Chartered accountant's duty for private clients is limited to due diligence and accurate reporting, absent collusion or deception.

A chartered accountant engaged by private assessees must exercise due skill and diligence, prepare accurate statements from the accounts supplied, and avoid misrepresentation or assistance in false accounts. The court distinguished this role from a company audit, where wider scrutiny is required for shareholder protection. For individual clients, the accountant is not obliged to independently verify the truth or completeness of the accounts unless there is collusion, falsehood, or misleading conduct. On the facts, the statements were treated as based on the accounts produced by the clients, and no connivance or deception was found; the accountant was therefore not guilty of gross negligence or unfitness to remain a member of the Institute.

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Issues: Whether the respondent, a chartered accountant engaged by private assessees to audit their accounts and prepare income-tax returns, was guilty of gross negligence for not independently verifying the truth and completeness of the accounts before forwarding the statements to the Income-tax Department.

Analysis: The reference turned on the scope of an accountant's duty when acting for individual clients. A distinction was drawn between the audit of a company, where the auditor must scrutinise the directors' accounts for the protection of shareholders, and the case of private assessees, where the accountant acts for the clients and prepares statements on the basis of the accounts produced by them. The accountant must exercise due skill and diligence, must not misstate facts, and must not assist in false accounts, but is not required to investigate for himself whether the client's accounts are true or reliable. On the facts, the statements made by the respondent were treated as statements based on the accounts produced, and there was no finding that he had connived in any falsehood or misled the department.

Conclusion: The respondent was not guilty of gross negligence or conduct rendering him unfit to be a member of the Institute.

Ratio Decidendi: A chartered accountant acting for individual clients is bound to prepare accurate statements from the accounts produced and to avoid misrepresentation, but is under no duty to independently probe the truth or completeness of those accounts absent collusion or misleading conduct.

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