CA who threatens client guilty of misconduct because such act is not expected by members of a civil society being a Chartered Accountant – High Court

CA who threatens client guilty of misconduct because such act is not expected by members of a civil society being a Chartered Accountant – High Court

ABCAUS Case Law Citation:
995 2016 (08) HC

Brief Facts of the Case:
A complaint was made to ICAI against a Chartered Accountant (CA) alleging that the complainant had engaged the services of the said CA to file income tax returns (ITRs) of himself and his family members and as and when called upon to pay professional charges the complainant used to pay the professional charges.

However the complainant receive a bill from the CA on November 10, 2004 demanding a sum of Rs. 3.8 lacs as professional fee for filing the returns of the complainant for 19 years commencing from the financial year 1985-86 till the financial year 2004-05. The bill was raised @ Rs. 20,000/- per annum. As per the complainant, the bill was accompanied by a threatening written communication which was unethical. The communication contained a threat to initiate legal action and with a limb informing the complainant that for for the year 2004-05 the Assistant Commission of Income Tax desired to verify the details of the loans stated to had been advanced by the complainant’s mother. Whereas the the complainant submitted that infact no such order was ever passed by the ACIT.

ICAI took the cognizance of the complaint and the Disciplinary Committee (DC) heard the matter.

The DC opined that it was strange that the respondent would raise a bill for 19 years services rendered in the year 2004 and found no explanation from the respondent as to why for each year as and when professional servicers were rendered a bill was not raised.

With respect to the written communication appended to the bill, the DC opined that the language was threatening and not expected of a Chartered Accountant who is looked upon by the society as a dignified professional. In few web portal/social groups this case has been misquoted as CA being held guilty of misconduct for threatening legal proceedings to recover his dues whereas it was the threat pertaining to the second part of the note (threatening in the name of Income Tax) which was found to be of aggravating nature.

The D. Committee therefore held that the CA was guilty of the misconduct i.e. annexing a note to the bill dated November 10, 2004 which contained a language not expected from a Chartered Accountant. Accordingly the Council of ICAI recommending penalty of reprimand to the CA as contemplated by Section 21(6)(b) of the Chartered Accountants Act, 1949.

Accordingly, a reference was made by the Council of ICAI to the High Court by the Institute of Chartered Accountants under Section 21(5) of the Chartered Accountants Act, 1949.

Held by the High Court:
The Court opined that a professional who threatens a client would certainly commit a misconduct because the act is of a kind which is not expected by members of a civil society to be committed by a professional. The Court approved the reprimand penalty as decided by the Council of the ICAI.