ICAI to give clear reason while recommending the de-registration of a CA: Supreme Court
The Hon’ble Supreme Court of India, in the case of D.K. Agrawal v. Council of The Institute of Chartered Accountants of India [Civil Appeal No. 6337 of 2021 decided on September 23, 2021] has held that the Council of the Institute of Chartered Accountants of India (“Respondent”) needs to necessarily record reasons in its report as to why a CA must be de-registered. It has been held that the Respondent needs to give its own independent findings while accessing the need of de-registering a CA for misconduct instead of making recommendations mechanically. The same was absent in the present case. Hence, the appeal was allowed.
D.K. Agrawal (“Appellant”) is a chartered accountant having his Office as M/s, Dinesh K. Agrawal & Co., Chartered Accountants.
In 2 separate instances, the Office of the Inspecting Assistant Commissioner of the Income Tax had sent a communication to ICAI alleging that the Appellant was indulging in professional misconduct and at one instance had interpolated some of assessees’ copies of challans to show higher figures and claimed the higher amount from them.
The Respondent was of the prima facie opinion that the Appellant was guilty of professional and/or other misconduct and accordingly referred the case to the Disciplinary Committee constituted under the Chartered Accountants Act, 1949 (“the CA Act”).
After some rounds of hearing opportunity being afforded to the Appellant in regard of different instance of misconduct, in terms of Section 21(5) of the CA Act, the disciplinary cases were forwarded to the Allahabad High Court to pass necessary orders in accordance with Section 21(6) of the CA Act with the recommendation that the name of the Appellant should be removed from the Register of the Members.
Allahabad High Court accepted the recommendations of the Respondent directed removal of the Appellant’s name from the Register of the Membership permanently. The Appellant has preferred this Appeal against the said actions.
- The Hon’ble Supreme Court observed that the order of the Respondent, imposing a penalty upon the member, is appealable by the members aggrieved before the High Court. Accordingly, in such circumstances, it is all the more necessary that the recommendation/order of the Respondent should contain reasons for the conclusion.
- The Respondent was under an obligation to record a finding that the guilt of the Appellant was beyond reasonable doubt and a mechanical recommendation to the High Court without recording reasons shall be untenable. Such actions violate the principles of natural justice.
- Further, it was held that the Allahabad High Court has also erred in accepting the recommendations of the Respondent without applying its own logic to this aspect of the matter.
- Accordingly, the Appeal was allowed whereby the orders of the Allahabad High Court made on the recommendation of the Respondent were quashed.
- Further, the Respondent has been directed to take up the matter afresh and dispose it in accordance with law and in the light of the observations made.
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