CA held guilty of Misconduct for Undertaking Tax Audit Without Prior Communication

The Institute of Chartered Accountants of India (ICAI) Board of Discipline has imposed a penalty on a chartered accountant for accepting an audit in a company without informing the previous auditor.

A complaint was registered by CA Raghavendra Prasad Mandava against CA Kota Sai Krishna. The firm of CA Raghavendra Prasad Mandava (complainant) was appointed as a tax auditor of the firm named Sri Venkata Ramana Traders (Rice Mill). The compliant firm was appointed to conduct an audit under section 44AB of the Income Tax Act, 1961 and to file the income tax returns (ITR) for the assessment years 2009-10 to 2016-17. However, it was alleged by the complainant that the CA Kota Sai Krishna (respondent) had taken the audit of the Sri Venkata Ramana Traders for the assessment year 2017-18 without making any prior communication with the complainant.

The complainant submitted that neither did he voluntarily resign nor did he receive any notice from the firm that he was being removed from the firm as a tax auditor.

During the hearing, the respondent auditor accepted the allegations. He said that he was new to the practice at that time. He assured the board that he will not do such a thing again in his professional practice.

Considering his submission, the ICAI Board of Discipline held that CA Kota Sai Krishna is guilty of professional misconduct within the meaning of Item (8) of Part I of the First Schedule to the Chartered Accountants Act, 1949. Accordingly, a penalty of Rs 25,000 was levied on him.