Dilip B. Bhosale, J.@mdashThis civil petition, u/s 21(5) of the Chartered Accountants Act, 1949 (for short, ''the Act'') is placed before this Court to consider the recommendation made by the Council of Institute of Chartered Accountants of India (for short, ''the Council'') under this Act, whereby they have recommended to remove name of the respondent from the Register of Members maintained by them for a period of one month. The disciplinary proceedings against the respondent, as contemplated by Section 21 of the Act, were initiated at the instance of Director of Income Tax (Exemption), Bangalore (for short ''the Complainant''), who sought removal of the respondent''s name from the Register of Members maintained by the Council on the allegations made therein, which according to him, amount to professional misconduct. The relevant portion of the complaint made by the Director of Income Tax reads thus:
"Annexure-A
Sri Y.N. Jayasimha, Chartered Accountant, has committed professional misconduct in certifying the audit report of M/s. CMR Jnanadhara Trust for the year ended on 31st March, 2000 without properly verifying the books of accounts and without even drawing up of the bank reconciliation statements as discussed herein under:
2. The accounts for the year ending 31-3-2000 in the case of M/s. CMR Jnanadhara Trust, No. 2079, III Main, Keshavanagar, HBR Layout, Bangalore, a Trust assessed in this charge, are stated to have been audited by Sri Y.N. Jayasimha, Chartered Accountant. He certified the Audit Report in Form 10-B as required under the provisions of Section 12-A(1)(b) of the income tax Act, 1961 read with Rule 17-B of income tax Rules, 1962.
3. During the course of examination of accounts of the Trust, certain grave irregularities were found in the accounts, which are stated to have been audited by the above Chartered Accountant.
4. A perusal of the balances in the Bank accounts when compared with the bank statements revealed that the balances as per bank passbooks are different from the balances as mentioned in the balance sheet for the year ending 31-3-2000.
5. The discrepancies are substantial. Some of the discrepancies noticed in respect of the following account:
These discrepancies have neither been qualified in the audit report given by the said CA, nor any note has been appended. Apparently, reconciliation of the bank accounts has not been done.6. In view of the above, it appears that even the basic requirement of drawing up a bank reconciliation statement has not been done before finalising the accounts and certifying them as representing true state of affairs and that they are in agreement with the books of accounts maintained by the assessee.
7. Therefore, prima facie it appears that proper audit was not conducted by the said Chartered Accountant in a professional manner and accounts have been incorrectly/improperly certified as representing true state of affairs and being agreement with the books of accounts maintained by the assessee".
2. On receipt of the complaint, the Council, prima facie formed an opinion that the respondent had been guilty of the professional misconduct and in view thereof, they referred the case to a Disciplinary Committee. The Disciplinary Committee, on receipt of the reference made by the Council, after following the due procedure/principles of natural justice, held an enquiry and submitted its report to the Council. On receipt of the report, the Council found the respondent guilty of professional misconduct. After recording finding to that effect, the Council issued notice to the respondent in order to give him an opportunity of being heard before the orders are passed against him. The record shows that the respondent appeared before the Disciplinary Committee as well as before the Council and submitted written representation. The Council, after considering the report of the Disciplinary Committee as well as the written representation submitted by the respondent, held him guilty of professional misconduct and recommended to this Court for removal of his name from the Register of Members for a period of one month. The relevant observations made by the Council in the minutes of the 289th meeting of the Council held on 9th August, 2009, u/s 21 of the Act reads thus:
"The Council considered the Report of the Disciplinary Committee along with the written representation dated 30th July, 2009 received from the respondent and also the oral submissions made by the respondent before it. The Council noted that the respondent in the instant matter failed to seek corroborative evidence and to evaluate the management representation letters so received and merely relied upon the version of the Trust. Thus, the respondent did not perform his duties diligently and with utmost care while carrying out the audit of the Trust for the year ended 31st March, 2000 as the discrepancies noticed in the instant complaint were material enough to be qualified in the Audit Report which the respondent in his capacity as the auditor, failed to do. The Council, thus accepted the Report of the Disciplinary Committee and decided that the respondent was guilty of Professional Misconduct falling within the meaning of clauses (5), (6), (7) and (8) of Part I of the Second Schedule read with Sections 21 and 22 of the Chartered Accountants Act, 1949.
On consideration of the Report of the Disciplinary Committee along with the written representation dated 30th July, 2009 received from the respondent and also the oral submissions made by him before it, the Council decided to accept the Report of the Disciplinary Committee and accordingly held that the respondent was guilty of Professional Misconduct falling within the meaning of clauses (5), (6), (7) and (8) of Part I of the Second Schedule read with Sections 21 and 22 of the Chartered Accountants Act, 1949".
3. It is apparent from the minutes of Council and so also the report of the Disciplinary Committee and other materials placed before us including written representation made by the respondent, the Council considered everything in depth and recommended removal of the respondent''s name from the Register of Members for a period of one month and forwarded its recommendation to this Court under sub-section (5) of Section 21 of the Act.
4. This Court had admitted the petition on 20-1-2012 and issued notice to the respondent. Respondent after service of notice entered appearance through M/s. VGB Associates. The allegations made against the respondent, remained uncontroverted before this Court. Mr. S. Vivekananda, holding for M/s. VGB Associates, Advocates on record, for the respondent, on instructions, submits that he has instructions not to contest this civil petition on merits and that the respondent would be satisfied if the quantum-of punishment, recommended by the Council, is reduced from one month to reprimand.
5. The Council held the respondent guilty of the professional misconduct for his acts, as reflected in the complaint and in the order the Council u/s 21(5) of the Act. The Council has wide powers u/s 21 of the Act. It is well-settled that while dealing with the reference, such as against the respondent before us, it is essential to remember that this Court in its jurisdiction u/s 21 of the Act is dealing with not a private dispute or litigation but is dealing with the findings of a professional body of people who are supposed to be the best Judges of what their own standard of professional conduct should be. We do not find any violation or disregard of the provisions of the Act or Regulations made thereunder or any disregard of the well-known principles of natural justice and fairness on the part of the Council while dealing with this case. Though the respondent denied the allegations made in the complaint, we find that the Council on the basis of the materials placed before it by the complainant and also after considering the written representation made by the respondent, rightly held him guilty of the professional misconduct. In the circumstances, we are inclined to accept the recommendation made by the Council, for the reasons recorded in the order u/s 21 of the Act. We do not find any reason to interfere with the findings of fact recorded by the Council holding the respondent guilty of misconduct. Thus, we confirm the findings recorded and accept the recommendation made by the Council against the respondent. However, having regard to the nature of allegations and the passage of time, the recommendation for removal of the respondent''s name for one month from the Register of Members maintained by the Council, in our opinion, is harsh. Hence, we are inclined to reduce the quantum of punishment from one month to reprimand. Order accordingly. The civil petition is accordingly disposed of. No Costs.
