HC stays ban on CA for vacancy of Chairperson in Appellate Authority ICAI

High Court stays ban on Chartered Accountant for professional misconduct due to non appointment of Chairperson in Appellate Authority ICAI

In a recent judgment, Hon’ble Delhi High Court stayed ICAI notification removing the name of a chartered accountant for alleged professional misconduct as the office of the Chairperson of the Appellate Authority, ICAI is lying vacant.

ABCAUS Case Law Citation:
ABCAUS 4178 (2024) (07) HC

In the instant case, the Chartered Accountant in question had carried forward significant balances as ‘Deferred Revenue Expenditure’ and ‘Capital Work in Progress’ in subsequent financial years, without qualifying his audit reports.

The ICAI noted that in the statement recorded the CA stated that it was not known.at the time of preparation of the balance sheet as to whether the expenses incurred were to be capitalized or were to be treated as Deferred Revenue Expenditure and finally, the same was kept as ‘CWIP’ in the balance sheet.

The ICAI held that the admission of the CA itself showed that at the time of audit, compliance of the conditions of Para 44 of Accounting Standard (AS) 26 was not checked by the CA and the amount was recognized in an arbitrary manner. Hence, it amounted to Professional Misconduct falling within the meaning of Items (6), (7) and (8) of Part I of the Second Schedule of the Chartered Accountants Act, 1949.

Accordingly, the Disciplinary Committee of ICAI ordered removal of name of the CA from the register of members for a period of Two years. The removal was also notified.

However, the CA approached the Hon’ble High Court seeking to quash and stay the operation of the order of the Disciplinary Committee as well as the publication giving effect to the removal of his name in the Official Gazette.

Before the Hon’ble High Court, the ICAI fairly admitted that the Impugned Orders are amenable to appellate scrutiny. He accepted that currently, the office of the Chairperson of the Appellate Authority, ICAI is lying vacant. It was also pointed out that the appointment for the said vacancy has to be done by the Ministry of Corporate Affairs. It was also stated by the Institute that till the stay application in appeal filed by the CA is heard, the Impugned Order shall not be implemented.

The Hon’ble High Court observed that several writ petitions are being filed before the Court in view of the vacancy in the office of the Chairperson of the Appellate Authority, ICAI, a copy of this order be sent to the MCA with a direction to expedite the process for the appointment of Chairperson of Appellate Authority, ICAI.

The Hon’ble High Court directed that till the preliminary hearing of appeal filed by the CA, the Impugned Penalty Order and the consequential Gazette notification shall be kept in abeyance.

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