of the Complainant, being the Director
of a Private Limited Company, was forged as the signature of the
Complainant was simply copied & pasted and the Respondent had
certified Form 32 on the Complainant’s forged resignation letter
which had been filed with the ROC. It was observed that based on
his forged resignation letter, the resignation of the Complainant
from Directorship of the said Company had been occurred.
It was noted that the Respondent had not taken any step to verify
forged signature on resignation letter which anyone would have
taken in normal circumstances.
of the Chartered Accountants Act, 1949.
(Shri Gunwant Singh Saluja, Director, M/s Mongia Steel Ltd. vs.
Bijay Kumar Sah Re: [DC/ 474-2016] Judgement delivered dated:
22nd August, 2017).
2.1.7(358) Where a Chartered Accountant had certified Form No. 32 wherein
Mr. Milan Biswas and Mr. Saroj Thakur were shown as having
been appointed as Directors of the Company and the Complainant
and Mr. Sanjay Ramesh Kaul (being the existing Directors) were
removed from the Directorship of the Company. On perusal of
Form 32, it was observed that the said Form was digitally signed
by the Complainant and was verified by the Respondent.
173
The Complainant for the same had lodged complaint with TCSSA
to have the name of the person who got the digital certificate
issued in the name of the Complainant.
It was noted that the digital signatures of the Respondent were
used without his knowledge and the person who had used his
signature had accepted this fact before the Court and in the Police
Station to misuse the signature of him. He further submitted that
his digital signatures were used from a computer system on which
he earlier used his digital signatures.
The Respondent also produced copy of letter dated 18.12.2013
written by another person to him wherein he had accepted that he,
by mistake, had used the digital signature of the Respondent. But
the Respondent could not produce any evidence of acceptance of
his fault by that person before the Court and Police authority.
The case of that other person could have been only an after-
thought and seems to have been procured to hide the negligence
on the part of the Respondent.
of Clause (2) of Part IV of the First Schedule and Clause (7) of
1949 read with section 22 of the said Act.
(Mahesh Khemsingh Rawat, Director, M/s. Max Cot Merchants
Pvt. Ltd., Ulhasnagar vs. Vikash Kumar Agarwal, Liluah Re: [PR-
328/13-DD/48/2014 /DC/597/17] Judgement delivered on 6 thApril,
2018).
False Statement of Current Account
2.1.7(359) Where the Respondent had submitted a false Statement of
Current Account maintained with KCCB for the period 1 st April
2010 to 31st March 2011 and failed to report that the balance
confirmation of 4 Bank Accounts. The Respondent as an auditor
did not bring the same to the knowledge of the users of the
financial statements through his audit report that sufficient audit
evidence and appropriate information could not be obtained by
him despite writing letters to the Bank. Hence, it was apparent that
the Respondent failed to exercise due diligence and gather
sufficient information for expression of opinion.
174
The Respondent was held of professional misconduct falling within

the meaning of Clauses (7) and (8) of Part I of the Second
(Relationship Manager, State Bank of India, Mumbai vs. Mahavir
Jain, Mumbai Re: [PR-126/2012-DD/171/2012/DC/441/2016]
Judgement delivered on 6th February, 2017).
Handed over Password of Digital Signature of Director
2.1.7(360) The Respondent was assigned by the Complainant with the task
of verification of the data relating to the retirement of the existing
directors, appointment of new directors, increase in the authorized
share capital of the company and allotment of shares, in his
professional capacity.
In this regard, the Respondent in good faith had handed over of
the password of his digital signature to his old client for e-filing the
documents with the ROC. Once the Respondent had passed the
password of his digital signature to his client, he was accountable
for the misuse of the same, if any and cannot plead ignorance or
negligence.
Here, the Respondent should have diligent enough not to have
passed the password of his digital signature to his client.
the Chartered Accountants Act,1949.
(M/s Anjaneya Bisanpur Agro Industries Pvt. Ltd., vs. Narender
Kumar Kaushik - Page 524 of Vol. II of Part I of the Disciplinary
Cases of April, 2015 Judgement delivered on 21 th August,2014).
Not supplying requisite information timely to RBI
2.1.7(361) The Respondent had furnished details to RBI vide his letter dated
12.10.2006 showing the unsecured loan for Rs.48.97 lakhs
whereas as per financial statement audited by him for the year
ended 31st March, 2005, the amount of unsecured loans was
shown as Rs.64.30 lakhs.
As per RBI Guidelines, the Respondent was required to furnish
requisite information to the RBI within 15 days and ought to have
reconciled unsecured loan with the figures appearing in the
175
financial statement before submitting it to the RBI which he failed

to do.
(Gora Chand Mukherjee in Re:- [PPR/P/10/E/2007/DD/6/E/
8INF/08/DC/94/2010] Judgement delivered on 15 th December,
2016).
---------
176
2.1.8 Clause (8): fails to obtain sufficient information which is

necessary for expression of an opinion or its exceptions are
sufficiently material to negate the expression of an opinion;
Relying on Internal Auditor Report without own due diligence
2.1.8(362) Where a Chartered Accountant relying on the work of the internal
auditor of a Company qualified his report that the books of
account and the supporting vouchers had been examined by the
internal auditor of the Company, the Council taking the view that
the qualification amounted to an exception sufficiently material to
negate the expression of an opinion, found him guilty of
misconduct under the latter part of Clause (8). As a general rule, a
statutory auditor would be guilty under this Clause, if he
performed his work so recklessly as to give his report without
looking into the books of account of a Company, on the basis of
the work of the internal auditor whose opinion turned out to be
false.
(J.C. Chandiok in Re:- Page 367 of Vol. IV of the Disciplinary
Cases and pages 681-683 of June, 1964 issue of the Institute’s
Journal - Judgement delivered on 31st January, 1964).
2.1.8(363) Where the Respondent had failed to report on the significant value
of land sold by the Company(client) and did not exercise due care
in reporting the outstanding amount of sale of the land to Directors
& their relatives which had been duly reflected in the Accounts
under the head ‘Advance for Plots’. Moreover, the Respondent did
not mention that the Company had been consistently followed the
practice of recording all transactions of plot of sales in one
consolidated account without maintaining separate individual
accounts of parties and the practice of netting off the debit and the
credits balance in the name of the different parties in the ‘Advance
for Plots A/c’ which was not consistent with the basic principle of
accounting even though the Company.
Second Schedule to the Chartered Accountants Act 1949.
177
(Ramesh Chand Jain vs. Giriraj Khandelwal – Page 482 of Vol. II

of Part I of the Disciplinary Cases of April, 2015 judgement
delivered on 21 st August, 2014).
Issued Presumptive Certificate without any Disclaimar
2.1.8(364) The Respondent had issued a false and concocted Certificate
before the Court for increase in the interim maintenance amount to
the Complainant’s wife in respect of proceedings being conducted
under Domestic Violence Act, 2005. In the said Certificate, the
Respondent had mentioned that the same had been prepared as
per the records produced before him by the wife of the
Complainant.
It was further, observed that the entire certificate had been
prepared on the basis of normal earning capacity of the company
in steel sector applied upon bank receipts.He had issued a
certificate which was considered to be written confirmation of the
accuracy of facts stated therein.
Hence, it was incumbent upon him to mention suitable disclaimer
to the effect that the certification is based on estimated income
and not the actual. It was imperative on the part of the
Respondent especially when he was certifying as a professional to
clearly mention that the same was a presumption based
certification.
within the meaning of Clauses (7) & (8) of Part-I of the Second
(Vijay Prakash Gupta, Bangalore vs. Nati Panwar Re:
[PR/35/14/DD/64/14/DC/520/2017] Judgementdated: 10th
February, 2018).
False Certification without Due Diligence
2.1.8(365) Where a Chartered Accountant issued a certificate of circulation of
a periodical without going into the most elementary details of how
the circulation of a periodical was being maintained i.e. by not
looking into the financial records, bank statements or bank pass
178
books, by not examining evidence of actual payment of printers

bills and by not caring to ascertain how many copies were sold
and paid for.
Held, he was guilty under Clause (8).
(Registrar of Newspapers for India vs. K. Rajinder Singh - Page
920 of Vol. IV of the Disciplinary Cases and pages 77-82 of July,
1971 issue of the Institute’s Journal - Judgement delivered on 7 th
May, 1971).
2.1.8(366) Where the Complainant had sanctioned an additional loan to a
Company on the basis of a proforma balance sheet duly certified
by a Chartered Accountant while the Audited Balance Sheet of the
Company for the same period duly certified by the Statutory
Auditors revealed a completely different picture.
Held that the Chartered Accountant was guilty under clauses (7) &
(8).
(Assam Financial Corporation vs. S.K. Beria - Page 17 of Vol.VII
(1) of Disciplinary Cases - Judgement dated 10 th July, 1992).
Failed to detect Financial Leakages
2.1.8(367) Where the Respondent had conducted the Statutory Audit of
various schemes of Sarva Siksha Abhiyan and failed to detect
embezzlement to the extent of Rs.14.98 crores leading to the loss
to the exchequer.
If he had done reconciliation with the Statements of the District
Collectors office because money was spent through the District
Collectors at the various villages. If the reconciliation had taken
place with the State Head Office Account, the Respondent would
have noticed Rs.15 crores misappropriation.
Held guilty of professional misconduct falling under Clauses (5),
(7) & (8) of part I of the Second Schedule to the Chartered
(Mohd. Ali Rafath, I.A.S., State Project Director, Sarva Siksha
Abhiyan, Hyderabad vs. Moparthy Sesha Rao [PR-194/08-
179
DD/226/08/DC/158/2011] Judgement delivered on 30 thAugust,

2014).
2.1.8(368) Where the Respondent had issued three certifications of a MNC
Singapore based viz., Internal Resource Generation (IRG)
Computation Sheet, Net Worth Computation and Turnover
Computation Sheetof a MNC which were required to be submitted
by the said MNC relating to global tender bid.
It was observed that the figure per the Audited Financial
Statement filed by the MNC with Accounting and Corporate
Regulatory Authority, Singapore, were differed by huge
margin.Further, the Respondent had no working papers in that
regard and he did not mention that he certified the above on the
basis of unaudited figures.
Thus, the Respondent had not exercised due diligence in issuing
the certificate and held guilty of professional misconduct falling
within the meaning of Clauses (7), and (8) of Part I of Second
(D. Ravi, Executive Director, M/s Power Finance Corporation
Limited, New Delhi vs. A. K. Vijaya Srinivas Re: [PR-87/11-
DD/83/2011/DC/364/14] Judgement delivered on 20 th January
2017).
2.1.8(369) Where the Respondent failed to disclose of the details of secured
loan and did not care to verify all records & documents before
signing the balance sheet of the Company.
Hence, it was clear that the Respondent was negligent in
performing his professional duties as an Auditor of the Company
and held guilty of professional misconduct falling within the
meaning of Clause (7) & (8) of Part I of the Second Schedule to
(Dipti Gosavi, Authorized Representative of M/s R. S. Mittal
Consultants Pvt. Ltd, Thane vs. Nikhil Chandra H. Vyas Re: [PR-
45/13-DD/44/13/DC/394/2014] Judgement delivered on 6 th
January 2016).
Not disclosing relevant Fact in Financial Statements
2.1.8(370) The Company being the Complainant had taken a loan of Rs.248
180
crores from Axis Bank Limited which become NPA as on

