TaxTMI 
TaxTMI 
TaxTMI 
2019 (8) TMI 117
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....stitute of Chartered Accountants of India (hereafter 'ICAI'). The impugned order dated 10.02.2014 was passed pursuant to proceedings initiated on a complaint filed by the petitioner against respondent no.3, with ICAI. By the impugned order dated 10.02.2014, the Disciplinary Committee had found respondent no.3 to be guilty of professional misconduct falling within Clause (8) of Part I of the First Schedule to the Chartered Accountants Act, 1949 (hereafter the 'ICAI Act'); however, the Disciplinary Committee had absolved respondent no.3 of the charges of professional misconduct falling within Clauses 7 and 9 of Part I of the Second Schedule to the Act. By an order dated 21.08.2014, the Disciplinary Committee had imposed a punishment of reprimand on respondent no.3 on account of his misconduct, as found. 3. According to the petitioner, the decision of the Disciplinary Committee absolving respondent no.3 of professional misconduct under Clauses 7 and 9 of Part I of the Second Schedule to the Act is erroneous and, therefore, the petitioner filed a petition seeking review of the said decision. The Disciplinary Committee did not entertain the said review petition on the ground that there....
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....ouchers. It was alleged that in this manner, funds had been siphoned off by the petitioner and his wife. 11. Next, it was alleged that a sum of Rs.10,00,000/- had been misappropriated by the petitioner and his wife by showing the same as loan processing expenses paid to various professionals. It was further alleged that a large amount was accounted for in the name of M/s M.J. Enterprises instead of the Trust. Next, it was alleged that the petitioner had fraudulently obtained reimbursement of payment of Rs.17,000/- for the purchase of an expensive watch and the same had no connection with the functioning of the school. It is also alleged that the petitioner had fabricated a resolution so as to nominate his wife on the Board of Management of the Delhi Public School. 12. It is stated that on 17.08.2004, respondent no.3 had submitted a report, which substantiated the allegations made in the show cause notice. The petitioner contends that the said report was fabricated and malicious. He also alleged that respondent no.3 had entered into a conspiracy with other trustees to oust the petitioner and his wife. He also pointed out that the allegations made in the show cause notice (which wa....
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.... respondent no.3 accepting the assignment without communicating with the previous auditor. 17. It was alleged that respondent no.3 had been appointed at a meeting held on 26.08.2004 which was attended by Sh. Vipin Mahajan. The petitioner alleged that Sh. Mahajan had been removed as a trustee of the Trust at a meeting held on 03.03.2003 and, therefore, respondent no.3's appointment as an auditor was irregular. The Disciplinary Committee examined the said contention and found that Sh. Vipin Mahajan was removed at a meeting purportedly held on 03.03.2003, which was shown to have been attended by only four trustees out of eight trustees. The Disciplinary Committee found that a quorum of 3/4th majority was required to remove a managing trustee and, therefore, the said resolution was invalid. 18. The Court also noted that the said dispute had been agitated in a Civil Suit (Civil Suit No. 266/2004 captioned "Rajiv Bhatnagar and Mrs Rasika Bhatnagar v. Saraswati Education Foundation"). The Court had noted that the Trust could invalidate the resolution in question and in fact had done so by passing a resolution dated 11.08.2004, whereby annulling the resolution removing Mr Vipin Mahajan a....
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....ndhar rendered in Civil Suit No. 266/2004 was subject matter of appeal and, therefore, could not be relied upon, is unmerited. The Disciplinary Committee was not concerned with the internal disputes between various trustees. The scope of examination before the Disciplinary Committee was limited to examining whether respondent no.3 had misconducted himself by accepting an appointment on 26.08.2004, which was made pursuant to a resolution of the Board of Trustees wherein Mr Vipin Mahajan participated as a trustee. 24. Plainly, respondent no.3 was not required to take a view on the validity of the resolution dated 11.08.2004, passed by the Board of Trustees, annulling the earlier resolution removing Vipin Mahajan as a trustee. Therefore, notwithstanding the disputes between the trustees, respondent no.3 could not have been held to have misconducted himself on that ground. 25. Having stated the above, this Court is also of the view that there is no flaw in the conclusion of the Disciplinary Committee in rejecting the said allegation. The Disciplinary Committee had noticed that the resolution dated 03.03.2003 was passed at a meeting which was attended by only four trustees. It had not....
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....lled upon to comment on his own work. Respondent no. 3 was simply appointed as an auditor to audit the accounts of the Trust although, the same was termed as a statutory auditor. Mr Mehta was pointedly asked whether there was any material to indicate the scope of audit to be performed by respondent no.3. However, he was unable to show any document to indicate the same. 31. Although, it was alleged that respondent no. 3 had submitted a statutory report, the petitioner had not produced any material on record to establish the same. Mr Mehta had referred to the opinion of the Director, Discipline of ICAI to contend that two reports were submitted by respondent no.3. However, this is precisely the allegation that was examined by the Disciplinary Committee and it was found that the petitioner had merely signed Form 10B under the Income Tax Rules. And, this was required for the trust to claim benefit of Section 12A(b) of the Income Tax Act, 1961. 32. In view of the above, this Court is unable to accept that the decision of the Disciplinary Committee of ICAI is erroneous or warrants any interference by this Court. 33. At this stage, it is material to note that considerable judicial time....