Case Details: Institute of Chartered Accountants of India vs. CA Shri Subhajit Sahoo - [2024] 168 taxmann.com 501 (Delhi)
Judiciary and Counsel Details
- Vibhu Bakhru & MS. Swarana Kanta Sharma, JJ.
- Aldanish Rein, Adv. for the Petitioner.
- Deep Bisht, Sarthak Gupta, Gaurav Kumar, Ms Pooja Bhardwaj, Advs. & Asheesh Jain, CGSC for the Respondent.
Facts of the Case
The petitioner was a Chartered Accountant in practice. A complaint was filed by the Additional Development Commissioner (Handicrafts), Government of India, Ministry of Textiles, against the petitioner. The complainant alleged that the petitioner had issued two Utilisation Certificates without verifying the relevant documents.
With respect to the first such certificate, the petitioner failed to physically verify the machinery before issuing the certificate. Instead, he relied on the certificate issued by another chartered accountant firm without mentioning the facts in the certificate. Regarding the second certificate, he failed to place on record any document that he had verified before issuing the said certificate.
In accordance with the Chartered Accountants Act, the matter was referred to the Disciplinary Committee. The Disciplinary Committee found the petitioner guilty of professional misconduct. The matter reached before the Delhi High Court.
High Court Held
The High Court held that a Chartered Accountant can be held guilty of professional misconduct if he is ‘grossly negligent’ in the conduct of his professional duties. The petitioner failed to independently verify the machinery purchased by the Society before issuing the Utilisation certificates.
While issuing the first such Certificate, he merely relied on a certificate issued by a CA firm and a bank statement with overwriting, neither of which he adequately verified. The petitioner should have clearly mentioned his reliance on these documents in the first Utilisation Certificate he issued, which he did not mention.
Further, he could not present any documentary evidence to substantiate this claim nor explain the inconsistency in the records. These acts reflected inadequate diligence and negligence on the part of the petitioner. Therefore, the charges against the petitioner have been proven with reasonable certainty, which is higher than the standard of preponderance of probabilities and evidence.
List of Cases Referred to
- Council of Institute of Chartered Accountants of India v. Dayal Singh FCA 2007 SCC OnLine Del 724 (para 44)
- In Institute of Chartered Accountants of India, Indraprastha Marg, New Delhi v. CA Gordhanbhai Madhabhai Savalia 2023 SCC OnLine Bom 2347 (para 54)
- H.V. Panchaksharappa v. K.G. Eshwar, (2006) 6 SCC 721 (para 56).
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