31.03.2011. The Axis Bank under SARFAESI Act, 2002
(Securitization And Reconstruction of Financial Assets and
Enforcement of Securities Interest Act) entered into an agreement
with IARC for assignment of loan and pursuant to which amount of
Rs.10.48 crores were credited to the loan account of the Company
as on 31.3.2011.
The Respondent had shown the said amount due to IARC in the
Audited Balance Sheet as on 31.03.2011 under the category of
secured loan in place of Rs 248 crores. It was observed that the
Respondent was aware about the transaction of agreement and
further, no disclosure had been made in financial statements in
this regard. The Respondent failed to disclose the proper facts in
the Audited Balance Sheet.
The Respondent was held of professional misconduct falling within
the meaning of Clause (7) and (8) of Part I of Second Schedule to
(Satish K. Arora, President & Chief Operating Officer, M/s
International Asset Reconstruction Co. (P) Ltd vs. Ramchandra
Yashwant Kulkarni Re: [PR-277/13-DD/270/13-DC/488/16]
Judgement dated 6 th February, 2017).
2.1.8(371) Where a Chartered Accountant being the Statutory Auditor of a
Company for F.Y. 2011-12 which had raised a fund of Rs.30
crores only by issuing the Preferential Shares.
It was alleged that there was false disclosures in the Balance
Sheet suggesting utilization of proceeds of Preferential Allotment
of Rs. 30 crores for purchase of land and also suppressed
thematerial fact with regard to the financial transactions wherein
the money had been circulated by it through one Smt Manjulaben
Shah.
Further, on information being sought by SEBI, the Respondent did
not provide any explanation as regards the aforesaid disclosure in
the Financial Statement of the Company.Thus he as a Statutory
Auditor had failed to exercise due diligence in performance of his
duties.
181
Held guilty of Professional and Other Misconduct falling within the

meaning of Clause (2) of Part IV of First Schedule and Clauses (7)
and (8) of Part I of the Second Schedule to the Chartered
(Debashis Bandyopadhyay, Securities and Exchange Board of
India (SEBI), Mumbai vs. Ashit Kumar Thomas Macwan Re: [PR-
6/2014-DD/30/14-DC/646/2017] Judgement delivered on
20thNovember,2018).
2.1.8(372) A Chartered Accountant issued certificates certifying the utilization
of funds by the Company for the amount granted and disbursed by
a bank without verifying the records properly before issuing the
aforesaid certificates. Also, the said certificate did not reflect the
end use of the funds.
He was grossly negligent in issuing the said certificate(s). The
auditor knowingly certified the end use of money received by the
auditee incorrectly and improperly which is undoubtedly an un-
pardonable act on the part of the Respondent.
He was held guilty by the Council under Clauses (5), (6), (7) and
(8) of Part I of the Second Schedule which was accepted by the
High Court.
(Thampy Mathews, Dy. General Manager, IIBI vs. R.K. Tayal,
Delhi - Page 254 of Vol. IX – 1 – 21(6) Decision of the Council on
25th June, 2004, 243 rd Meeting of the Counciland Judgement of
High Court dated 23 rdJuly, 2007).
2.1.8(373) The Respondent failed to point out in Audit Report about housing
loan given in the name of two persons which had been shown as
Secured Loans in the Books of Accounts of the client, a
Proprietary Concern.
The second charge was that the Respondent failed to point out in
the Audit Report that a payment of Rs.12,51,000/- made to a party
which was a partnership concern but that payment was shown in
the books of client, the Proprietary Concern. Therefore, this
clearly indicated the negligence on the part of the Respondent.
182
(Mukesh M. Kelawala vs. Sukhdev Manilal Soni-page 265 of Vol. II
of the Disciplinary Cases of April, 2015 Judgement delivered on
5thOctober,2013).
Non-Verification of Huge Cash Balances
2.1.8(374) Inspite of having huge cash-in-hand balance of a Company in
different locations for two consecutive financial years, the
Respondent physically verified the only at one location and for
other locations he accepted only the management certification. It
was reported in the Auditors Report on the Balance Sheet that the
Balance Sheet and Profit & Loss Account was drawn up in
accordance with Accounting Standards but was not reported that
the company did not follow Accounting Standard-18.
(Deputy Registrar of Companies, Ministry of Corporate Affairs,
Kolkata vs. Gopal Agarwal Re: [PR-189/14-DD/212/2014/
DC/522/2017] Judgement delivered on 30 thNovember, 2018).
Unqualified Report inspite of non-Compliances of AS / CARO
2.1.8(375) Where the Respondent had Audited the Financial Statements of
the Company for financial year 2007-2008. However, the
Respondent had given unqualified opinion in his Audit Report
despite the fact that there was a non-compliance with the
requirements of certain Accounting Standards notified viz, AS 1,
AS 2, AS 5, AS 9, AS 15, AS 17, AS 18 and AS 20.
of Clauses (7), (8) and (9) Part I of the Second Schedule to the
(Chiranjive Lall Khanna in Re: [PPR/7/W/11/DD/2/W/INF/11/DC/
286/13] Judgement delivered on 5 th November, 2014).
2.1.8(376) Where a Chartered Accountant failed to qualify his report as
regard the non- disclosure of the nature of security against each
183
secured loan either under relevant schedule or in notes to

accounts as to which asset was put on charge as security against
the reported secured loan by the Company. Moreover, the
Respondent failed to value the inventory of the Company(i.e.
client) as required under AS-2.
of Clauses (5), (7) and (9) of Part I of Second Schedule, to the
(David Jones in Re: [PPR/23/N/09/DD/14/N/INF/09/DC/294/2013]
Judgement delivered on 19 th October, 2015).
2.1.8(377) Where the Respondent certified the Balance Sheet and mentioned
that all records given to him showing a true and fair picture of the
state of affairs of the Company.
The Respondent also did not qualify his report as required under
CARO, 2003 on the Balance Sheet for the aforesaid years thus
violating provision of Para 4 (iii) (b) of CARO, 2003.
He could not produce working papers, Trial Balance, certificate of
confirmation obtained from the management with respect to loan
and advance, sundry debtors, sundry creditors and verification of
fixed assets of the Company when asked for.
Accountants Act, 1949 and also Clauses (7) and (9) of Part I of
(J. K. Teotia, Additional Director (FA), Govt. of India Serious
Fraud Investigation Office, Ministry of Corporate Affairs vs.
Mahendra Kumar Hingar Re: [PR-173G/2010- D/174 /2010 /DC/
320).
2.1.8 (378) Where the Respondent being an Auditor of a Company failed to
point out in his report the following:
(a) non-disclosure of the date of redemption of 15 lakhs 9%
cumulative preference shares together with earliest date of
redemption in the published Balance Sheetsas per Part I of
Schedule VI read with Section 211,
184
(b) amount of TDS was shown on the assets side under Loans
& Advances and details of TDS on interest income were
omitted in bracket, and
(c) non-disclosure of Inter Corporate Deposit and Balance
amount outstanding by a Related Party as required by
Schedule VI and Accounting Standard-18 were not
complied with by the Company.
of Clauses (5), (7) & (8) of Part I of Second Schedule to the
(Prakash J. Apte in Re:- [PPR/P/35/W/13/DD/27/W/INF/13 /DC/
424/14] Judgement delivered on 27 th June, 2016).
Non Reporting on misuse of Bank Account
2.1.8(379) Where the Respondent had failed to report on the Bank Account
which was opened by the client in the capacity as a proprietor
which included lot of variations, i.e., Account Number was different
and the capacity in which Account was opened was also different.
As a Professional, the Respondent ought to have copies of Bank
Account which could easily establish the fact that the Bank
Account was opened and operated proprietary name but he could
not do that.
Hence, it was observed that the Respondent was not only
negligent in his duties in respect of auditing of bank transactions
but also, failed to obtain sufficient information for expressing an
opinion.
within the meaning of Clauses (7) & (8) of Part I of the Second
Schedule to the Chartered Accountants Act 1949.
(P. Arun vs. N. Raja Ganesh Re: [PR-179/2008-DD/217/2008/DC
/77/2010] Judgement delivered on 9 th September, 2014).
---------
185
2.1.9 Clause (9): fails to invite attention to any material departure from
the generally accepted procedure of audit applicable to the
circumstances;
Not adopted Sample Checking
2.1.9(380) Where a Chartered Accountant did not conduct sample checking
of the bank accounts in relation to the accounts of the Company
and did not carry out vouching with respect to the transactions
reflected in the accounts of the Company and depended upon his
assistant who was a Chartered Accountant and experienced clerk
who were entrusted with the auditing work.
Held, he was guilty under Clauses (7) (8) and (9).
(M.S. Ramanathan vs. A. Umanath Rao- Page 750 of Vol. IV of
the Disciplinary cases and page 165 of September, 1968 issue of
Institute’s Journal - Judgement delivered on 24 th June, 1968).
Not Reporting as per GAAP
2.1.9(381) Where a Chartered Accountant failed to verify the actual
disbursement of the amount by examining the various items of
purchases and insisting for the bills to be produced in respect of
the various items before issuing his certificate as mere payment
would not constitute utilisation of the amount for the purpose for
which it was meant.
Held, he was guilty under Clauses (7), (8) and (9).
(Punjab State Govt. vs. K.N. Chandla - Page 946 of Vol. IV of the
Disciplinary Cases andpages 140-142 of August, 1972 issue of
the Institute’s Journal - Judgement delivered on 15 th June, 1972).
2.1.9 (382) A Chartered Accountant had checked the Cash Book totals but
not the Bank Column totals, had verified all the transactions in the
Bank Columns but not the contra-entries, had taken the casting
only of personal ledger and that too not of all accounts, had
resorted to test check when there was no system of internal
check, had not seen the pay-in-slips, had not checked the bank
reconciliation statements for all the months.
Held, he was guilty of professional misconduct under Clauses (7),
(8) and (9).
186
PART I OF THE SECOND SCHEDULE - CLAUSE (9)
(Air Commodore Dilbagh Singh vs. E.S. Venkataraman - Page 100

of Vol. V of the Disciplinary Cases and page 224 of September, 76
issue of Institute’s Journal - Judgement delivered on 5 th July,
1976).
2.1.9(383) Where a Chartered Accountant had not followed the provisions of
Auditing and Assurance Standards (AAS) 28 in the Auditors
Report on Financial Statements while discharging the attest
function. Moreover, he did not disclose that the Balance Sheet
and Audit Reports were prepared for limited purpose and was not
a general purpose Financial Statement.
Clauses (7), (8) & (9) of Part I of Second Schedule to the
(Rajwade Pratap Ramchandra (On the basis of information) Re:
Page 67 of Vol I Part I of Disciplinary Cases, Judgement delivered
on 12thSeptember, 2011).
2.1.9(384) The Respondent carried out the Statutory Audit of a Co-operative
Credit Society Ltd. but did not perform his duties judicially against
the interest of Society Members and Depositors and compliance of
Maharashtra Co-operative Societies Act, 1960, Rules 1961, bye-
laws of the Society and Standard Accounting Practice.
The Respondent did not mention anything about non-members
deposits, liquidity compliance by the Society, Credit-Deposit (CD)
ratio and huge NPA. The Respondent did not submit any remark
about the fact that the Society had not submitted Audit rectification
report as required u/s 82 of the Maharashtra Co-operative
Societies Act, 1960. The Respondent awarded wrong audit
classification to the Society as required under the circular of
Commissioner for Co-operation & Registrar of Co-operative
Societies, Maharashtra State.
In view of the above, with respect to charge relating to Credit-
Deposit (CD) ratio, the Respondent was guilty of professional
misconduct under Clauses (5) & (8) of Part I of the Second
Schedule, and with respect to charge relating to grade assigned to
187
the Society, the Respondent was guilty of Professional Misconduct

falling within the meaning of Clauses (6), (7) & (9) of Part I of the
(Divisional Joint Registrar, Co-operative Societies (Audit) vs. K.S.
Ambardekar-Page 237 of Vol. II of the Disciplinary Cases of April,
2015 Judgement delivered on 5 th October,2013).
---------
188
2.1.10 Clause (10): fails to keep moneys of his client other than fees or
remuneration or money meant to be expended in a separate
banking account or to use such moneys for purposes for which
they are intended within a reasonable time.
What constitutes Clients’ Money
2.1.10(385) The expression “Moneys of his Client” has to be understood as
moneys placed in the hands of a Chartered Accountant in
connection with the discharge of his duties as Chartered
Accountant and for the purposes connected therewith.
(National Insurance Co. Ltd. vs. B. Mukherjee - Page 288 of
Vol.III of the Disciplinary Cases and pages 150-155 of the
September, 1957 issue of the Institute’s Journal-Judgement
delivered on 4th July, 1957).
Failure to keep moneys in a separate Banking Account
2.1.10(386) Where a Chartered Accountant appointed as Liquidator of a
Company had wrongfully and without the knowledge and consent
of the complainants disposed of a machine which was duly
charged in their favour.
The Council had found the Respondent guilty under Clauses (7)
and (10).
Held by the High Court that Clause (7) was gross negligence in
the conduct of professional duties. The liquidator in this case was
not an Auditor of the Company in liquidation and was not
therefore practising his Professional duties.
Similarly, Clause (10) was failure to keep moneys of his client in
a separate banking account. The Company in liquidation was not
a client of the complainants. Referring to the Respondents failure
to keep moneys in a separate banking account, the High Court
considered the evidence of the Respondent which did not give a
clear picture in order to come to a final and definite conclusion.
Setting aside the order of the Council, the Court reprimanded the
Respondent.
189
(Sunderdas Thakersey & Bros. vs. P.K. Mukherji - Page 452 of

