Facts of the Case

A complaint was filed by CA Vinay Kumar Aggarwal against CA Nitesh Agrawal alleging professional and other misconduct in relation to activities carried out during the Respondent’s association with the complainant’s firm, M/s Aggarwal & Rampal. The Respondent was appointed as Manager – Audit and Taxation on 15 July 2013 and his services were terminated on 25 February 2014.

It was alleged that during and after his association, the Respondent misused the complainant’s digital signature for filing statutory forms including Form 23AC and Form 66 of M/s Astra Netcom (India) Pvt. Ltd., ran an independent practice without the knowledge of the complainant firm, advised clients of the complainant firm independently, and acted as managing partner of M/s Global Tax Solutions without requisite ICAI approval while holding full-time Certificate of Practice.

Issues Involved

Whether the Respondent misused the complainant’s digital signature for statutory filings, acted as managing partner of another firm without approval, carried on independent professional practice in breach of ethical requirements, and whether such acts constituted professional or other misconduct under Item (8) of Part I and Item (2) of Part IV of the First Schedule to the Chartered Accountants Act, 1949.

Complainant’s Allegations

The complainant alleged that the Respondent filed statutory documents using his digital signature without authority, represented clients independently, and used the complainant firm’s name without consent. It was further alleged that the Respondent acted as managing partner of Global Tax Solutions and maintained bank accounts as authorized signatory, thereby violating provisions relating to holding of Certificate of Practice and prior approval requirements.

Respondent’s Submissions

The Respondent denied all allegations and submitted that filing of statutory forms was done strictly on instructions of the complainant, for assignments of the complainant firm, and that fees were paid to the complainant firm alone. He submitted that the digital signature was used only once for filing statutory forms with due knowledge of the complainant and that no misuse was established.

The Respondent further submitted that Global Tax Solutions was a partnership firm of relatives, that he neither had legal nor beneficial ownership nor operated its bank account in any capacity, and that his designation as authorized signatory was limited to signing appointment letters without involvement in management. He produced affidavits, bank letters and police reports establishing that he never operated the bank account and that no evidence of misuse of digital signature existed.

He also clarified that mobile numbers and addresses appearing on letterheads were family-related and used without professional intent, and that no professional solicitation or independent practice was carried on in violation of ICAI regulations.

Court / Authority Order and Findings

The Board of Discipline examined statutory filings, ROC records, correspondence, affidavits, bank confirmations, police closure reports and submissions of the parties. The Board observed that statutory filings made using the complainant’s digital signature were acknowledged by the company and were for assignments of the complainant firm, with fees credited to the complainant.

The Board noted that no evidence was produced to show unauthorized or repeated misuse of the digital signature. The Board further observed that Form 23AC filings relating to Gulmohar Marketing Pvt. Ltd. contained clerical attachment errors which were promptly sought to be rectified and did not establish misconduct.

Regarding Global Tax Solutions, the Board accepted documentary evidence showing that the Respondent did not operate the bank account, had no ownership interest, and did not act as managing partner. The Board also noted that police investigation found no evidence of misuse of digital signature.

On overall appreciation, the Board held that allegations were based on suspicion and internal professional disputes and were not supported by cogent or circumstantial evidence sufficient to establish professional or other misconduct.

Important Clarification

The Board clarified that isolated or authorized use of digital signatures for firm assignments, clerical errors in statutory filings subsequently rectified, and association with family-run entities without managerial control do not constitute professional misconduct in absence of proof of intent, misuse or violation of statutory provisions.

Final Outcome

The ICAI Board of Discipline held CA Nitesh Agrawal (M. No. 527125) Not Guilty of Professional or Other Misconduct under Item (8) of Part I and Item (2) of Part IV of the First Schedule to the Chartered Accountants Act, 1949 read with Section 22. By order dated 10 February 2023, 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.

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