Facts of the Case

A complaint dated 14 December 2022 was filed by Shri Gajendra Prasad Panda alleging professional misconduct against CA Amara Kanta Padhy, who had earlier acted as his statutory auditor. The complainant alleged that after deciding to change his auditor, the respondent forcibly added himself as auditor on the complainant’s Income-tax portal and conducted the tax audit for Financial Year 2021–22 without written authorisation or consent. It was further alleged that the respondent threatened to file a false complaint with the Income Tax Department.

The complainant asserted that all professional dues for FY 2020–21 were fully settled on 17 March 2022. When a new auditor was proposed to be appointed, the respondent allegedly objected by issuing a letter dated 19 November 2022 to the incoming auditor, claiming that he had already audited the financial statements for FY 2021–22 and alleging that the complainant had refused to discharge tax liabilities and had forcibly taken back his Digital Signature Certificate. The complainant disputed these allegations, stating that responsibility for books of account and tax compliance lies with the assessee and that control of the DSC rests with the assessee.

The incoming auditor sought guidance from the ICAI Directorate by email dated 21 November 2022. The Directorate replied on 30 November 2022 stating that any allegation of misconduct must be filed in the prescribed Form I; no complaint was thereafter filed by the incoming auditor.

Issues Involved

Whether the respondent forcibly added himself as auditor on the complainant’s Income-tax portal and conducted a tax audit without authorisation, whether the respondent obstructed the incoming auditor by misrepresentation or threat, and whether such conduct constituted “Other Misconduct” under Item (2) of Part IV of the First Schedule to the Chartered Accountants Act, 1949.

Petitioner’s Arguments

The complainant alleged unauthorised conduct of tax audit, misuse of access to the Income-tax portal, issuance of a misleading letter to the incoming auditor, and threats of false complaints to the tax authorities, contending that such acts amounted to professional misconduct.

Respondent’s Arguments

The respondent denied all allegations and submitted that the complaint was malicious and filed after he declined to issue an unqualified audit report for FY 2021–22, which would have violated Section 278 of the Income-tax Act, 1961. He stated that upon refusal, his reappointment was deactivated on the Income-tax portal and another auditor was appointed. The respondent asserted that he acted ethically, issued a qualified report based on professional judgment, advised payment of additional tax, and that his communication to the incoming auditor was factual, made in good faith, and did not contain any threat or intent to obstruct.

Court / Authority Order and Findings

The Board of Discipline noted that the complainant did not appear on the dates of hearing and did not furnish any additional evidence in support of the allegations, and the matter proceeded ex parte against the complainant. The Board observed that the first allegation relating to forcible addition of the respondent’s name on the Income-tax portal had already been dropped by the Director (Discipline) in the prima facie opinion after examination.

With respect to the surviving allegation concerning the letter written to the incoming auditor, the Board found that the respondent had only communicated factual information and acted within the bounds of professional courtesy. The Board held that there was no conclusive evidence of threat, obstruction, malafide intent, or hindrance to the appointment or functioning of the new auditor. The respondent’s explanation that he had completed his audit work and that his role ceased thereafter was found to be corroborated by the factual circumstances. In the absence of corroborative evidence from the complainant, the Board concluded that misconduct was not established.

Important Clarification

The Board clarified that professional communication made in good faith, conveying factual information to an incoming auditor, does not amount to professional or other misconduct unless supported by clear evidence of obstruction, threat, or malafide intent.

Final Outcome

The ICAI Board of Discipline held CA Amara Kanta Padhy (M. No. 054595) Not Guilty of “Other Misconduct” under Item (2) of Part IV of the First Schedule to the Chartered Accountants Act, 1949. By order dated 08 December 2025, the Board directed closure of the case under Rule 15(2) of the Chartered Accountants (Procedure of Investigations of Professional and Other Misconduct and Conduct of Cases) Rules, 2007.

Source Link- https://www.mytaxexpert.co.in/uploads/1768892588_ShriGajendraPrasadPandavsCA.AmaraKantaPadhyM.No.054595Odisha.pdf

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