Monday, March 20, 2017

2-year ban on practicing CA as he was actively involved in business through companies and trust


a) Punjab National Bank filed complaint before council of the Institute of Chartered Accountant (ICAI) alleging that the respondent: a practicing chartered accountant (CA), had incorporated three companies, a trust and had diverted funds to companies and firms in which CA was associated with directly as a director or as a partner.

b) Council held that the CA was guilty of professional misconduct under Chartered Accountants Act, 1949 and recommended to the High Court that the name of the CA be removed from the Register of Members for a period of two years.

The High Court held as under:

1) There was evidence on record that CA was signing the balance sheet of various companies in the capacity as a director and was also operating the bank accounts and signing various applications submitted to the bank.

2) There was also evidence that CA had acted as the introducer when accounts of other companies were opened and significantly the addresses of these other companies were the same from where CA carried on his profession as a Chartered Accountant. 

3) A Chartered Accountant registered with the ICAI as practicing chartered accountant cannot be a director of a company without the permission of the ICAI. In the instant case, being a chartered accountant the respondent was actively carrying on business through companies, trusts and firms.

4) Thus, removal of CA’s name from the Register of Members of the Institute of Chartered Accountants for a period of two years was affirmed. - [2017] 79 9 (Delhi) 

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