Vol. IV of the Disciplinary Cases and pages 150-155 of
September, 1965 issue of the Institute’s Journal -Judgement
delivered on 22 nd April, 1965).
2.1.10(387) A Chartered Accountant had received large sums of money from
his client for making investments and depositing Income Tax on
behalf of the client. He neither made investments nor deposited
the Income Tax or deposited the money in a separate Bank
Account.
The Council held him guilty under this clause and also for other
misconduct which was accepted by High Court.
(S. Seshadri vs. R. Srinivasan - Page 167 of Vol. VII(1) of
Disciplinary Cases Council's decision dated 7 th to 9th June, 1990
and High Court Judgement dated 20 thJanuary, 1998).
2.1.10(388) A Member while working as a Financial Advisor misappropriated
the funds of his client by way of converting a Savings Bank
account in his individual name to that of joint account with the
client without his consent and fraudulently discharged 3 FDRs in
the client’s name.
The Council held him guilty under Clause (10) of Part I of the
Second Schedule and “Other Misconduct” under Section 22 read
with Section 21, which was accepted by the High court.
(Tara Pada Banerjee, Dy. General Manager, Bank of Baroda vs.
B.K. Sarker - Page 15 of Vol. IX – 1 – 21(6), Council’s decision
dated 1st September, 2004 (245 th Meeting of The Council) and
High Court Judgement dated 5 th May, 2006).
2.1.10(389) Where a Chartered Accountant had submitted a bogus challan of
bank to prove that he had paid an amount of Rs. 6,91,323/- by
cheque which was issued earlier in his favour by the client
towards payment of his Long Term Capital Gain Tax.
On perusal of a certificate issued by the bank it was noted that
only Rs. 91,323/- was deposited towards the Income Tax.
190

of Clause (10) of Part I of the Second Schedule to Chartered
(T. N. Swaminathan vs. V. Kannan Re: Page 28 of Vol I Part I of
Disciplinary Cases, Judgement delivered on 12 thSeptember,
2011).
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191
PART-II OF THE SECOND SCHEDULE
Professional Misconduct in relation to Members of the Institute

generally.
guilty of professional misconduct, if he:-
2.2.1 Clause (1): contravenes any of the provisions of this Act or the
regulations made thereunder or any guidelines issued by the
Council:
Services of Article Assistants / Stipend

2.2.1(390) Where a Chartered Accountant entered into an improper
arrangement to permit his articled clerk to serve his articles under
another Chartered Accountant in another place without disclosing
those facts to the Institute and got the Articles registered knowing
that the declaration and the Deed are false.
Held, he was guilty of misconduct.
(Lawrence Tellis vs. Dr. S.G. Mandre - Page 1 of Vol. I of the
Disciplinary Cases and pages 25-28 of January, 1952 issue of
Bulletin - Judgement delivered on 10 thOctober, 1951).
2.2.1(391) Where a Chartered Accountant took into Articles a person who
was employed in Government service and failed to inform the
Council of the same and granted him a certificate of completion of
service under Articles, while he did not receive adequate training.
Held that the Chartered Accountant was aware of the employment
of the articled clerk and held him guilty of the charge, viz., failure
to inform the Council, but on the other charge of inadequacy of
training and issue of the certificate of completion, the High Court
was not satisfied that he did not receive the required training.
(M. Rajamany in Re:- Page 51 of Vol. I of the Disciplinary Cases
and pages 40-43 of June, 1952 issue of Bulletin - Judgement
delivered on 4th April, 1952).
192
PART II OF THE SECOND SCHEDULE - CLAUSE (1)
2.2.1(392) Where a Chartered Accountant after signing the Form for

Articleship failed to forward the same for registration as required
by Regulation 64 inspite of repeated enquiries from the articled
clerk and even failed to take notice of communications addressed
to him in that behalf and having two other articled clerks along
with the present one whose articles were not sent for registration
took up a fourth articled Clerk without being entitled to do so.
Held, he was guilty for breach of Regulation 46.
(Mohan Sehwani vs. SunderlalFatehpuria - Page 704 of Vol.IV of
the Disciplinary Cases and page 629 of May, 1968 issue of the
Institute’s Journal - Judgement delivered on 23 rd February, 1968).
2.2.1(393) Where a Chartered Accountant, who was entitled to take three
articled clerks, had already taken three such clerks, represented
to a person that he had still a vacancy and induced him to enter
into articles. A formal deed was executed and the premium was
paid.
He subsequently cancelled the articles of the third articled clerk
for irregular attendance without reference to the Institute.
Held that he had contravened the provisions of Regulation 58 and
was guilty of grave misconduct.
(J.K. Ghosh in Re:- Page 106 of Vol.II of the Disciplinary Cases
and pages 278-280 of January, 1956 issue of the Institute’s
Journal - Judgement delivered on 6 th December, 1955).
2.2.1(394) Where a Chartered Accountant agreed to take a person as an
articled clerk in a vacancy shortly to arise and received the
premium for the purpose and made him believe, when he
executed the deed of articles that he was taking him in that
vacancy, while, in fact, the vacancy had been filled up by the
Chartered Accountant earlier by taking another audit clerk.
The audit clerk came to know from the Institute that the deed of
articles was not registered as that was forwarded with a request
for entertaining an extra articled clerk.
Held that the Chartered Accountant was guilty of serious
misconduct for having contravened Regulation 58.
193
(A.K. Basu vs. P.K. Mukherji - Page 9 of Vol.III of the Disciplinary

Journal Judgement delivered on 16 th April, 1956).
2.2.1(395) Where a Chartered Accountant
(i) issued false certificates to two articled clerks stating that he
had refunded the entire premium, while a part of it was
claimed as a set off against food and halting allowances
given to them while they were working in out- stations,
(ii) violated Regulation 62 by not refunding the premium within
the time specified in the Regulation, and
(iii) the refund of premium in installments in one case was not
as specified in the certificate.
Held, he was guilty of dishonest behaviour both as regards his
clients and articled clerks.
(M.N. Bhargava in Re:- Page 512 of Vol.III of the Disciplinary
Cases and pages 671-673 of June, 1958 issue of the Institute’s
Journal - Judgement delivered on 1 st May, 1958).
2.2.1(396) A Chartered Accountant took loan from a firm in which the articled
clerk and his father were both interested, against the provisions of
the Chartered Accountants Regulations, 1988 which prohibit
taking of loan or deposit etc. from the articled clerk.
(M.K. Tripathi in Re:- Published at page 36 of Vol.VI(1) of
Disciplinary Cases and in the May, 1980 issue of the Institute’s
Journal at page 1014- Judgement delivered on 26 th October,
1979).
2.2.1(397) The Chartered Accountant received Rs.2,000/- by way of Security
from the Complainant’s father as a consideration for taking him as
an articled clerk.
Held that he was guilty under the provision.
194
(Virender Kumar vs. K.B. Madan - Published at page 108 of

Vol.VI(1) of Disciplinary Cases - decided on 26th August, 1980).
2.2.1(398) A Chartered Accountant did not pay stipend to his articled clerk, in
accordance with Regulation 48 of the Chartered Accountants
Regulations, 1988 while to another articled clerk he was paying
stipend every month.
The stipend was paid only after the articled clerk left him after
working for a few months and a complaint was lodged with the
Institute. The plea of the Chartered Accountant that he had an
agreement with the articled clerk to pay stipend on annual basis
was found to be misconceived as the same should be against the
provisions of Regulation, 48.
(Radhey Mohan in Re:- Published at page 47 of Vol.VI(1) of
Disciplinary Cases and in the March, 1980 issue of the Institute’s
Journal at pages 849-852 - Judgement delivered on 9 th November,
1979).
2.2.1(399) A Chartered Accountant failed to pay the stipend to his articled
clerk in accordance with Regulation 48 which requires that the
payment should be made every month. The payment was made
long after the matter was brought to the notice of the Institute.
The Chartered Accountant pleaded that Regulation 48 did not
prescribe the periodicity of payment but only the rate at which
stipend had to be paid and further the payment was not made in
view of a letter written by an Advocate who introduced the articled
clerk to the effect that the payment should not be made directly to
the articled clerk but to his father whenever he desired. To other
articled clerks, the payments were made in lump sum.
Held, the Chartered Accountant had contravened Regulation 48 by
not making payments of stipend on a month to month basis.
(B.B. Rohatgi in Re:- Published at page 69 of Vol.VI(1) of
Disciplinary Cases and in July 1980 issue of the Institute’s Journal
at pages 51-55 and 59 - Judgement delivered on 17 th April, 1980).
195
2.2.1(400) Three articled clerks of a Chartered Accountant informed the

Institute that the Chartered Accountant had failed to make the
payments of stipend to them every month in accordance with
Regulation 48.
misconduct under the Clause as he contravened Regulation 48 by
not making the payment every month.
The Court rejected the two contentions put forward by the
Chartered Accountant, viz.,
(1) that the declaration filed by the articled clerks could not be
regarded as information in order to justify the
commencement of disciplinary proceedings
(2) that under Regulation 48 the payments had to be made at a
monthly rate and not that the payments had to be made
every month.
The third contention that the payments could not be made every
month or regularly because of financial stringency was also
rejected particularly in view of the fact that the Chartered
Accountant during the relevant period had purchased a plot of
land and constructed a house at the cost of more than 1 lakh of
rupees and he had in his employment throughout the relevant
period a Chartered Accountant at a salary of Rs. 500/- per month.
(R.C. Gupta in Re:- Published at page 94 of Vol.VI(1) of
Disciplinary Cases and pages 241-242 of the September, 1980
issue of the Institute’s Journal - Judgement delivered on 21st July,
1980).
2.2.1(401) A Chartered Accountant did not pay stipend to the Articled Clerk in
accordance with Regulation 32B of the Chartered Accountants
Regulations, 1964 for the period during which the Article Clerk
worked with him. Also the Article Clerk was asked to work in
excess of the prescribed working hours in violation of Regulation
45 of the Chartered Accountants Regulations, 1964.
(i) of Part II of Second Schedule to the Chartered Accountants
Act, 1949.
196
(U.V. Benadikar vs. N.G. Kulkarni - Page 473 of Vol VIII – 1 –

