Facts of the Case

A complaint was filed by Shri Dharmendra Nagawat, Jaipur, against CA Praveen Kumar Singhvi alleging professional misconduct arising out of financial transactions connected with construction and allotment of a residential flat at Alaknanda Apartments, Jaipur. The Respondent was closely associated with M/s S.S. Builders, a concern run by his wife, and actively participated in transactions involving the complainant and his family members.

The complainant alleged that substantial amounts were paid to M/s S.S. Builders and to the Respondent’s wife for construction of a residential house and allotment of a flat, and that the Respondent, while acting as a Chartered Accountant, witnessed agreements, facilitated transactions, and received payments described as consultancy fees without rendering any professional consultancy services. It was alleged that the Respondent failed to maintain professional independence and integrity and colluded in financial dealings detrimental to the complainant.

Issues Involved

Whether the Respondent failed to maintain independence and integrity by acting in transactions involving close relatives, whether he facilitated and witnessed financial transactions without adequate documentation or professional justification, and whether such conduct amounted to “Other Misconduct” under Item (2) of Part IV of the First Schedule to the Chartered Accountants Act, 1949.

Petitioner’s Arguments

The complainant contended that the Respondent abused his professional position by actively participating in transactions involving his wife’s proprietary concern, receiving payments under the guise of consultancy without evidence of services rendered, and facilitating financial arrangements that caused loss and hardship to the complainant. It was argued that such conduct demonstrated collusion, conflict of interest, and lack of professional independence.

Respondent’s Arguments

The Respondent denied the allegations and submitted that the amounts received were towards consultancy services rendered by M/s S.S. Builders and not by him personally. He contended that he merely witnessed certain transactions and did not directly receive amounts from the complainant. The Respondent further argued that the disputes were civil in nature and that criminal and police investigations were pending, and therefore disciplinary proceedings should not be concluded.

Court / Authority Order and Findings

The Board of Discipline carefully examined the documentary evidence, affidavits, bank statements, agreements, and statements recorded under Section 161 of the Code of Criminal Procedure. The Board noted that substantial amounts were transferred to M/s S.S. Builders and that the Respondent’s wife admitted that amounts were shown as consultancy fees without any real consultancy being provided.

The Board observed that the Respondent actively participated in transactions, witnessed payments, and failed to maintain professional distance despite clear conflict of interest arising from his close relationship with the builder entity. The Board held that a Chartered Accountant is expected to act with utmost integrity, independence and objectivity, and the Respondent’s conduct fell far short of these standards.

The Board further held that disciplinary proceedings are governed by the standard of preponderance of probabilities and need not await the outcome of criminal proceedings. On evaluation of the material on record, the Board concluded that the Respondent was guilty of “Other Misconduct” within the meaning of Item (2) of Part IV of the First Schedule read with Section 22 of the Chartered Accountants Act, 1949.

Important Clarification

The Board clarified that Chartered Accountants must scrupulously avoid conflicts of interest and must not associate themselves, directly or indirectly, in financial transactions involving close relatives where professional independence is compromised. Receipt or facilitation of payments without demonstrable professional services constitutes serious professional misconduct.

Final Outcome

The ICAI Board of Discipline held CA Praveen Kumar Singhvi (M. No. 070604) guilty of “Other Misconduct” under Item (2) of Part IV of the First Schedule to the Chartered Accountants Act, 1949. In exercise of powers under Section 21A(3) of the Act, by order dated 19 April 2023, the Board directed removal of the name of the Respondent from the Register of Members for a period of 5 (five) years and imposed a monetary penalty of ₹50,000 (Rupees Fifty Thousand only).

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