Punjab Sand Mining Case: ICAI Imposes One-Month Suspension on Chartered Accountant

A complaint was filed by an income tax investigation officer alleging the involvement of CA Surinder Kumar, a practicing Chartered Accountant, in partnership firms formed in connection with the Punjab Sand Mining Auctions case. It was alleged that the partnerships were created for carrying on mining-related activities and that the CA held a profit-sharing interest while continuing professional practice.

The matter was examined by the Director (Discipline), following which the Board of Discipline confined its inquiry to violations under Items (4) and (11) of Part I of the First Schedule to the Chartered Accountants Act, 1949.

Main Issue: Whether a chartered accountant in practice can enter into partnerships with non-members and business entities without prior permission of the ICAI, even if no actual business activity is carried out.

Board of Discipline’s Ruling: The Board of Discipline held that merely entering into partnership deeds with non-members for carrying on mining and related activities constituted professional misconduct. It ruled that prior permission under Regulation 190A was mandatory and that actual commencement of business was irrelevant.

The Board found the CA guilty of professional misconduct under Items (4) and (11) of Part I of the First Schedule to the Chartered Accountants Act, 1949. The Board ordered the removal of the CA’s name from the Register of Members for a period of one month.

To Read Full Judgment, Download PDF Given Below