21(6) of Disciplinary Cases- Judgement dated 6 th August, 2004).
Failure to pay Stipend
2.2.1(402) In the following cases also, the Chartered Accountants were held
guilty for failure to pay the monthly stipend.
C.R. Lakhia in Re:- Page 146 of Vol.VI(1) of Disciplinary cases -
Judgement dated 11 thMarch, 1980 of High Court and Judgement
dated 10thDecember, 1980 of Supreme Court
S.C. Bhatia in Re:- Page 289 of Vol.VI(1) of Disciplinary cases -
decided on 3rdMay, 1982
U.S.Lekhi in Re:- Page 304 of Vol.VI(1) of Disciplinary cases -
decided on 26thJuly, 1982
M.C. Jain in Re:- Page 306 of Vol.VI(1) of Disciplinary cases -
Judgement dated 22 ndSeptember, 1982.
K.L. Singhee in Re:- Page 324 of Vol.VI(1) of Disciplinary cases -
Judgement dated 8 thOctober, 1982
B.Mohanty in Re:- Page 375 of Vol.VI(1) of Disciplinary cases -
decided on April 4, 1984
G.V. Ramanaiah in Re:- Page 384 of Vol.VI(1) of Disciplinary
cases - decided on 23rdOctober, 1984
R.L.P. Sinha in Re:- Page 406 of Vol.VI(1) of Disciplinary cases -
Judgement dated 23 rdSeptember, 1985
M.L. Surana in Re:- Page 415 of Vol.VI(1) of Disciplinary cases -
decided on 1stOctober, 1985
D.K. Bohara in Re:- Page 420 of Vol.VI(1) of Disciplinary cases -
decided on 1stOctober, 1985
G.S. Punjawat in Re:- Page 427 of Vol.VI(1) of Disciplinary cases
- decided on 1 stOctober, 1985
B.P. Waghela in Re:- Page 445 of Vol.VI(1) of Disciplinary cases -
Judgement dated 20 thApril, 1989
197
Sharat Sekhri in Re:- Page 506 of Vol.VI(1) of the Disciplinary

cases - Judgement dated 7 thNovember, 1989
H.S. Venkata Rao in Re:- Page 663 of Vol.VI(1) of Disciplinary
cases - Judgement dated 5 thMarch, 1991
Dinesh Kumar in Re:- Page 1 of Vol. VII(1) of Disciplinary cases -
Judgement dated 1 stMay, 1992
P. Vishwanadham in Re:- Page 38 of Vol. VII(1) of Disciplinary
cases - Judgement dated 28 thAugust, 1992
K.C. Koshal in Re:- Page 195 of Vol. VII(1) of Disciplinary cases -
Judgement dated 16 thNovember, 1998
J.K. Batra in Re:- Page 309 of Vol. VII(1) of Disciplinary cases -
Judgement dated 20 thJuly, 2000 and published in June 2001 issue
of the Institute’s Journal at Page 66
P.D. Aggarwal in Re:- Page 320 of Vol. VII(1) of Disciplinary cases
- Judgement dated 20thJuly, 2000 and published in June 2001
issue of the Institute’s Journal at Page 66
J.K. Gupta in Re:- Page 406 of Vol. VII(1) of Disciplinary cases -
Judgement dated 5 thSeptember, 2000
I.C. Gupta in Re:- Page 395 of Vol. VII(1) of Disciplinary cases -
Judgement dated 5 thSeptember, 2000.
P.B. Kapoor in Re:- Page 414 of Vol. VII(1) of Disciplinary cases -
Judgement dated 5 th September, 2000
P.L.Tapdiya in Re:- Page 508 of Volume VIII (1) of Disciplinary
Cases- Judgement dated 6 thAugust, 2004
Yogesh J. Patel vs. ArvindI. Patel - Page 521 of Volume VIII (1) of
Disciplinary Cases- Judgement dated 6 thAugust, 2004
Signed the Financial Statement without Certificate of practice
2.2.1(403) The Respondent had signed the Balance Sheet, Profit & Loss
Account and Audit Report for the Financial Year 2009-10 of the
Firm without holding the Certificate of Practice (COP).
198
The provision of Section 6 (1) of Chartered Accountants Act, 1949

states that “no member of the Institute shall be entitled to practice
(whether in India or elsewhere) unless he had obtained from the
Council a Certificate of Practice”. Thus, the Respondent had
clearly violated the provisions of the Act and was prima facie guilty
as admitted by him.
Clause (1) Part II of the Second Schedule to the Chartered
(Sunil Grover in Re:- [PPR/100/15/DD/81/INF/15/DC/572/2017]
Judgement delivered on 18 th September, 2018).
Wrong Attestation for Undue Advantage
2.2.1(404) The Respondent had certified different sets of Financial
Statements for four entities showing totally different financial
position in every such Certified Financial Statement for facilitating
the entities to obtain loan facility from the bank and for the
purpose of filing Tax Returns with the Income Tax Department.
In view of the Certified Financial Statements of the
assesses/auditees, it was noted that amount of opening stock,
sales, closing stock, gross profit and even amount of items shown
in Balance Sheets were altogether different and/ or had huge
differences and he failed to clarify these huge differences.
Further, these Certified Financial Statements signed by the
Respondent had no date and place etc. which was the basic
requirement of SA 700 (AAS 28) “Auditor’s Report on Financial
Statements”.
within the meaning of Clauses (3) & (7) of Part I and Clause (1) of
Part II of Second Schedule to the Chartered Accountants Act,
1949.
(D. Sundararajanin in Re:- [PPR/P/3/S/11/DD/ 3/S/INF/11/DC/232/
2012]).
199
Accepted appointment in contravention of Guidelines

2.2.1(405) Where the Respondent had accepted audit while the amount of
undisputed audit fee of Rs.38,606.00/- was not paid to the
Complainant till date of signing of report.
As per Council Guidelines No.1-CA(7)/02/2008, dated 8 th August,
2008, “A member of the Institute in practice shall not accept the
appointment as auditor of an entity in case the undisputed audit
fee of another Chartered Accountant for carrying out the statutory
audit under the Companies Act, 1956 or various other statutes had
not been paid.”
Thus, the Respondent was expected not to accept the Audit of the
Company till the outstanding audit fees was cleared by the
Company.
Hence, the Respondent was held guilty of professional misconduct
falling within the meaning of Clause (1) of Part-II of Second
(Shyam Lal Gupta vs. Manoj Bansal Re: [PR/10/13/DD/
15/13/DC/427/2014] Judgement delivered on 10 th February, 2018).
2.2.1(406) Where the Respondent had accepted the Tax Audit of a Company
for the Financial Year 2009-10 relevant to the Assessment Year
2010-11 without communicating and taking no objection certificate
from the previous Auditor. The huge amount of audit fees and
other professional charges were also pending as payable to the
Complainant.
Clause (8) of Part I of the First Schedule and Clause (1) of Part II
ofthe Second Schedule to the Chartered Accountants Act, 1949
(Jatinder Kumar Jain vs. Sundeep Kumar Re: [PR-65/2011-
DD/62/11/DC /328/14] Judgement delivered on 25 th July 2016).
Description as CA and Investment Consultant / Advisor
2.2.1(407) A Chartered Accountant issued a confidential and private circular
to clients where, in addition to describing himself as Chartered
Accountant he also described himself as Investment Consultant
200
and Public Accountant. By this circular he introduced himself to

the public and private limited Companies which were accepting
fixed deposits and loans through him.
Held, he was guilty of professional misconduct under Clause (1) of
Part II of the Second Schedule.
(B.M. Lala in Re:- Page 95 of Vol.V of the Disciplinary Cases and
page 224 of September, 1976 issue of the Institute’s Journal -
Audit vis-à-vis Indebtedness
2.2.1(408) When a Housing Loan was taken by a HUF wherein the
Respondent was Karta and also a loan taken by the Respondent
in joint name. Thereafter, the Respondent firm got the
appointment as Central Statutory Auditors of the Complainant
Bank wherein the Respondent and his family members were
having indebtedness.
The Respondent gave a false declaration that neither he was a
borrower nor guarantor for any loan from SBI.
He further declared that neither he nor any of his family members
dependent on him or firm/company (in which he was
Partner/Director) was declared wilful defaulter by any Banks or
Financial institutions.
A Member of the Institute in practice shall be deemed to be guilty
of professional misconduct, if he accepts appointment as auditor
of a concern while he was indebted to the concern or had given
any guarantee or provided any security in connection with the
indebtedness of any third person to the concern, for limits fixed in
the statue and in other cases for amount exceeding the prescribed
limit.
falling within the meaning of Clause (1) of Part II of the Second
(The Chief General Manager (FRC&T) State Bank of India vs.
Radhesham N. Bhattad -Page 226 of Vol. II of the Disciplinary
Cases of April, 2015 Judgement delivered on 4 th October, 2013).
201
2.2.1(409) The Respondent was the Statutory Auditor of various Branches of

Punjab and Sind Bank in Jalandhar for the Financial Years 2008-
2009 and 2009-2010 while availing credit facilities in his name and
also in the name of a firm, namely, M/s. Marigold Industries, Prop.
Smt. Pragati w/o the Respondent where the Respondent was a
guarantor thereby violating the provisions laid down under
Chapter X of the Council Guidelines, 2008.
The Guidelines provided that a Member in practice or a partner of
a firm in practice or a firm shall not accept appointment as Auditor
of a concern while indebted to the concern or given guarantee or
provided any security in connection with the indebtedness of any
third party to the concern for limits fixed in the statute and in other
cases for an amount exceeding Rs. 10,000/-.
It was observed that the total Loan/Credit facilities availed by the
Respondent as on the date of audit was more than Rupees
seventy five lakhs.
within the meaning of Clause (1) of Part II of the Second Schedule
(The Asstt. General Manager (Accounts), Punjab & Sind Bank vs.
Pawan Kumar Gulati [PR-51/11-DD/50/11/DC/263/2013]
Judgementdelivered on 14 September, 2014).
th
Audit Limit Exceeded

2.2.1(410) A Chartered Accountant had conducted 468 Tax Audits U/s 44AB
of the Income Tax Act i.e. more than the limit prescribed by the
Council of the ICAI (Guidelines No. 1 – CA (7)/02/2008, dated 8 th
August, 2008, “Tax Audit Assignments under Section 44AB of the
Income Tax Act, 1961).
The said Council Guidelines state that a Member of the Institute in
practice shall not accept, in a Financial Year, more than the
“specified number” (i.e.45) of Tax Audit Assignments under
Section 44AB of the Income Tax Act 1961.
202

(Harsh Jain & others vs. Radhakanta Das Re: [PR-309/13-
DD/33/2014 /DC/415/2014] Judgement delivered on 13 th June
2016).
2.2.1(411) The Respondent had signed Tax Audit Reports for Financial Year
2012-2013 more than the limit as prescribed by the ICAI through
Council Guidelines No. 1 – CA (7)/02/2008, dated 8 th August,
2008, in chapter VI ‘Tax Audit Assignments’ under Section 44AB
of the Income Tax Act, 1961.
Here, the Respondent had conducted the Tax Audit as above and
signed more than 45 TARs which was in violation of Code of
Ethics.
(Harsh Jain vs. Dhirendra Nath Misra Re: [PR-308/13-DD/08/2014
/DC/414 /2014] Judgement delivered on 28 thJune 2017).
Auditor while engaged in business
2.2.1(412) Where the Respondent being an Auditor of a Company who was
also a Member of Bombay Stock Exchange & National Stock
Exchange and registered with SEBI for very long period. The
Respondent was dealing in shares through the Complainant in his
own name and also in the name of family Members.
There arose disputes between the Complainant and the
Respondent about money due & payable towards such share
transactions.
In the back ground of such disputes and in retaliation thereto, the
Respondent adopted non-cooperative attitude towards the
Complainant in respect of Audit work.
The Audit of next FY was kept incomplete by the Respondent on
the false & frivolous pretext of and/or in the guise of alleged non
furnishing of relevant information by the Complainant.
203

of Clause (1) of Part II of the Second Schedule to the Chartered
(Varsha G. Vaidya, Director, M/s. Harsh Chandra Gutt & Co. Pvt.
Ltd. vs. Shekhar K Dandekar, M/s Kolatkar & Dandekar Re: [PR-
56/2011-DD/53 /2011/DC/355/2014]).
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204
PART-II OF THE SECOND SCHEDULE - CLAUSE (2)
2.2.2 Clause (2): being an employee of any company, firm or person,

discloses confidential information acquired in the course of his
employment except as and when required by any law for the time
being in force or except as permitted by the employer;
---------
205
2.2.3 Clause (3): I ncludes in any information, statement, return or form

to be submitted to the Institute, Council or any of its Committees,
Director (Discipline), Board of Discipline, Disciplinary Committee,
Quality Review Board or the Appellate Authority any particulars
knowing them to be false;
Supplying wrong information to the Institute

