Facts of the Case

The matter arose from information received by the Institute of Chartered Accountants of India based on a self-contained note of the CBI relating to alleged involvement of the respondent, CA Radhey Shyam Bansal, in providing accommodation entries and fake bills. Disciplinary proceedings were initiated under the Chartered Accountants Act, 1949. The Director (Discipline) examined the information, including call transcripts, forensic examination reports and other material forwarded by the investigating agency. The Board of Discipline, in its report dated 30.01.2020, formed an opinion that the respondent was guilty of Professional and Other Misconduct falling within the meaning of Clause (2) of Part III and Clause (2) of Part IV of the First Schedule to the Act.

Pursuant thereto, action under Section 21A(3) was contemplated, and the respondent was granted an opportunity of personal hearing. The respondent appeared before the Board on 09.03.2020, was put on oath, and made both oral and written submissions, seeking leniency.

Issues Involved

Whether the respondent Chartered Accountant was guilty of Professional Misconduct and Other Misconduct under Clause (2) of Part III and Clause (2) of Part IV of the First Schedule to the Chartered Accountants Act, 1949 for alleged involvement in providing accommodation entries and fake bills, and whether disciplinary action under Section 21A(3) was warranted.

Petitioner’s Arguments

The disciplinary proceedings were based on material received from the CBI, including a self-contained note, call transcripts and forensic examination reports, which allegedly indicated the respondent’s involvement in arranging accommodation entries and issuance of fake bills. It was contended that such conduct was unbecoming of a Chartered Accountant and violated the highest ethical standards expected of members of the profession.

Respondent’s Arguments

The respondent raised several objections on facts and law. He contended that the information received did not satisfy the procedural requirements under the 2007 Rules, that no formal complaint or charge-sheet was supplied, and that reliance on call transcripts without original recordings was improper. It was argued that excerpts of conversations were taken out of context and that there was no direct evidence linking him to any illegal activity. The respondent also objected to being charged under Clause (2) of Part III without issuance of a specific show cause notice and pleaded that the documents relied upon were sham and lacked evidentiary value. He sought a lenient view while reiterating his denial of misconduct.

Court Order / Findings

The Board of Discipline carefully examined the entire record, including the respondent’s oral and written submissions. The Board observed that the objections raised by the respondent had already been considered and dealt with in its findings. It held that there was sufficient material on record, including the self-contained note of the CBI, forensic examination report and call transcripts, to conclude that the respondent was involved in activities such as providing accommodation entries and fake bills. The Board held that such conduct was clearly unbecoming of a Chartered Accountant and not befitting the highest ethical standards expected of the profession. The misconduct was held to be conclusively proved, attracting Clause (2) of Part III and Clause (2) of Part IV of the First Schedule to the Chartered Accountants Act, 1949 read with Section 22.

Important Clarification

The Board clarified that involvement of a Chartered Accountant in activities facilitating accommodation entries or fake billing, even if established on the basis of investigative material and surrounding circumstances, constitutes grave professional and other misconduct, warranting strict disciplinary action to uphold the integrity of the profession.

Final Outcome

The Board of Discipline, ICAI, held that CA Radhey Shyam Bansal was GUILTY of Professional Misconduct and Other Misconduct under Clause (2) of Part III and Clause (2) of Part IV of the First Schedule to the Chartered Accountants Act, 1949. In exercise of powers under Section 21A(3), the Board removed his name from the Register of Members for a period of 45 days and imposed a fine of ₹75,000, payable within 60 days from receipt of the order, by order dated 21.05.2024.

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