The Disciplinary Committee (DC) of Institute of Chartered Accountants of India (ICAI) recently imposed a penalty of Rs. Five Lakhs along with 3 months of probation period on Chartered Accountant Rajender Kumar for alleged conduct of tax audit Section 44AB of the Income Tax Act, 1961 beyond the limit prescribed by the Institute, amounting to professional misconduct.
The Chartered Accountant was found to have conducted 1532 tax audits in the period 2010-2014.
The CA, represented by CA Shresht Tayal, submitted the case of K Bhagavatheeswaran v. ICAI (1999) in which it was held that the limit on tax audits were unconstitutional. He also submitted that the pendency of various writ petitions against the limit on tax audits should be taken into consideration and his case must be kept in abeyance until a judicial decision is taken by the High Courts or Supreme Court.
However, the DC observed that the limitation is a reasonable restriction that has been upheld in a number of cases including Virginia Tobacco Growers Association v. Union of India & Ors. (2000).
The DC further opined during the hearings that the respondent was expected to adopt the highest standard of ethical behaviour and professional compliance of the Council General Guidelines. It was also observed that the CA had conducted 1397 audits in excess of the prescribed limit.
Observing as above, the Disciplinary Committee gave the punishment of fine and probation to the Chartered Accountant. The Committee also directed the fine amount to be paid within 3 months of receipt of the order.
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