The Institute of Chartered Accountants of India (ICAI) has found two Chartered Accountants guilty of professional misconduct for crossing the specified limits of tax audits.

The charge against Respondent CA Mustafa Ahmed and CA Prabir Kumar Chatterjee is that for the financial years in consideration they conducted Tax Audit u/s 44AB of the Income Tax Act, 1961 beyond the specified number prescribed by the Institute vide Council Guidelines. The specified number of tax audits as per section 44 AB is 45 in respect of the financial year under consideration and the limit was increased to 60 in place of 45 for the financial year 2014-15 and onwards.

 It was alleged that the CA Mustafa Ahmed has conducted 621, 966 and 300 number of tax audits u/s 44AB of the Income Tax Act, and CA Prabir Kumar Chatterjee has conducted 179, 253 and 236 number of tax audit u/s 44AB of the Income Tax Act during the financial year 2010-11, 2011-12 and 2013-14 respectively instead of 45 audits they are legally bound to conduct.

The Committee noted that the tax audit assignment under Section 44AB of the Income-Tax Act 1961 is a time-bound assignment unlike other professional fields, and the work of audit requires precision. The certificate of audit issued by a Chartered Accountant under Section 44AB of Income Tax Act 1961 has statutory force for the purpose of Income Tax whereas a Chartered Accountant in practice is free to accept audits under Sections 44AD and 44AE of the Income-tax Act, 1961 without any limit.

Thus, considering all these relevant factors, the Committee viewed that it cannot be said that the ceiling of tax audit limit is in any way unreasonable or discriminatory.

Accordingly, there is no basis for the contention that there is a violation of Article 14 or Article 19(1) (g) of the Constitution of India. It is regulatory in nature and such regulation is permissible under the Chartered Accountants Act, 1949. The Guidelines do not in any way affect the rights of the Chartered Accountant under the Constitution of India being only a reasonable restriction.

Relying on the findings the Disciplinary Committee held that the Respondents in the cases were expected to adopt the highest standard of ethical behavior and professional compliance of the Council General Guidelines, but they failed to do so and hence based on the facts and circumstances of the case, CA Mustafa Ahmed was ordered to be removed from Register Of Members for a period of three months along with a fine of Rs 5,00,000/- that shall be paid within a period of 01 months from the date of receipt of this Order and in case he fails to pay the same as stipulated, the name of the Respondent, CA. Mustafa Ahmed is removed for a period of six months in place of three months from the Register of members. CA Prabir Kumar Chatterjee is directed to pay a fine of 5,00,000 that shall be paid within a period of 01 months from the date of receipt of this Order and in case he fails to pay the same as stipulated, the name of the Respondent, CA Prabir Kumar Chatterjee be removed for a period of six months from Register Of Members

Source: https://www.taxscan.in/icai-finds-two-chartered-accountants-guilty-of-professional-misconduct-for-crossing-specified-limit-of-tax-audits/163340/