TaxTMI 
TaxTMI 
TaxTMI 
2013 (12) TMI 1769
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.... period of six months. [2.0] The matter arises out of a complaint filed by one Shri P. Sobhanadri, Head­Audit, Global Trust Bank Ltd. [hereinafter referred to as "the complainant"] against the respondent - Shri Arun Purshottam Kapadia, who is a practicing chartered accountant. The complainant made the following allegations against the respondent. A. Mahadev Associates - Escrow Account - Deviations observed: (a) Account was opened on 05.08.2002 without obtaining regular sanction, despite the condition laid down in the in­principle approval that the branch has to submit a detailed proposal with full particulars and take a regular sanction. (b) As per the in­principle sanction, one day's balance has to be maintained in the escrow account whereas end of day's balance was always Nil. (c) Cheques out of Escrow account have to be issued only upto the extent of deposit provided. Though the deposit provided is Rs. 1.00 crore, cheques were issued to the tune of Rs.2.50 crores on every day. (d) As per the approval OD against the deposit has to be given only to meet the cheques issued out of Escrow account. But branch released OD 95% on the....
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.... in the practice of keeping the margin for 110% of LC value until receipt of the provisional invoice and after receipt of provisional invoice, the branch is keeping the 100% of LC value till the receipt of final documents. The Respondent has not brought to the Complainant's notice about this risk to the extent of 10% tolerance level. As on 09.05.2003, the shortfall in margin is to the extent of around Rs.3.00 Crores. Theses deviations were not pointed in the concurrent audit reports. E. Collection of Interest @ 17.5% for not taking delivery of goods/documents within 10 days from the date of Airway Bill - Deviations observed: The branch is not in the practice of collecting the interest @ 17.5% for not taking delivery of Goods/Documents within 10 days from the date of Airway Bill though this was specifically mentioned in the sanction communication and the same was accepted by the Borrowers (Chetan Jewellers & Zaveri Bullion). This has resulted a revenue leakage of Rs.30.53 lac (Rs.11.91 Lac in case of Zaveri & Rs.18.62 Lac in case of Chetan). These deviations were not pointed in the concurrent audit reports. [2.1] The copy of the complaint was sent to the respondent vi....
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.... the parties were again requested to send the written representation, if any, in the matter and that if they so desire, they may appear before the Council either in person and/or through a member of the institute duly authorized by them and to make their oral submissions. The respondent submitted his written representation dated 06.12.2011 on the report of the Disciplinary Committee. It appears that report of the Disciplinary Committee could not be considered by the Council at its meeting held in December 2011. Both the parties were informed vide institutes' letter dated 09.03.2012 that the report of the Disciplinary Committee would be considered by the Council on 27.03.2012 at its meeting to be held from 26th to 28th March 2012. Both the parties were again requested to send the written representation, if any, in the matter and that if they so desire, they may appear before the Council either in person and/or through a member of the institute duly authorized by them and to make their oral submissions. The respondent submitted his further written representation dated 20.03.2012 on the report of the Disciplinary Committee. Both the parties were again informed vide institutes' letter ....
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....r, it was his duty to report to the Head office rather than relying upon and/or trusting the branch office. It is submitted that therefore the respondent has failed to perform his duties as concurrent auditor. [3.2] It is submitted that as such as a concurrent auditor it was his duty to draw the attention of the head office with respect to any lapse on the part of the branch office, which the respondent has failed to perform. [3.3] It is submitted by Shri Soparkar, learned Counsel appearing on behalf of the Council that in respect of charge No.1.1[i] with respect to the escrow accounts of one Mahadev Associates, it has been found that the respondent failed to discharge his professionally assigned duties with best care and diligence and he has been gross negligent in carrying out necessary checks which were required from the respondent as concurrent auditor of the bank. It is submitted that similarly with respect to charge Nos.1.1[ii], 1.1[iii], 1.1[iv], 1.1[v], 1.1[vi] and 1.4, the respondent is found to be gross negligent in carrying out the necessary checks and performed his duties which were required from the respondent as concurrent auditor of the bank. [3.4] It is sub....
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.... + 2003(129) Taxmann 80 (Gujarat) 14. Council of the Institute of Chartered Accountants of India v. Mukesh R. Shah 2004(134) Taxmann 265 (Gujarat) 15. C A Rajesh v. Disciplinary Committee 2012(28) Taxmann Com 100 (Gujarat) Relying upon above decisions and making above submissions, it is requested to accept the recommendations of the Council. [4.0] Though served, nobody appears on behalf of the respondent. Hence, present reference is proceeded further ex parte so far as the respondent is concerned. [5.0] Heard Shri Soparkar, learned Counsel appearing on behalf of the Council of the Institute of Chartered Accountants of India. At the outset it is required to be noted that the respondent is a chartered accountant and member of the Council and was working as concurrent auditor of the complainant - bank. The respondent herein is held to be guilty of professional misconduct for charge Nos.1.1[i], 1.1[ii], 1.1[iii], 1.1[iv], 1.1[v], 1.1[vi]. Charges for which the respondent is held guilty by the Disciplinary Committee as well as Council reads as under: 1.1(i) Account was opened on 05.08.02 without obtaining regular sanction, despite the condition lai....
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....he Hon'ble Supreme Court in the case of Chandra Shekhar Soni v. Bar Council of Rajasthan reported in AIR 1983 SC 1012, the court would not, as a general rule interfere with the concurrent finding of the fact given by the Disciplinary Committee unless the finding is based on no evidence or it proceeds on mere conjectures and unwarranted inferences. In the present case, the finding of fact given by the Disciplinary Authority accepted by the Council are neither demonstrated as perverse and/or contrary to the evidence on record. [5.3] Part I of Second Schedule which is framed under sections 21(3), 21(b)(3) and 22 of the Act described "professional misconduct in relation to chartered accountants in practice". The said clause 7 of part I of Second schedule to the Act prescribes inter alia that if practicing chartered accountant does not exercise "due diligence" or shows "gross negligence" and is grossly negligent in conduct of his professional duties, then, it would amount to professional misconduct. As observed by the learned single Judge in the case of CA Rajesh (Supra), which is reported to be confirmed by the Division Bench, not only 'gross negligence', but 'due diligence' is equa....