Facts of the Case

The present disciplinary proceedings arose from a complaint filed by Shri Sudip Roy, Superintendent of Police and Head of Branch, Central Bureau of Investigation, Economic Offence Wing, Kolkata, against CA Gopal Pitti (M. No. 053621), partner of M/s G. Pitti & Co., Kolkata.

The complaint emanated from a CBI investigation registered on 2 September 2016 concerning financial irregularities linked to a car loan transaction involving a second-hand Honda City car bearing registration number WB-06C-8250.

The investigation revealed that the vehicle, already owned by Shri Rakesh Kumar Singh (then Chief Manager, Allahabad Bank), was allegedly shown as being sold through M/s First Drive, a dealer in second-hand vehicles, on the basis of fabricated bills and delivery challans. These documents were allegedly used to obtain a car loan of Rs. 4 lakhs from Allahabad Bank.

The role attributed to the Respondent was that he connived with one Shri Anil Agarwal of M/s First Drive in preparing and circulating fake documents and further assisted in routing and adjusting an amount of Rs. 4,70,000 through Hena Vincom Pvt. Ltd., ultimately handing over cash to Shri Rakesh Kumar Singh.

Based on the Director (Discipline)’s investigation and subsequent proceedings, the matter was placed before the Board of Discipline under Section 21A of the Chartered Accountants Act, 1949.

 

Issues Involved

  1. Whether CA Gopal Pitti was involved in preparation and circulation of fake bills and delivery challans relating to the sale of a second-hand car.
  2. Whether the Respondent connived with third parties to facilitate misuse of bank loan funds.
  3. Whether such conduct amounted to “Other Misconduct” under Item (2) of Part IV of the First Schedule to the Chartered Accountants Act, 1949 read with Section 22.
  4. What disciplinary action, if any, was warranted under Section 21A(3) of the Act.

 

Petitioner’s Arguments

The Complainant, through the CBI investigation, alleged that:

  • The Respondent knowingly assisted in creation and circulation of false documents showing sale of a second-hand Honda City car.
  • These documents were used by a senior bank official to obtain a car loan fraudulently.
  • The Respondent played an active role in adjusting and routing funds amounting to Rs. 4,70,000 to conceal the fraudulent transaction.
  • Such acts constituted serious professional misconduct affecting public trust and the integrity of the profession.

The Complainant relied on recorded statements, documentary evidence seized during investigation, and the overall chain of transactions to establish the Respondent’s complicity.

 

Respondent’s Arguments

The Respondent denied involvement in the alleged fraudulent transaction and submitted that:

  • The events in question pertained to transactions more than ten years old, making retrieval of documentary evidence difficult.
  • Allegations were primarily based on third-party statements which were contradictory in nature.
  • No opportunity for cross-examination of third parties was provided.
  • The bill forwarded by the Respondent through email was not used for obtaining the loan, as the loan application had already been submitted earlier on the basis of a different bill.
  • Payments routed through Hena Vincom Pvt. Ltd. did not establish his direct involvement in any cash transaction.

The Respondent sought quashing of charges on the ground of lack of direct evidence.

 

Court Order / Findings of the Board of Discipline

After examining the charge sheet, recorded statements, documentary evidence, and submissions of the Respondent, the Board of Discipline made detailed observations.

The Board found that:

  • The Respondent was well aware of the parties involved and the nature of the transaction.
  • The Respondent had prior acquaintance with Shri Anil Agarwal of M/s First Drive and actively facilitated preparation and circulation of documents.
  • The Respondent played a key role in adjusting the amount of Rs. 4,70,000 by routing it through Hena Vincom Pvt. Ltd. and handing over cash to the bank official.
  • The Respondent himself admitted during the hearing that he had mistakenly emailed the bills, which demonstrated his involvement.

On appreciation of the entire material, the Board concluded that the Respondent had connived in preparing fake documents and facilitating a fraudulent loan transaction.

Accordingly, the Board held CA Gopal Pitti guilty of “Other Misconduct” under Item (2) of Part IV of the First Schedule to the Chartered Accountants Act, 1949.

Considering the facts, misconduct, and representation made by the Respondent at the hearing, the Board, exercising powers under Section 21A(3) of the Act, decided to reprimand the Respondent.

 

Important Clarification

  • The order reinforces that involvement of a Chartered Accountant in preparation or facilitation of false documents, even indirectly, amounts to serious professional misconduct.
  • Connivance with third parties in financial irregularities undermines public confidence and attracts disciplinary action irrespective of criminal conviction.
  • Even where mitigating circumstances are pleaded, established misconduct under the Chartered Accountants Act warrants appropriate disciplinary sanction.
  • Reprimand by the Board of Discipline serves as a formal censure and remains a significant adverse finding on professional record.

 

Professional Significance

This decision highlights the high ethical threshold expected from Chartered Accountants, especially where transactions involve public institutions, bank finance, and documentary authenticity. It serves as an important precedent on “Other Misconduct” under the First Schedule of the Chartered Accountants Act, 1949.

 LINK TO DOWNLOAD THE ORDER
https://www.mytaxexpert.co.in/uploads/1768722380_Sh.VinodK.KalaGurgaonvsCA.MunishMehtaM.No.098142NewDelhi.pdf 

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