In ICAI v. M.S Rathi, a two judge bench of the Supreme Court upheld the order of the Bombay High Court wherein the High Court held that professional misconduct cannot be alleged against CA if the Disciplinary Committee couldn’t prove manipulation of figures in Certificate.
In the instant case, disciplinary action was taken by the disciplinary committee of the appellant, Institute of Chartered Accountants of India (ICAI) against a Chartered Accountant for issuing certificates for consumption of raw materials showing the value of imported raw material as CIF value to the units without seeing the records since imported value of the raw materials should have been shown as value of the raw materials and not the CIF value. Further, the units did not maintain any record for past production, still the certificates were issued which shows that the figures were manipulated and the certificates issued were not correct.
The Disciplinary Committee found that while issuing the certificates to the units, the respondent CA had failed to obtain sufficient information to warrant the expression of his opinion and found him guilty of professional misconduct which would attract Clauses (7) and (8) of Part I of the Second Schedule to the Chartered Accountants Act, 1949 r/w Sections 21 and 22 of the said Act.
Subsequently, the Institute recommended to the High Court that the Respondent be reprimanded wherein the Court set aside the findings of the Disciplinary Committee and held in favour of the respondent.
While doing so, the High Court held that the allegation regarding non-maintenance of books of accounts was without any basis for the reason that neither the complainant nor the Disciplinary Committee have chosen to call for those books of accounts.
Aligning with the above findings of the High Court, a bench of R K Agarwal and Abhay Manohar Sapre observed that “the High Court has considered the statements made on behalf of the Respondent to hold that there is no material on record to establish that the units had paid an amount more than what was mentioned in the CIF value or purchase vouchers and merely because the sellers from whom the units had purchased the goods had imported the same, it does not mean that the units in question had paid the custom duty. Thus, no adverse inference can be drawn against the Respondent on this ground.”
Read the Full Text of the order Below
