Categories: Accounting Firm

ICAI’s Duty to Investigate on financial misconduct Non-Practicing CAs

Bombay High Court : Directive to ICAI for former CA professional ethics enforcement

This Bombay High Court ruling in Principal Commissioner of Income Tax vs. M/s Buniyad Chemicals Ltd. underscores the regulatory responsibilities of The Institute of Chartered Accountants of India set up by an act of parliament. The Institute of Chartered Accountants of India is established under the Chartered Accountants Act in addressing financial misconduct by former CAs. The bench of Justice M.S. Sonak and Justice Jitendra Jain questioned whether ICAI is taking action against CAs who, despite surrendering their COP, are involved in illegal financial activities.

Key Takeaways from the Bombay High Court Judgment:

Key Takeaways from the Bombay High Court Judgment in the matter of Principal Commissioner of Income Tax vs. M/s Buniyad Chemicals Ltd  

  • ICAI’s Duty to Investigate Non-Practicing Chartered Accountants: The court has directed The Institute of Chartered Accountants of India to inquire into Chartered Accountants who, despite surrendering their Certificate of Practice, misuse their professional background for fraudulent activities.
  • Mukesh Choksi & Accommodation Entries: Mukesh Choksi, director of Buniyad Chemicals, admitted to Practicing as a Chartered Accountant from 1978 to 1993 before surrendering his Certificate of Practice. And engaging in accommodation entry business since 2000 to aid tax evasion through shell companies. Moreover that Facing multiple tax department actions, including searches in 2002, 2006, and 2009.
  • Court’s Concern on ICAI’s Oversight: The HC questioned whether ICAI has the power to act against individuals who misuse their Chartered Accountant background after surrendering Certificate of Practice. It highlighted that professional accountability should extend beyond active practice to prevent financial fraud.
  • ICAI’s Regulatory Mandate Strengthened: The Institute of Chartered Accountants of India has been directed to examine whether Choksi’s actions constitute professional misconduct under the Chartered Accountants Act, 1949. This ruling reinforces The Institute of Chartered Accountants of India’s disciplinary role in tackling financial irregularities within the profession.
  • ICAI Directed to Conduct Inquiry : The Bombay HC has now instructed ICAI to investigate whether Mukesh Choksi’s actions amount to professional misconduct under the Chartered Accountants Act, 1949. If found guilty, ICAI could initiate disciplinary proceedings.

In summary Bombay High Court ruling on ICAI ethics enforcement on former CA.

This Bombay High Court ruling is a significant directive for the ICAI to take strict action against CAs operating without a COP also engaged in misconduct. High Court judgement strengthens ICAI’s authority to act against former professionals misusing their expertise. Also Emphasizes professional accountability beyond active practice. High Court ask to reinforce judicial oversight on financial irregularities. And Sends a clear message against fraudulent practices like accommodation entries for CA’s. Bombay High Court Judgment Sets a precedent for stricter oversight of financial misconduct by ex- Chartered Accountants.

Rajput Jain & Associates

Rajput Jain & Associates is a Chartered Accountants firm, with it's headquarter situated at New Delhi (the capital of India). The firm has been set up by a group of young, enthusiastic, highly skilled and motivated professionals who have taken experience from top consulting firms and are extensively experienced in their chosen fields has providing a wide array of Accounting, Auditing, Taxation, Assurance and Business advisory services to various clients and their stakeholders. Rajput jain & Associates, a professional firm, offers its clients a full range of services, To serve better and to bring bucket of services under one roof, the firm has merged with it various Chartered Accountancy firms pioneer in diversified fields. We have associates all over India in big cities. All our offices are well equipped with latest technological support with updated reference materials. We have a large team of professionals other than our Core Team members to meet the requirements of our prospective clients including the existing ones. However, considering our commitment towards high quality services to our clients, our team keeps on growing with more and more associates having strong professional background with good exposure in the related areas of responsibility.

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