2.2.3(413) Where a Chartered Accountant who was employed as a manager
of a firm of Registered Accountants, applied for admission as
Fellow of the Institute stating that he was a partner, while he was
not.
Held that the Chartered Accountant was guilty of misconduct as
he had made the statement that he was a partner knowing it to be
false.
(J.R. Chatrath in Re:- Page 96 of Vol.I of the Disciplinary Cases
and pages 44-47 of June, 1952 issue of the Institute’s Bulletin -
Judgement delivered on 14 thApril, 1952).
2.2.3(414) A Member had during the course of the hearing before Disciplinary
Committee given a wrong statement duly verified and also a
statement on oath knowing it to be false.
(K.S. Dugar in Re:- Page 52 of Vol. VI(2) of Disciplinary Cases -
Decided on 29 th, 30thand 31st December, 1987).
2.2.3(415) There was nothing wrong in a Member being associated with a
cultural or religious organisation but to use this association and
facilities connected with it as a vehicle to gain professional work is
not permissible.
It is undesirable on the part of a Member to pressurise for
reappointment even in cases when he feels that he has been
wrongly removed.
A Member had in his letter-head printed several places as
branches though factually he had none and Form No. 27 filed by
him had also not referred to the “offices”.
206
The Member was found guilty in terms of this Clause.

(K. Bhattacharjee vs. B.K. Chakraborty - Page 482 of Vol.VII(2) -
Council's decision dated 11 th , 12thand 13thFebruary, 1988).
2.2.3(416) Where a Chartered Accountant in his application for empanelment
as auditor of branches of Public Sector Banks submitted to the
Institute included the name of another Member as one of partners
of his firm though in fact the said Member was not a partner of the
said firm on the date of the said application.
Held that the Chartered Accountant had contravened clause (1) of
Part III of the First Schedule in having submitted the application
containing the particulars to the Council knowing them to be false.
(L.N. Gupta in Re:- Page 1 of Vol. VII(2) of the Disciplinary Cases
– Council’s decision dated 6 th to 8th June, 1991).
2.2.3(417) Where a Chartered Accountant had submitted an application of his
firm for empanelment as auditor of branches of Public Sector
Banks and Statutory Central Audit and Branch Audit of Regional
Rural Banks mentioning under the head “Details of disciplinary
proceedings pending against any partner/proprietor” as “NIL”,
whereas a prima facie case against the Member existed.
Held that he had violated the provisions of clause by deliberately
furnishing false information when he was fully aware that
disciplinary proceedings were pending against him.
(A.K. Mehra in Re:- Page 39 of Vol. VII(2) of the Disciplinary
Cases – Council’s decision dated 6 th to 8th June, 1991).
Wrong Information by an elected Member
2.2.3(418) The Respondent who was an Elected Member of a Branch of ICAI,
had given a wrong declaration to the effect that he was not
associated with the Institute as an Elected Member of the Council/
Regional Council / Managing Committee of the Branches of ICAI
and acted as an Examiner for May 2013, November, 2013, May
2014 and November, 2014 Examinations and evaluated the
answer books of Inter-mediate (IPC) Examination –Group1- Paper
4 Taxation.
207

(Bimal Kumar Agarwalla in Re: [PPR/ 63/15/DD/57/ INF/15/DC
/496/2016] Judgement delivered on 28 th April, 2017).
Conflict while acting as Observer in CA Examination
2.2.3(419) On the basis of an application to empanel as an Observer of the
CA Examinations, the Respondent had been assigned the task of
acting as an Observer for May, 2012 as well as May, 2013 CA
Examinations at an Examination Centre at Jaipur.
It was noted that the Respondent was having conflict of interest as
his brother had also appeared in the stated Examination although
in different centres in Jaipur. Accepting the assignment as an
observer in CA Examination in such circumstances was in
contravention of the Guidelines issued by the Institute for acting
as an observer.
within the meaning Clauses (1) & (3) of Part II of the Second
(Pulkit Goyal in Re:- [PPR/36/C/13/DD/47/INF/14/DC/531/2017]
Judgement delivered on 7 th January, 2019).
2.2.3(420) Inspite of repeated reminders a Chartered Accountant failed to
reply to the letters of the Institute asking him to confirm the date of
leaving the services by the Paid Assistant.
(A. Umanath Rao in Re:- Page 998 of Vol.IV of the Disciplinary
Cases - decided on 11thand 12thJanuary, 1965).
CA being Proprietor / Director / Manager in Business Firm
at any time about his engagement as a Proprietor of a non-
Chartered Accountants’ firm while holding Certificate of Practice.
208
He had also not furnished particulars of his engagement as a

Director of a Company despite various letters of the Institute which
remained unreplied.
Held that he was guilty under clause (11) of Part I and clauses (1)
and (3) of Part III of the First Schedule.
(P.S. Rao in Re:- Page 110 of Vol. VII(2) of the Disciplinary Cases
– Council’s decision dated 9 thto 11th April, 1992).
2.2.3(422) A Chartered Accountant had been in full-time employment in a
Company besides holding Certificate of Practice without obtaining
Institute’s permission and in the bank empanelment form, he had
given declaration to the effect that he was not devoting any time to
any occupation/vocation/business etc. other than the profession of
Chartered Accountants.
He was held guilty for violation of Clause (11) of Part I and Clause
(1) of Part III of the First Schedule. The Council ordered that his
name be removed from the Register of Members for a period of
six months.
(N.K. Gupta in Re:- Page 1 of Volume VIII(2) of Disciplinary Cases
Council’s decision dated 1 st to 4th July, 1998).
2.2.3(423) Two Members, while holding Certificate of Practice, had been in
full time employment with an Insurance Company without
obtaining the Institute’s permission to be so engaged. They also
did not disclose the particulars of their full-time salaried
employment at the time of furnishing particulars in the prescribed
Form for Registration of the Aticled Assistant.
They were held guilty for violation of Clause (11) of Part I and
Clause (1) of Part III of the First Schedule.
(C.M. Mehrotra in Re:- Council’s decision dated 11 th to 13th
October, 1999, Page 76 of Volume VIII(2) of Disciplinary Cases
and A.P. Gupta in Re:- Council’s decision dated 15 th to 17th
December, 1999, Page 134 of Volume VIII(2) of Disciplinary
Cases).
209
2.2.3(424) A Chartered Accountant claimed to be in full-time practice while

applying for empanelment as bank branch auditor while he was in
part-time employment with a private limited Company.
Since he had submitted the particulars to the Council knowing
them to be false, the Council held him guilty under Clause (1) of
Part III and decided that his name be removed from the Register
of Members for a period of 15 days.
(R.K. Seth in Re:- Page 660 of Vol. VII(2) of Disciplinary Cases –
Council’s decision dated 16 th to 18thJanuary, 1997).
2.2.3(425) A Chartered Accountant, inspite of his being in employment as
Manager (F&A) with a Company from 9 A.M. to 2 P.M. and
devoting 30 hours per week in the said employment, had shown
his main occupation to be in full-time practice, in the Employment
Form for bank branch audits.
He was held guilty for violation of Clause (1) of Part III of the First
Schedule for not giving the full particulars truthfully in his
application.
(H.K. Gupta in Re:- Council’s decision dated 15 th to 17th
December, 1999 - Page 110 of Volume VIII(2) of Disciplinary
Cases).
2.2.3(426) The charges against the Respondent were that
(i) while being in full-time service, he had falsely informed the
Institute that he had left the service,
(ii) had offered the Complainant the articleship which was not
accepted by the Institute, since he was not entitled to train
any Articled Assistant, in having not completed three years
of continuous service, resulting in the Complainant spoiling
about four months of articleship training, and
(iii) he did not pay any stipend to the Complainant for training
which was not recognised by the Institute.
The Council held him guilty for violation of Clause (1) of Part III of
the First Schedule and ordered that his name be removed from
the Register of Members for a period of three months.
210
(Sunil Patni vs. B.L. Gujar – Council’s decision dated 1st to 4thJuly,
1998 - Page 11 of Volume VIII(2) of Disciplinary Cases).
2.2.3(427) The Respondent, while in employment with a Company wrote a
letter to the Institute that he had resigned from the Company,
which was false and misleading.
(Managing Director, A.P. Handicrafts Dev. Corpn. Ltd. vs. A.
Bhimeswara Swamy – Page 590 of Vol. IX – 2A – 21(4) of
Disciplinary Cases – Council’s decision dated 7 th to 8th& 24th to
25th April, 2003).
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211
2.2.4 Clause(4): defalcates or embezzles moneys received in his

professional capacity.
2.2.4(428) The following case has been decided under clause (10) of part I of
the second Schedule. However, also incorporated here since
appearing to be relevant for this clause also.
A Member while working as a financial advisor misappropriated
the funds of his client by way of converting a Savings Bank
account in his individual name to that of joint account with the
client without his consent and fraudulently discharged 3 FDRs in
the client’s name.
The Council held him guilty under Clause (10) of Part I of the
Second Schedule and “Other Misconduct” under Section 22 read
with Section 21, which was accepted by the High court.
(Tara Pada Banerjee, Dy. General Manager, Bank of Baroda vs.
B.K. Sarker - Page 15 of Vol. IX – 1 – 21(6), Council’s decision
dated 1st September, 2004 (245 th Meeting of the Council) and
High Court Judgement dated 5 th May, 2006).
----------
212
PART III OF SECOND SCHEDULE
Other Misconduct in relation to members of the Institute generally

guilty of other misconduct, if he is held guilty by any civil or criminal court for
an offence which is punishable with imprisonment for a term exceeding six
months.
---------
213
INDEX OF DECIDED CASES
Section 22: Conduct of the Members in any other Page

circumstances:
Additional Collector of Customs, Department of Customs vs. … 10
K.N. Kanodia
B.K. Chakraborty in Re: … 3
Commissioner of Income - Tax, Gujarat -III, Ahmedabad vs. … 10
Mukesh R. Shah
D.B. Parelkar in Re: … 2
Deepak Pahwa vs. A.K. Gupta … 6
J.C. Tandon in Re: … 4
Jamnadas Harakchand and Others vs. P.C. Parekh … 1
K. Bhattacharjee vs. B.K. Chakraborty … 6
K.C. Jain Satyavadi in Re: … 1
Manager, Punjab National Bank vs. M.K. Sachdeva … 12
P.C. Parekh in Re: … 8
P.N.S. Murthy vs. D.V. Lakshmana Rao … 3
Qaroon Trading and Finance Pvt. Ltd. vs. Laxmi Narain … 3
Saxena and Jitendra Mohan Chadha
R. K. Goswami, Administrator, Delhi Nagrik Sekhari Bank Ltd. … 12
vs. M/s Dayal Singh & Co.
R.C. Dutta vs. Kailash C. Mishra … 12
S.C. Katyal vs. O.P.C. Jain & O.P. Sharma … 7
S.K. Bhaumik in Re: … 5
S.N. Banerjee, Dy. General Manager, State Bank of … 11
Hyderabad vs. Lokesh Dhawan
Sandeep P S G Nair, Mumbai in Re: … 13
Sri Gopal Shukla in Re: … 4
State Bank of Patiala vs. Rishi K. Gupta … 6
Supdt. of Police, CBI, ACB, New Delhi vs. Dayal Singh … 11
The Chief Commissioner (Administration) & Commissioner of … 2
214
Income - Tax, Karnataka-I, Bangalore vs. H. Mohanlal Giriya

