Facts of the Case

A complaint was filed by CA Sunil Kumar against CA Arpit Taneja alleging professional misconduct in relation to acceptance of a tax audit assignment. The complainant was the tax auditor of M/s Divyansh Associates, a proprietary concern, for the financial year 2017-18. For the subsequent financial year 2018-19, the respondent conducted the tax audit of the same concern.

It was alleged that the respondent accepted the audit assignment without obtaining a No Objection Certificate from the complainant and without communicating with the outgoing auditor in writing, as mandated under the Chartered Accountants Act, 1949. The matter was examined by the Director (Discipline) and thereafter placed before the Board of Discipline.

Issues Involved

Whether the respondent accepted the position of auditor 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 performed the tax audit for financial year 2018-19 without any written communication or No Objection Certificate from the outgoing auditor. It was submitted that the statutory requirement under Item (8) of Part I of the First Schedule was mandatory and its violation constituted professional misconduct.

Respondent’s Arguments

The respondent submitted that verbal communications had taken place and that the complainant had orally requested him to undertake the audit due to the complainant’s health issues. It was argued that there were cordial relations between the parties and that the audit was accepted in good faith. The respondent, however, did not produce any documentary evidence to establish written communication with the outgoing auditor.

Court / Authority Order and Findings

The Board of Discipline examined the documents and submissions on record and noted that Item (8) of Part I of the First Schedule to the Chartered Accountants Act, 1949 clearly mandates written communication with the outgoing auditor before acceptance of an audit assignment. The Board observed that the respondent admitted having accepted the audit without following the prescribed statutory procedure and failed to produce any evidence of written communication or No Objection Certificate.

The Board held that verbal communication or personal relationship cannot substitute the mandatory statutory requirement. Accordingly, the Board concluded that the respondent had violated Item (8) of Part I of the First Schedule and was guilty of professional misconduct within the meaning of the Chartered Accountants Act, 1949.

Important Clarification

The Board clarified that it is the statutory duty of an incoming auditor to communicate in writing with the outgoing auditor before accepting an audit assignment. Non-compliance with this requirement, irrespective of personal relations or alleged oral consent, constitutes professional misconduct under the Act.

Final Outcome

The ICAI Board of Discipline held CA Arpit Taneja (M. No. 544209) guilty of Professional Misconduct falling within the meaning of Item (8) of Part I of the First Schedule to the Chartered Accountants Act, 1949. In exercise of powers under Section 21A(3) of the Act, by order dated 29 July 2025, the Board imposed a monetary penalty of ₹25,000 (Rupees Twenty-Five Thousand only) on the Respondent.

Source Link- https://www.mytaxexpert.co.in/uploads/1768892450_CA.SunilKumarM.No.075294vsCA.ArpitTanejaM.No.544209Bharatpur.pdf

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