Facts of the Case

A complaint was filed by CA Atul Ramniklal Mathuria, Partner of M/s Bhaskar Atul & Associates, against CA Jimy Pirosha Wankadia, Proprietor of M/s Wankadia & Co. The complainant firm was the tax auditor of Shri Nishad Mehta, Proprietor of M/s Mehta & Associates, for Financial Year 2018–19. For the subsequent Financial Year 2019–20, the respondent firm accepted and completed the tax audit of the same client.

It was alleged that the respondent accepted and completed the tax audit without first communicating in writing with the complainant firm, as mandatorily required under Item (8) of Part I of the First Schedule to the Chartered Accountants Act, 1949. The Director (Discipline) formed a prima facie opinion of guilt, and the matter was placed before the Board of Discipline.

Issues Involved

Whether the respondent accepted and completed a tax audit assignment previously held by another Chartered Accountant without first communicating with the outgoing auditor in writing, in violation of Item (8) of Part I of the First Schedule to the Chartered Accountants Act, 1949, and whether such conduct amounted to professional misconduct warranting action under Section 21A.

Petitioner’s Arguments

The complainant contended that the respondent never communicated with him directly in writing before accepting the tax audit assignment. It was argued that reliance on the client to deliver a No Objection Certificate was impermissible and that documents relied upon by the respondent appeared to have been created or backdated after initiation of disciplinary proceedings. The complainant asserted that intent was immaterial and that non-compliance with the statutory mandate itself constituted professional misconduct.

Respondent’s Arguments

The respondent did not dispute the factual position that direct written communication with the complainant was not made. He submitted that he had issued a request for a No Objection Certificate on his letterhead and relied on the client to deliver it. He cited extraordinary circumstances arising from the COVID-19 pandemic, serious family health issues and personal hardship. The respondent contended that there was no intent to commit misconduct, that complainant’s fees had been paid, and that the lapse was an error of judgment rather than unethical conduct. He requested leniency and exoneration.

Court / Authority Order and Findings

The Board of Discipline observed that Item (8) of Part I of the First Schedule to the Chartered Accountants Act, 1949 imposes a mandatory obligation on an incoming auditor to communicate directly in writing with the outgoing auditor before accepting an audit assignment. The Board noted that it was an admitted fact that no such communication was made.

The Board further observed that the respondent’s own acceptance letter dated 17 March 2020 made commencement of audit contingent upon receipt of a written No Objection Certificate, clearly acknowledging the statutory requirement. Despite this acknowledgment, the respondent proceeded to commence and complete the audit without ever receiving written communication from the complainant. The Board held that reliance on the client to deliver the No Objection Certificate does not absolve the incoming auditor of his statutory duty.

While acknowledging the hardships caused by the COVID-19 pandemic, the Board held that even minimal compliance through electronic communication such as email was possible and expected. The Board concluded that the respondent deliberately departed from mandatory professional standards, thereby violating Item (8) of Part I of the First Schedule.

Important Clarification

The Board clarified that the requirement of written communication with the outgoing auditor is a core ethical safeguard intended to ensure transparency in auditor transitions. Reliance on clients, verbal assurances, or exceptional circumstances cannot override or dilute this statutory obligation.

Final Outcome

The ICAI Board of Discipline held CA Jimy Pirosha Wankadia (M. No. 044236) guilty of Professional Misconduct under Item (8) of Part I of the First Schedule to the Chartered Accountants Act, 1949. In exercise of powers under Section 21A(3), by order dated 12 December 2025, the Board imposed a monetary fine of ₹25,000 (Rupees Twenty-Five Thousand only) on the Respondent.

Source Link- https://www.mytaxexpert.co.in/uploads/1768892168_CA.AtulRamniklalMathuriaM.No.039604vsCA.JimyPiroshaWankadiaM.No.044236Mumbai.pdf

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