The Senior Manager, Punjab National Bank vs. N.K. Chopra … 7
Section 24: Penalty for falsely claiming to be a Member
etc.
Prem Batra in Re: decided on 18.7.1989 … 14
Section 27: Maintenance of Branch Offices
P.N. Mehta in Re: … 15
THE FIRST SCHEDULE
PART I
Clause (2)
D.S. Sadri vs. B.M Pithawala … 17
Vadilal V. Shah vs. J.B. Sanghavi … 17
Clause (4):
Assistant Director of Income Tax (Investment), Calicut vs. P. … 20
Subramanian
Harish Kumar in Re: … 19
The Assistant Commissioner of Income-Tax, Agra vs. Anurag … 20
Jain
Clause (5):
Jethanand Sharda vs. Deepak Mehta … 21
Clause (6)
A.K. Gupta of M/s G.P. Jaiswal & Co. vs. Habibullah 24
A.R. Ranawat in Re: … 32
B.K. Sharma in Re: … 27
B.K. Swain in Re: … 23
B.S.N Bhushan in Re: … 23
Bijoy Kumar in Re: … 28
Chief Auditor of Co-operative Societies, West Bengal vs. B.B. … 24
Mukherjee
D.C. Pal in Re: … 23
D.M. Kothari in Re: … 29
D.N. Das Gupta, Chief Auditor of Co-operative Societies, … 25
215
West Bengal vs. B.B. Mukherjee

G.K. Joglekar in Re: … 23
G.P. Agrawal in Re: … 26
J.S. Bhati vs. M.L. Aggarwal … 28
K.A. Gupta in Re: … 28
K.K. Mehra vs. M.K. Kaul … 26
L.K. Kathare vs. G. Sreenivasa … 33
M.J. Gadre vs. W.G. Ambekar … 22
M.L. Agarwal in Re: … 25
M.R. Walke in Re: … 22
M.V. Lonkar in Re: … 30
Naresh C. Agarwal in Re: … 29
P.G. Biswas in Re: … 31
Parimal Majumder in Re: … 27
Rajeev Sharma in Re: … 32
S.D. Chauhan in Re: … 32
S.N. Mukherji & Co. vs. P.K. Ghosh … 25
Sanjeev Srivastava in Re: … 27
Shashindra S. Ostwal in Re: … 27
Sunil Kumar in Re: … 33
V.B. Kirtane in Re: … 22
V.K. Goel in Re: … 30
V.K. Goenka, VC & MD, Warren Tea Ltd. vs. P.K. Lodha … 31
Clause (7)
Amresh Kumar Vashisht vs. Anuj Goyal … 38
B.S.N. Bhushan in Re: … 34
Bijoy Kumar in Re: … 35
216
Kailash Shankarlal Mantry in Re: … 38

Mirza M. Hussain in Re: … 34
N.O. Abraham Isaac Raj in Re: … 36
Rajeev Sharma in Re: … 37
S.D. Chauhan in Re: … 36
Sirdar P.S. Sodhbans in Re: … 35
Sri Nath Prasad vs. Vineet Aggarwal … 37
Yogesh Gupta in Re: … 36
Yogesh Kumar Sharma vs. O.P. Maheshwari of M/s O.P. … 37
Maheshwari & Co.
Clause (8)
A.K. Todani vs. A.P. Bhadani … 42
Ajay Kumar Singhal vs. Anil Kumar … 58
Anil Kumar Goel vs. A. Anurag Nirbhaya … 53
Ashok K. Aggarwal vs. Yogesh Thakur … 41
Ashok Kumar Pathak of M/s A.K. Pathak & Associates vs. … 54
Yogesh Bansal of M/s Y.K.B. Associates
Atul Jindal vs. Vivek Gupta … 62
B. L. Goyal vs. Suresh Advani … 59
Bhushan Khot of M/s. Bhushan Khot & Co. vs. Mahesh M. … 57
Bhatt
D.G. Chandak vs. S.D. Chauhan of M/s. S.D. Chauhan & Co., … 57
Mumbai
D.H. Firke vs. L.B. Jadhav … 45
D.R. Soni vs. H.L. Joshi … 49
Dinesh Gupta vs. Amit Gupta … 60
Gautam R. Patel vs. Bharat Kumar Haridas Mehta … 60
Gireesh Bhalla vs. Pradeep Kumar Sharma … 48
H.M. Kataria vs. R.K. Malpani … 53
H.N. Motiwalla vs. Nanalal Vishanji Parmar … 61
Har Narayan Rathi vs. Deepak Mehta … 58
217
J. Patnaik vs. Y. Pani … 42

J.P. Gupta vs. Charanjit Malhotra … 49
J.R. Kakadiya vs. M.S. Chokshi … 47
J.R. Shah of M/s J.R. Shah & Co. vs. Rajiv B. Pethkar of M/s … 56
Rajiv Pethkar & Associates
J.S. Bhati vs. M.L. Aggarwal … 45
Jatinder Kumar Jain vs. Sundeep Kumar … 59
Jugal Kishore Soni of M/s J. K. Soni & Associates vs. Abhijit … 57
Matilal
K.K. Sud vs. K.N. Chandla … 43
Lalit K. Gupta of M/s Lalit K. Gupta & Co. vs. Ajay Bansal … 47
M. Gopalasamy vs. N. Raja … 55
M.L. Agarwal vs. J.S. Bhati … 41
M.S. Padmanabhan Nair vs. R. Chidambaram … 47
M/s Jha & Associates vs. S. Dhar … 48
Mahendra R. Shah vs. Ms. Deepali Dattatraya Dalal … 44
Manindra Chandra Poddar vs. Manas Ghosh … 59
Mehra Khanna & Co. vs. Man Mohan Mehra … 41
Milind Ramchandra Kulkarni in Re: … 40
N. Raja, Chennai vs. Subrata Roy … 43
Naresh H. Kumbhani vs. P.V. Dalal … 46
Phool Chand Gupta vs. Parshu Ram Bhagat … 50
Prakash Chand Surana of M/s. Prakash Surana & Associates 52
vs. Pratap Singh Surana of M/s. Pratap Singh Surana & Co
Puneet Bhatia vs. Arvind Kumar Munka … 46
Radhe Shyam vs. K.S. Dubey … 40
Rajeev Kumar vs. R.K. Agrawal … 44
Rajeev Mittal of M/S. Mittal Rajeev & Associates vs. Rajeev … 51
Shah of M/s Bihani & Shah
Rajesh Rathi of M/s Rathi Pasari & Associates vs. Ramod … 39
Tapdiya of M/s Pramod Tapdiya & Associates
218
Rajiv Bhatnagar, Trustee, Saraswati Educational Foundation, … 43

Noida vs. Sanjeev Vohra , Ludhiana
Ram Pyare Pandey vs. Praveen Anand Singh … 58
S. S. Ajmera vs. S. R. Ghatge of M/s S. R. Ghatge & Co. … 55
S.B. Chidrawar vs. C.K. Rao … 40
S.K. Jain vs. D.K. Karmakar … 42
S.K. Kansal vs. S.L. Gupta … 45
S.M. Momaya of M/s S.M. Momaya & Co. vs. Ashok Sharma … 51
of M/s Ashok K. & Co.
S.N. Johri vs. N.K. Jain … 39
S.P. Khemka vs. T.G. Ramanathan … 50
S.V. Kharwandikar vs. D.K. Borkar … 39
Sanjay Kalra of M/s S. Kalra & Associates vs. B.M. Goel of … 56
M/s. Kapoor Bhushan & Co.
Siddheshwar Vithal Mali in Re: … 54
Sudhanshu Sharma vs. Pankaj Kumar Goyal … 61
Sunil Kashyap of M/s P.C. Bafna & Co. vs. Deepak Batra … 53
Sunil Prakash Goyal vs. Balraj Kalia … 61
Suresh S. Thakkar vs. Virendra S. Nayyar … 55
Tarak Nath Datta in Re: … 46
V.A. Parikh vs. R.I. Galledar … 44
V.K. Gupta vs. A.K. Jain … 45
V.K. Wadhwa vs. G.P. Makkar … 50
Vasant Gopiram Torka vs. Piyush H. Baxi … 62
Vinod Somani vs. M.L. Agarwal … 52
Vishnu Kumar Javar vs. Vinod K. Jain … 44
Clause (9)
B.B. Singhal vs. Rajesh Kumar … 66
B.N. Mohan vs. K.C.J. Satyawadi … 63
Bomkesh Sett & Pratha Pratim Sett vs. Pradip Kumar … 66
Agrawal
219
C.L. Tomson vs. K.A. Chandrasekhara Menon … 64

D. Srinivasa Rao & Others, Hyderabad vs. K. Ranganathan of … 71
M/s. P. Srinivasan & Co., Chartered Accountants, Hyderabad
D.L.Sukhadia in Re: … 64
Dipak Kumar Mitra in Re: … 65
J.P. Gupta vs. Charanjit Malhotra … 69
M.K. Biswas in Re: … 63
Narendra Kumar Shah vs. Amrit Kumar Chakrabarty … 71
Rajeev Mittal of M/s. Mittal Rajeev & Associates vs. Rajeev … 69
Shah of M/s. Bihani & Shah
Rajeev Nathwani vs. Rajan Sharma … 70
Ram Parshad Handa& Hari Krishan Khosla vs. B.K. … 66
Choudhury
Rinku Shaw Kesharwani in Re: … 70
S.I. Majumdar vs. Vinod Rana … 64
Shekhar A Parkhi vs. Harshal Govind Jethale … 72
T. Ravindra vs. K.F. Jetsey … 68
V.K. Dhingra vs. Satish Tandon … 68
V.K. Gupta vs. Rajiv Savara … 67
Vinod Somani vs. M.L. Agarwal … 70
Clause (10)
R.B. Basu vs. P.K. Mukherji … 73
S S S B Ray, Commissioner of Income Tax (Central), Nagpur … 73
vs. Durga Prasad Sarda, Nagpur
Clause (11)
A.C. Sharma & Mrs. Indu Sharma, Proprietor, M/s Sharma 85
Share Trading Co. vs. Sandeep Abbot
A.V. Deshmukh vs. J.D. Sanghvi … 88
Agi Logistic Inc.vs. Sher Jang Bahadur … 90
Ajush Kumar Kalra vs. Kapil Agarwal … 78
Amalendu Gupta vs. R.N. Kapur … 88
220
Ambarish Ratikant Galinde in Re: … 79

