ICAI Board of Discipline Closes Misconduct Proceedings Against Chartered Accountant on Grounds of Limitation

A disciplinary proceeding was launched against a chartered accountant based on an RC filed by the CBI related to charges of tampering with an Income Tax Investigation report. The charge sheet, which was filed on 30/11/2012 before the Special Judge, Patiala House, named several people, including an officer of the Income Tax Department and the Respondent. The case complained that, between 2007-2008, the accused individuals plotted to modify the report in a businessman’s and his friends’ favour. The inquiry unveiled meetings at various times in February and March 2008, including a meeting on 08/03/2008 when the accused were arrested. An authenticated three-hour taped conversation on 04/03/2008 using CFSL included talks on illicit payments, watering down of conclusions, and mention of an approximated bribe size of Rs. 10,00,000.

The Respondent, by way of a written statement, refuted all charges and mentioned the conclusions drawn by the Special Court that no proof existed that any such modification was done to the appraisal report at his behest. He also argued that the departmental proceedings were initiated with a gross delay of nearly 17 years from when the incidents are said to have occurred. The first communication from the Institute, according to him, was only received in 2018, nearly ten years after the occurrence, resulting in loss of evidence and prejudice to his defence. Relying on Rule 12 of the Chartered Accountants (Procedure of Investigations of Professional and Other Misconduct and Conduct of Cases) Rules, 2007, he urged that the proceedings be dropped as time-barred and contrary to principles of natural justice.

Issue Raised: Whether disciplinary proceedings could continue after an unexplained and inordinate delay of about 17 years, in light of Rule 12 of the Chartered Accountants (Procedure of Investigations of Professional and Other Misconduct and Conduct of Cases) Rules, 2007, and the principles of natural justice.

Board’s Decision: The Board considered the objection under Rule 12. It noted that the event that gave rise to the charge sheet was from the year 2008, while the first communication from the Institute was made only in 2018, showing a ten-year delay even in the commencement of proceedings. The total lapse from the events occurring to the current stage was some seventeen years. The Board observed that such an excessive and unexplained delay worked substantial prejudice to the Respondent’s right to a fair defence, making continuation of proceedings contrary to principles of natural justice.

The Board declared that continuing proceedings were not tenable. It thus accepted the Respondent’s plea and disposed of the case, acquitting him of Other Misconduct under Item (2) of Part IV of the First Schedule to the Chartered Accountants Act, 1949. The Board explained that its conclusion was limited only to the limitation issue and not on the merits.

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