TaxTMI 
TaxTMI 
2016 (9) TMI 658
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....kar Jha, the Chartered Accountant who has been indicted. 2. We have heard Sh.Rakesh Aggarwal who has very ably and painstakingly taken us through the record culminating in the report of the Disciplinary Committee constituted to look into a complaint dated July 05, 2005 lodged with the Institute of Chartered Accountants by the Assistant General Manager (Inspection) of the Punjab and Sindh Bank Ltd. 3. M/s.J.S.Bedi and Co., Chartered Accountants of which Sh.U.S.Jha was a partner/member, he being a Chartered Accountant, were appointed concurrent auditors to audit the account of the Branch of Punjab and Sindh Bank New Delhi at Chandani Chowk for the period July 01, 2003 to June 30, 2004. As per the terms of appointment the audit spanned t....
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....in question and that it had carried out the concurrent audit under his supervision but denied any fraud perpetrated for the period of the audit. But surprisingly it was also simultaneously pleaded that the purported frauds began in July, 2002 and continued till April, 2005 and went undetected. A defence wherefrom we can only gather that the respondent intended to highlight that the frauds were of a kind which could not be detected during routine audits. Unfortunately we have no assistance from the side of the respondent and therefore do not have the benefit of what was intended to be said by the respondent because in the same breath it is pleaded that there was no fraud committed for the period covered in the audit and in the same breath it....
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....ecently a fraud allegedly committed by a staff member had been detected and that while carrying out the audit newly opened accounts should be kept under strict scrutiny. The committee opined that with a little more diligence the concurrent auditors could have unearthed the modus operandi. The conclusion is that the respondent would be guilty of professional misconduct falling within the meaning of clause (5), (6) and (7) of Part I of Second Schedule read with Sections 21 and 22 of the Chartered Accountants Act, 1949. 7. The report was considered by the Council at its meetings held on January 16 and 17, 2011. After deliberating on the report and the respondent's response, the Council opined as under:- "8.2 The Council after deliberatio....
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....t with which he is concerned in a professional capacity. However, the Council keeping in view the scope of work assigned to a concurrent auditor and also in the instant matter wherein it was almost impossible to detect the fraud committed over a period of time even by preceding and successive auditors and/or during inspection by the senior officer of Bank and inspection audit done by RBI, was of the view that in the instant matter where undisclosed material fact or unreported material misstatement had emanated as a result of the fraud committed by an employee of the Bank in the said Branch, the same cannot be expected to be within the knowledge of the Respondent and certainly there was no malafide intention on his part. Hence, the Council h....
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....tively before it, the Council decided as under:- (a) to accept the report of the Disciplinary Committee to the extent wherein the Respondent was held guilty of professional misconduct falling within the meaning of Clause (7) of Part I of the Second Schedule read with Sections 21 and 22 of the Chartered Accountants Act, 1949. (b) NOT to accept the report of Disciplinary Committee to the extent wherein the Respondent was held guilty of professional misconduct falling within the meaning of Clauses (5) and (6) of Part I of the Second Schedule read with Sections 21 and 22 of the Chartered Accountants Act, 1949. 10. In respect of (a) above, the Council also decided to recommend to the High Court that the name of the Res....