Anil Kosha vs. Mahendra Kumar Mahajan … 91
Anil Kumar Dixit vs. Subrabh Kumar Shukla … 79
Arun Kumar Agarwal in Re: … 80
Ashish S. Kulkarni vs. Mahen J. Dholam … 94
Ashok Nanda, Jalandhar vs.Gurcharan Singh Syal … 91
Atul K. Gupta vs. Swadesh C. Srivastava … 93
B.L. Asawa, Chief Manager, Punjab National Bank, Delhi vs. … 82
P.K.Garg
C.M. Mehrotra in Re: … 77
Chatar Lal Mantri vs. Vinod Kumar Agarwal … 85
Chief Commissioner (Admn.) & Commissioner of Income-tax, … 87
Karnataka-I, Bangalore vs. H. Mohanlal Giriya
Chintamany Abhyankar in Re: … 76
D. Hemalatha vs. P.N. Malolan … 74
D.S. Sadri vs. B.M. Pithawalla … 74
Deputy General Manager, Canara Bank vs. Prasanta Kumar … 91
Roy Burman
Dr. Abhijit Sen, Alliance Credit & Investment Ltd. vs. … 88
Parmanand Tiwari of M/s Tiwari & Co.
Dr. Kesab Nandy, Director,Tilak Nagar Industries Ltd., … 81
Mumbai vs. Lalit Sethi
Dr. Renu Sharma vs. Surya Prakash Jalan … 81
Harish Kumar in Re: … 84
Harish L. Sampat in Re: … 86
Iqbal Hamid vs. Institute of Chartered Accountants of India- … 83
Allahabad High Court
J. K. Teotia, vs. Mahendra Kumar Hingar … 80
J.P. Gupta vs. T.C. Garg … 87
K.S. Dugar in Re: … 74
M. Hariharan in Re: … 76
M.K. Abrol and S.S. Bawa vs. V.P. Vijh … 76
221
Managing Director, A.P. Handicrafts Dev. Corpn. Ltd. vs. A. … 78

Bhimeswara Swamy
N.K. Gupta in Re: … 77
Nalin S. Sualy vs. Institute of Chartered Accountants of India … 83
P.S. Rao in Re: … 84
Pradeep R. Ghatge vs. Ashvin Bajaria … 84
R.D. Bhatt vs. K.B. Parikh … 81
R.K. Gupta of M/s Gupta Rajendra & Co. vs. M.G. Baig … 84
Rajkumar H. Advani in Re: … 75
Registrar of Companies, West Bengal vs. K.C. Lunawat … 88
Rohit B. Jain vs. Kishore Kumar Poddar … 90
S.C. Srivastava in Re: … 77
S.K. Kaul vs. S.C. Mangal … 76
S.K. Sharma vs. V.K. Kandoi … 86
Saraswati Gurunath Joshi vs. Himangi S. Prabhu … 92
Satwant Kaur vs. Rakshit Khosla … 87
Sharadchandra M. Kulkarni vs. Mahen J. Dholam … 94
Shiv Kumar Ramnarain Sharma in Re: … 86
Shivaputra Mohan Jotawar in Re: … 92
Soumen Sanyal vs. Paramjeet Singh Sethi … 79
Sri Nath Prasad vs. Vineet Aggarwal … 75
V. Krishnamoorthy vs. T.T. Krishnaswami … 82
Vemuri Krishna Prasad vs. Chigurupati Tirupathaiah … 92
Chowdary
Viplove Kaushik in Re: … 80
Yogesh Kumar Sharma vs. O. P. Maheshwari of M/s O. P. … 93
Maheshwari & Co.
PART III
Clause (2):
222

S.M. Vohra in Re: … 99
PART IV
Clause (2):
Aditya Raheja, Bangalore vs. H V Gowthama, Bangalore … 108
Anand Prakash Gupta in Re: … 105
Anil Kumar Goel vs. A. Anurag Nirbhaya … 103
Ashish Pradeep Deora, Mumbai vs. Jawahar Lal Beriwal, … 107
Delhi
Col. S.K. Ahuja vs. Dinesh Gupta … 104
Cyrus Maneck Bahadurji, Chairman, M/s. Tytan Organics Pvt. … 116
Ltd., Mumbai vs. Mustafa Abdulla Surka
Deputy General Manager, Canara Bank vs. Prasanta Kumar … 102
Roy Burman
Dilip C. Patel vs. Ronak S. Dawda … 108
Gopal Bhatter in Re: … 114
Jairam Mandal, New Delhi vs. Chinmoy Ghatak, Kolkata … 107
K. Ravichandran, Deputy General Manager, Indian Bank, … 107
New Delhi vs. Raj K. Aggarwal, M/s. Raj. K. Aggarwal &
Associates, New Delhi
Kailash Shankarlal Mantry in Re: … 111
Kamal Banerjee vs. Chinmoy Ghatak … 115
Kanchan Bhagchandani vs. Vaibhav Kumar Mehta … 110
Kired Mahadew Singh, Director, Viramah Real Estate India … 106
Pvt. LTD. vs. Shiv Chandra Shrestha
Madhu Mohan Damodhar, Commissioner, Central Excise, … 117
Pune-1 vs. Likhesh Vasanji Shah
Maninder Singh Johar in Re: … 112
Manish Kumar Neema in Re: … 111
Manohar G Bhujbal vs. Atish Vikas Phulphagar … 113
Manoj Kumar in Re: … 106
Mool Chand vs. Kamal Bhushan Jhamb … 114
223
Nagendra Prasad, Superintendent of Police, Kolkata vs. … 111

Umesh Kumar Dokania
Naresh Mohan Mittal vs. Gulshan Kumar … 105
Rajiv Sharma in Re: … 102
Sandeep P S G Nair in Re: … 109
Shashank V. Kamath, Deputy Regional Manager,Bank of … 115
Maharashtra, Mumbai vs. Rishi Anmol Sekhri
Simon Tipet vs. Ashok A Jain … 110
Sunil Kaplash, Canada vs. Balraj Kalia, New Delhi … 116
The Commissioner of Income-Tax, Meerut vs. Sanjay Sud … 117
The Director of Income Tax (Inv.) Nagpur vs. Anand … 108
Shyamsunder Daga
Vikas B. Pathakar vs. Atul Chandrakant Vaishali Ghorpade … 103
Vinay Dattatray Balse vs. Yogendra N. Thakkar … 113
Vinit Kumar Mantri in Re: … 112
Vinodray Vithaldas Donga in Re: … 110
Vivek Priyadarshi, Addl. Supdt. of Police, New Delhi vs. … 104
Kamal Kumar Grover
Yogesh Mishra vs. Om Prakash Prajapati … 106
THE SECOND SCHEDULE
PART I
Clause (1):
Bank of India vs. Ved Prakash … 118
Director, M/s Shree Industrial Rubber Works Pvt. Ltd. vs. S.R. … 119
Khanna
Jamnadas Harakchand and Others vs. P.C. Parekh … 118
Clause (2):
K. George Varghese vs. K.J. Thomas, Kochi … 122
P.N. Vittal Dass, Addl. Collector of Customs, Mumbai vs. P.U. … 120
Patil
Clause (3):
The DGM (Inspection), Tamilnad Mercantile Bank Ltd. vs. R. … 123
224
B. K. Samuel
Clause (4):
Anil Kosha vs. Mahendra Kumar Mahajan … 125
Bharat D. Bhatia vs. Vijay R. Ashar … 125
Brig. George Mathew and Others, Chennai vs. Livingstone J … 126
Nallathambi and M. H. Selvaraj of M/s Selvaraj & Livingstone,
Chennai
H.R. Shetty in Re: … 124
Manish Jajoo in Re: … 126
Promila Jain vs. Hardesh Kant … 124
Sharadchandra M. Kulkarni vs. Mahen J. Dholam … 125
Clause (5)
A.N. Iyer & R.N. Iyer vs. Satish Chandra K. Parikh … 129
Accounts Manager, M/s STP Limited, New Delhi vs. J. … 134
Keerthivasan
Audit Bureau of Circulations Ltd. vs. K.L. Agarwal … 127
Davar & Sons Ltd. vs. M.S. Krishnaswamy … 127
Divisional Joint Registrar, Co-op. Societies (Audit), vs. K.S. … 130
Ambardekar
Kishori Lal Dutta vs. P.K. Mukherjee … 128
M. Sivaiahin in Re: … 132
N. Thirumurthy, Chennai vs. S.V. Sredharan … 131
Ramesh Chand Jain vs. Giriraj Khandelwal … 133
Surajit Datta vs. Deb Kumar Dwibedi … 131
The DGM, State Bank of India (Stressed Assets Management … 130
Branch), Chennai vs. A. D. K. Manoharan
The Superintendent of Police, CBI – ACB, Chennai vs. CA. D. … 133
K. Manoharan
V.C.Agarwal in Re: … 128
Clause (6)
Dr. Narendra M Rege, Mumbai vs. Hiteshkumar Kishorbhai … 138
225
Joshi, Mumbai
Hon. General Secretary, Rohit House Occupants Welfare … 136
Association, New Delhi vs. K.K. Gupta
KS Kaushik, Deputy Director, SFIO SFIO, Ministry of … 140
Corporate Affairs Government of India vs. Sunil Kumar Gupta
Ray
Ms Vandita R. Agarwal, Company Secretary, M/s Wall Street … 139
Finance Ltd, Mumbai vs. M.S. Parikh M/s MSP & Co., Mumbai
Rajev M. Bhingarde vs. Gouri Shanker Chitlangia … 137
Registrar of Companies, Ministry of Corporate Affairs vs. … 141
Jitendra Nath Dhar
Registrar of Joint Stock Companies vs. S.S. Iyer … 135
S. S. Marwah and Stanislaus Fernandes vs. Vipul Amodwala … 138
V.C. Agarwal in Re: … 136
Clause (7) …
A. S. Ramanathan in Re: … 167
Addl. Director (Tax-II) Serious Fraud Investigation Office, … 167
Ministry of Corporate Affairs, New Delhi, vs. V. Subramanian
Ajay Chhaya in Re: … 146
Ajit Singh Ahuja vs. Dinesh Kumar Goyal … 142
Assam Financial Corporation vs. S.K. Beria … 152
B.L. Khanna in Re: … 154
B.L. Sinha, Joint Director (Inspection), Office of the Regional … 168
Director, Kolkata vs. Jitendra Prasad
C.S. Hariharan in Re: … 151
Captain, Chief Admin Officer, Air Force Station, Bapatlavs. J. … 170
Venkateswara Rao
Chief Operating Officer, Vishal Pipes Ltd., New Delhi vs. … 157
Tapan Kumar Saha
Commissioner of Agricultural Income-tax vs. T.S. … 153
Ranganathan
Deptt. of Economic Affairs vs. D.B.Kulkarni … 148
Dr. Meera N Rege, Mumbai vs. Hiteshkumar Kishorbhai Joshi 173
226
G.M. Oka in Re: … 142

General Manager, Industrial Development Bank of India, … 171
Kolkata vs. Surendra Kumar Surana
Gora Chand Mukherjee … 176
Jayanta Basu vs. Sumit Dasgupta … 159
John Mathew in Re: … 164
Kailash Kalantri, USA vs. Pankaj Prataprai Sanghvi … 170
Kedar Laddha, Ahmedabad in Re: … 157
Krishnendu Ghosh vs. Rakesh Kumar Agarwal … 166
M. Gandhi in Re: … 162
M.C.Poddar vs. P.S. Sodhbans … 143
M/s. Anjaneya Bisanpur Agro Industries Pvt. Ltd., vs. … 175
Narender Kumar Kaushik
Mahesh Khemsingh Rawat, Director, M/s. Max Cot Merchants … 174
Pvt. Ltd., Ulhasnagarvs.Vikash Kumar Agarwal, Liluah
Messrs. O.M. Agency Private Ltd. & Messrs. Oriental … 149
Mercantile Distributors Private Ltd. vs. M. Surendra Sastry
P.D.J. Solomon vs. L.A. Patnaik … 152
Paradise Co-operative Housing Society Ltd., Bombay vs. R. … 152
Viraswami
Pritesh B. Shah Ahmedabad vs. Ashvin Dashrathlal Panchal … 162
Ahmedabad
Promila Jain vs. Hardesh Kant … 161
Pujari Sudhakar Bachu Channa vs. Purushottam Ramesh … 163
Narayanapethkar
Qaroon Trading & Finance Pvt. Ltd. vs. Laxmi Narain Saxena … 150
and Jitendra Mohan Chadha
R.C. Dutta vs. Kailash C. Mishra … 160
R.K. Goswami, Administrator, Delhi Nagrik Sehkari Bank Ltd. … 150
vs. M/s. Dayal Singh & Co.
Registrar of Companies, West Bengal vs. R.K. … 146
Gangopadhyay
227
Registrar of Companies, West Bengal vs. V.V. Bapat … 145

