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BOD 750/2024Not guilty

A letter to the incoming auditor named unpaid dues. The Board found no threat and no misconduct in it.

6 min readJainam Shah

A client switched auditors after years of reappointment, and the outgoing auditor wrote to the replacement about unpaid dues and finished work. The Board read it as courtesy and cleared him.

Held
Not guiltyThe charge was not made out
Forum
Board of Discipline (First Schedule)
Clauses
Item (2) of Part IV of the First Schedule
Decided
File no.
PR/836/2022/DD/34/2023/BOD/750/2024
Source
Original order (PDF)

A chartered accountant had audited the same proprietor's business year after year, always reappointed by the same man. When the proprietor finally moved to a new auditor, a letter about the handover became the whole of the complaint against him.1

What happened#

A proprietor in Odisha reappoints the same chartered accountant as his statutory auditor for several years running, and settles the dues for a completed audit in full.
The proprietor then decides to change auditors. Before that change is complete, the outgoing auditor is found still recorded as auditor on the proprietor's income-tax portal, and goes on to conduct that year's tax audit without a fresh written authorisation from the proprietor.
Once the proprietor formally appoints a new auditor, the outgoing auditor writes to that new auditor directly. The letter says he has already prepared the year's financial statements and that the proprietor has not discharged his tax dues. The proprietor calls this an attempt to obstruct the handover and threaten him.
Before accepting the assignment, the new auditor writes to the ICAI Directorate for guidance. The Directorate replies that a complaint of professional misconduct has to be filed on the prescribed form — but the new auditor never files one himself.
The proprietor's own complaint goes to a hearing, but he does not attend it, on either of the two dates fixed. The Director (Discipline) has already dropped the portal allegation at the screening stage; only the letter to the new auditor remains, and the Board closes that too, finding nothing in it beyond ordinary professional communication.

The Board's findings do not explain why the portal allegation was dropped before it reached a hearing — the Director (Discipline)'s reasons are said to be "recorded therein" but are not reproduced (para 13). Only the letter to the incoming auditor was ever argued before the Board.

The respondent's account of what happened next was never answered by the other side. He said the proprietor's representatives took back his Digital Signature Certificate without his authorisation, that he never uploaded the year's audit report once that happened, and that he had no further role in the engagement from that point on (para 14).

The charge#

Item (2) of Part IV of the First Schedule covers conduct that brings the profession into disrepute — the residual clause used where an alleged wrong doesn't sit under a specifically named professional duty.2 It was the only charge that reached the Board; the portal allegation had already been dropped without a hearing.

The Board found the charge not established and closed the case.

What the respondent said#

The complaint, he said, was retaliation. He had declined to issue an unqualified audit report for the year in question, because doing so would have breached Section 278 of the Income-tax Act, 1961 — and it was only after that refusal that the proprietor deactivated his reappointment on the income-tax portal, engaged a new auditor, and complained to ICAI.

He had verified the records, carried out the audit, issued a qualified report reflecting what he found, and told the proprietor about the discrepancies and the additional tax due. The proprietor disagreed with those findings and wanted an unqualified report instead, which he refused to give. The engagement, he added, was a private contractual matter that had harmed no public interest, and his letter to the new auditor was a lawful, good-faith professional communication — not a threat to anyone.

What the Board held#

The proprietor did not appear at either hearing date and produced no material in support of his own complaint, so the matter proceeded ex parte to him (para 11). That left the Board to assess the letter on the respondent's uncontested account of it.

The Board read the letter as limited to stating facts the respondent believed to be true, not as pressure on anyone:

He had only communicated factual information to the incoming auditor and categorically stated that there was no iota of threat or intent to obstruct (para 15)

Nothing on the file pointed the other way — no evidence that the communication carried bad faith, or that it had actually stopped the new auditor from taking on the work, and the respondent's account that he had already finished the audit before his role ended was consistent with the surrounding facts (para 15). The Board concluded:

the conduct of the Respondent does not establish any professional or other misconduct under Item (2) of Part IV of the First Schedule to the Chartered Accountants Act, 1949 (para 16)

The order#

in the considered opinion of the Board, the Respondent is 'Not Guilty' of Other Misconduct falling within the meaning of Item (2) of Part IV of the First Schedule

No punishment follows. The Board ordered the case closed under Rule 15(2), and the complaint stands disposed of.3 It had taken two hearings, the better part of a year apart, to get there.4

Why it matters#

This section is ours, not the Board's.

A complaint nobody shows up to argue rarely survives. The proprietor missed both hearing dates and offered no evidence of his own. If you file a complaint with ICAI, treat the hearing as something to attend, not paperwork that resolves itself.

Writing to the auditor replacing you is not misconduct by itself. What saved this letter was that it stuck to facts the respondent could stand behind — dues he said were unpaid, work he said was finished. Keep any such communication to verifiable facts, and nothing that could read as pressure.

An allegation the Director (Discipline) drops at screening does not come back. The portal allegation never returned once it was dropped before a hearing. Watch what actually survives the prima facie stage — that, and nothing else, is what gets argued.

This summarises a public order and links the primary source. It is general information, not legal or professional advice.

Footnotes#

  1. Sh. Gajendra Prasad Panda, Berhampur, Odisha was the complainant, a proprietor. CA. Amara Kanta Padhy (M. No. 054595), Brahmapur, Odisha was the respondent, his outgoing statutory and tax auditor. The incoming auditor, whose firm took over the engagement, was CA. Siba Prasad Mishra of M/s Bhabani & Siba. ↩

  2. Item (2) of Part IV of the First Schedule covers a member found guilty of any "other misconduct" bringing disrepute to the profession or the Institute — a general clause, used where the conduct alleged does not fall under one of the specifically named items elsewhere in the Schedule. ↩

  3. Rule 15(2) of the Chartered Accountants (Procedure of Investigations of Professional and Other Misconduct and Conduct of Cases) Rules, 2007 — where the Board finds a member not guilty, it records that finding and orders the complaint closed. There is no punishment hearing. ↩

  4. CA. Rajendra Kumar P (Presiding Officer) and Ms. Dolly Chakrabarty, IAAS (Retd.) (Government Nominee), both present in person, with the respondent appearing in person. An earlier hearing on 14 December 2024 was part-heard and adjourned; the matter was heard at ICAI Bhawan, Kolkata on 15 October 2025, and the findings were signed on 8 December 2025. ↩

Written by Jainam Shah. Found guilty under Item (2) of Part IV of the First Schedule; the Board ordered a not guilty. General information, not legal or professional advice — read the order itself before relying on it.

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