Facts of the Case

The complainant, CA Sukumar Datta, was appointed as the Internal Auditor of the Institute of Indian Foundrymen (IIF) for the Financial Year 2017–18. The complainant alleged that the respondent, CA Deepak Gulati, accepted appointment as Internal Auditor of IIF without first communicating in writing with him, being the previous internal auditor, as mandated under Item (8) of Part I of the First Schedule to the Chartered Accountants Act, 1949.

The complaint was placed before the Board of Discipline under Section 21A of the Act. The final hearing was conducted on 07.05.2024 at ICAI Bhawan, New Delhi.

Issues Involved

Whether the respondent Chartered Accountant was guilty of professional misconduct under Item (8) of Part I of the First Schedule to the Chartered Accountants Act, 1949 for allegedly accepting appointment as Internal Auditor without prior written communication with the previous internal auditor.

Petitioner’s Arguments

The complainant alleged that no prior written communication was received from the respondent before acceptance of the internal audit assignment, and therefore the respondent violated the mandatory requirement of Item (8) of Part I. The complainant, however, informed the Board that he was unable to attend the final hearing and had nothing further to add beyond his earlier submissions.

Respondent’s Arguments

The respondent submitted that he had duly complied with the requirement of prior communication by sending a written letter to the complainant through Registered Post with Acknowledgement Due on 04.08.2018, which was the same date on which he received the appointment letter. The respondent explained that postal tracking reports are available online only for a limited period and hence could not be downloaded at the time of initial submission.

To substantiate compliance, the respondent produced correspondence from the Postmaster, Karol Bagh Post Office, New Delhi, confirming that the registered article bearing No. RD188030173IN was booked on 04.08.2018 and that the postal record had subsequently been weeded out as per departmental policy.

Court Order / Findings

The Board of Discipline examined the submissions and evidence produced by the respondent, including the confirmation issued by the Postal Department. The Board noted that the respondent had sent the written communication to the complainant by Registered Post with Acknowledgement Due on the same date on which the appointment was received. The Board observed that postal confirmation sufficiently established compliance with the communication requirement under Item (8) of Part I.

Considering the sufficiency and validity of the documentary evidence and the absence of any rebuttal from the complainant, the Board concluded that the respondent had duly complied with the statutory mandate and that no professional misconduct was made out.

Important Clarification

The Board clarified that compliance with Item (8) of Part I does not require proof of delivery beyond reasonable documentary evidence of dispatch. Where communication to the previous auditor is duly sent by Registered Post with Acknowledgement Due, and such dispatch is corroborated by postal records, the requirement of prior written communication stands satisfied.

Final Outcome

The Board of Discipline, ICAI, held that CA Deepak Gulati was NOT GUILTY of Professional Misconduct under Item (8) of Part I of the First Schedule to the Chartered Accountants Act, 1949. The case was closed under Rule 15(2) of the Chartered Accountants (Procedure of Investigations of Professional and Other Misconduct and Conduct of Cases) Rules, 2007, by order dated 12.06.2024.

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