Relationship Manager, State Bank of India, Mumbai vs. … 175
Mahavir Jain, Mumbai
S. K. Kalimuddin, Distt. Birbhum, West Bengal vs. Subrata … 158
Tapadar
S.N.Das Gupta in Re: … 143
Shakti Kumar in Re: … 156
Shashank V. Kamath, Deputy Regional Manager,Bank of … 171
Maharashtra, Mumbai vs. Rishi Anmol Sekhri
Shekhar Purushottamrao Kannao vs. Sanjay S. Khandekar … 166
Shri G. N. Somdeve, Assistant General Manager, National … 168
Housing Bank, New Delhi vs. S.K. Gupta
Shri Gunwant Singh Saluja,Director, M/s. Mongia Steel Ltd. … 173
vs. Bijay Kumar Sah
Shri V.G. Hegde, Dy. General Manager (Agri Business), State … 155
Bank of India, Local Head Office, Bhubaneswar vs.
Brahmananda Sahu, Cuttack
Smt. Sushma Shourie vs. Mahesh Taneja … 160
Sr. Manager, Indian Overseas Bank, Pune vs. Nalin Ramesh … 172
Chavan
Srinivas Rao,Vapi vs. Nikhil D. Sabharanjak … 147
Sunderlal Fatehpuria in Re: … 148
T N C Sridhar, DY. Commissioner of Income Tax, Tumkurvs. … 161
C.S. Prahallada
T.S. Vaidyanatha Iyer in Re: … 142
Tamilnad Mercantile Bank Ltd. vs. V.U. Gangolli … 150
Tapan Sarkar, Assistant Commissioner of Sales Tax, Kolkata, … 156
vs. O.P. Banka
Thampy Mathews, Dy. General Manager, IIBI vs. R.K. Tayal, … 154
Delhi
The Asstt. Commissioner of Central, Excise & Customs Surat- … 164
I vs. Noshir Pestanji Bharucha
The Deputy General Manager (Inspection), The … 146
Dhanalakshmi Bank Ltd., vs. S. Sathiavageeswaran
228
The Deputy General Manager, State Bank of India, Stressed … 147

Assets Management Branch, Ahmedabad vs. Mansukhlal
Bachubhai Thummar
The Fairdeal Corporation Ltd. Bombay vs. K.Gopalakrishna … 144
Rao
The Regional Director, Ministry of Industry, Department of … 144
Consumer Affairs, Calcutta vs. Inderjit Roy
The Superintendent of Police, CBI, Anti-Corruption Branch, … 169
Kolkata vs. S.K. Kalimuddin
Tilak Devji Dedhia in Re … 169
V. Ajay in Re: … 163
V. Ayyadurai vs. M. Rajkumar … 165
V.K. Verma in Re: … 149
Clause (8)
Assam Financial Corporation vs. S.K. Beria … 179
Chiranjive Lall Khanna in Re: … 183
D. Ravi, Executive Director, M/s Power Finance Corporation … 180
Limited, New Delhi vs. A. K. Vijaya Srinivas
David Jones in Re: … 184
Debashis Bandyopadhyay, Securities and Exchange Board of … 182
India (SEBI), Mumbai vs. Ashit Kumar Thomas Macwan
Deputy Registrar of Companies, Ministry of Corporate Affairs, … 183
Kolkata vs. Gopal Agarwal
Dipti Gosavi, Authorized Representative ofM/s R. S. Mittal 180
Consultants Pvt. Ltd, Thane vs. Nikhil Chandra H. Vyas
J. K. Teotia, Additional Director (FA), Govt. of India Serious … 184
Fraud Investigation Office, Ministry of Corporate Affairs vs.
Mahendra Kumar Hingar
J.C. Chandiok in Re: … 177
Mohd. Ali Rafath, I.A.S., State Project Director, Sarva Siksha … 179
Abhiyan, Hyderabad vs. Moparthy Sesha Rao
Mukesh M. Kelawala vs. Sukhdev Manilal Soni … 183
P. Arun vs. N. Raja Ganesh … 185
229
Prakash J. Apte in Re: … 185

Ramesh Chand Jain vs. Giriraj Khandelwal … 178
Registrar of Newspapers for India vs. K. Rajinder Singh … 179
Satish K. Arora, President & Chief Operating Officer, M/s. … 181
International Asset Reconstruction Co. (P) Ltd vs.
Ramchandra Yashwant Kulkarni
Thampy Mathews, Dy. General Manager, IIBI vs. R.K. Tayal, … 182
Delhi
Vijay Prakash Gupta, Bangalore vs. Nati Panwar … 178
Clause (9)
Air Commodore Dilbagh Singh vs. E.S. Venkataraman … 187
Divisional Joint Registrar,Co-op. Societies (Audit) vs. K.S. … 188
Ambardekar
M.S. Ramanathan vs. A. Umanath Rao … 186
Punjab State Govt. vs. K.N. Chandla … 186
Rajwade Pratap Ramchandra in Re: … 187
Clause (10)
National Insurance Co. Ltd. vs. B. Mukherjee … 189
S. Seshadri vs. R. Srinivasan … 190
Sunderdas Thakersey & Bros. vs. P.K. Mukherji … 190
T. N. Swaminathan vs. V. Kannan … 191
Tara Pada Banerjee, Dy. General Manager, Bank of Baroda … 190
vs. B.K. Sarker
PART II
Clause (1)
A.K. Basu vs. P.K. Mukherji … 194
B.B. Rohatgi in Re: … 195
B.M. Lala in Re: … 201
B.Mohanty in Re: … 197
B.P. Waghela in Re: … 197
C.R. Lakhia in Re: … 197
D. Sundararajanin in Re 199
230
D.K. Bohara in Re: … 197

Dinesh Kumar in Re: … 198
G.S. Punjawat in Re: … 197
G.V. Ramanaiah in Re: … 197
H.S. Venkata Rao in Re: … 198
Harsh Jain & others vs. Radhakanta Das … 203
Harsh Jain vs. Dhirendra Nath Misra … 203
I.C. Gupta in Re: … 198
J.K. Batra in Re: … 198
J.K. Ghosh in Re: … 193
J.K. Gupta in Re: … 198
Jatinder Kumar Jain vs. Sundeep Kumar … 200
K.C. Koshal in Re: … 198
K.L. Singhee in Re: … 197
LawrenceTellis vs. Dr. S.G. Mandre … 192
M. Rajamany in Re: … 192
M.C. Jain in Re: … 197
M.K. Tripathi in Re: … 194
M.L. Surana in Re: … 197
M.N. Bhargava in Re: … 194
Mohan Sehwani vs. Sunderlal Fatehpuria … 193
P. Vishwanadham in Re: … 198
P.B. Kapoor in Re: … 198
P.D. Aggarwal in Re: … 198
P.L.Tapdiya in Re: … 198
R.C. Gupta in Re: … 196
R.L.P. Sinha in Re: … 197
231
Radhey Mohan in Re: … 195

S.C. Bhatia in Re: … 197
Sharat Sekhri in Re: … 198
Shyam Lal Gupta vs. Manoj Bansal … 200
Sunil Grover in Re … 199
The Asstt. General Manager (Accounts), Punjab & Sind Bank … 202
vs. Pawan Kumar Gulati
The Chief General Manager (FRC&T) State Bank of India vs. … 201
Radhesham N. Bhattad
U.S.Lekhi in Re: … 197
U.V. Benadikar vs. N.G. Kulkarni … 197
Varsha G. Vaidya, Director, M/s. Harsh Chandra Gutt & Co. … 204
Pvt. Ltd. vs. Shekhar K Dandekar, M/s Kolatkar & Dandekar
Virender Kumar vs. K.B. Madan … 195
Yogesh J. Patel vs. ArvindI. Patel … 198
Clause (3)
A. Umanath Rao in Re: … 208
A.K. Mehra in Re: … 207
Bimal Kumar Agarwalla in Re: … 208
C.M. Mehrotra in Re: … 209
H.K. Gupta in Re: … 210
J.R. Chatrath in Re: … 206
K.S. Dugar in Re: … 206
L.N. Gupta in Re: … 207
Managing Director, A.P. Handicrafts Dev. Corpn. Ltd. vs. A. … 211
Bhimeswara Swamy
N.K. Gupta in Re: … 209
232
Pulkit Goyal in Re: … 208

R.K. Seth in Re: … 210
Sunil Patni vs. B.L. Gujar … 211
Clause (4)
Tara Pada Banerjee, Dy. General Manager, Bank of Baroda … 212
vs. B.K. Sarker
233
234
235
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236

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Volume-III

[CASE LAWS REFERENCER]

©THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA

Price : Rs. 210

Twelfth edition : March, 2020

Published by : The Publication Department on behalf of Shri

Professional Ethics is a very specialized subject and it is essential that suitable

New Delhi CA. Prafulla P. Chhajed

7th February, 2020 CA. Ranjeet Kumar Agarwal

THE CHARTERED ACCOUNTANTS

Section 24: Penalty for falsely claiming to be a Member 14

PART-II Professional Misconduct in Relation

PART-III Professional Misconduct in Relation

Not supplying information sought by the Institute 99

PART-IV Other Misconduct of Members in

S 22 For the purposes of this Act, the expression “Professional or Other

employer could have known that he had been so grossly

and Jitendra Mohan Chadha - Page 828 of Vol. IV of the

Misappropriation of Institute’s Fund

Possession of Government Records by a Member

(K. Bhattacharjee vs. B.K. Chakraborty - Page 86 of Vol. VII(1) of

Advertisement with malafide intention to malign

2003 and judgement of Supreme Court dated 6 th August, 2003 and

necessity to interfere with the punishment recommended. It has

Demand of excess Money & failure to refund Unspent Money

The Council held him guilty of “other misconduct” under Section

Violation of PCAOB Rules

S 24 Any person who -

S 27 (1) Where a chartered accountant in practice or a firm of such

Professional Misconduct in Relation to Chartered

1.1.1 Clause (1): allows any person to practice in his name as a

1.1.2 Clause (2): pays or allows or agrees to pay or allow, directly or

(Assistant Director of Income Tax (Investment), Calicut vs. P.

1.1.6 Clause (6): solicits clients or professional work either directly or

Held, he was guilty of professional misconduct under the clause.

(D.N. Das Gupta, Chief Auditor of Co-operative Societies, West

He was reprimanded by the Council under Section 21(4). On an

(v) the names of various concerns which had conveyed their

Highlighting expertise in Sales matters in letter

Parliament had also sent a letter to the Bank recommending the

(V.K. Goel in Re: - Page 340 of Vol.VII(2) of Disciplinary Cases –

modified the punishment awarded to him by substituting the same

(S.D. Chauhan in Re:- Page 226 of Vol. VIII (2) of Disciplinary

Approached Chairman for Audit of Institution

1.1.7 Clause (7): advertises his professional attainments or services, or

Offering Concessions along with services

“Experienced C.A. having Posh Office with telephones, Computer,

1.1.8 Clause (8): accepts a position as auditor previously held by

1.1.8(83) Where a Chartered Accountant had accepted the Statutory Audit

the instructions contained in the booklet “Code of Conduct” could

(A.K. Todani vs. A.P. Bhadani - Page 177 of Vol.VI(2) of

The Respondent was held guilty of professional misconduct falling

1.1.8(95) Member sent the communication by Ordinary Post. The Council

Accepting audit without Communication in Writing

Auditor of a Company and as Statutory Auditor of another

1.1.8(109) Where a Chartered Accountant accepted the position as auditor

school without first communicating in writing with the previous

the work had been entrusted to another Chartered Accountant and

(Vinod Somani vs. M.L. Agarwal - Page 511 Vol.X-2A-21(4) of