Accommodation Entry of Professional Misconduct

Recently, an order of honorable Punjab and Haryana High Court was point of discussion and hot debate in professional circle in India. In the order, the High Court direct that name of respondent Vivek Kapoor be removed from the register of members of the Institute of Chartered Accountants of India for life.

I have no willingness to comment upon this “excessive punishment” and respondent has right to appeal. Though, from fact state in the order, it sees respondent never responded before the Disciplinary Committee and Council of ICAI and High Court but made all admissions before Income Tax Authorities and Settlement Commission. Respondent admitted what is being called scam of providing accommodation entries. It was said that he being a Chartered Accountant was bound to discharge his duties strictly in accordance with law, however, he not only violated the provisions but caused loss of revenue to the State to the tune of lacs of rupees for his undue benefit.

Disciplinary action against respondent No. 1 was initiated on the complaint dated 1st February 2006 received from the Commissioner of Income Tax-II, Amritsar. The matter was considered in the meeting of the Disciplinary Council in its meeting held in November, 2008. Respondent was found guilty of professional and other misconduct. The matter was referred to the Disciplinary Committee for enquiry. Respondent was held guilty of other misconduct under Section 22 read with Section 21 of the Act.

The Committee, in its report, is of the view that the respondent had indulged in opening and operating Bank Accounting using fake names and photographs, giving bogus entries, preparing fraudulent partnership deeds. Profit & Loss Account and Balance Sheet and has thereby done cheating with clients and has help clients to defraud the revenue by helping in evading Taxes. The Committee is thus of the view that the respondent is guilty of “Other Misconduct” under Section 22 read with Section 21 of the Chartered Accountants Act, 1949.

The Council, vide order dated 14.7.2011, decided to recommend to this court for removal of the name of respondent from the register of members for a period of 10 years. The High Court direct that name of respondent Vivek Kapoor be removed from the register of members of the Institute of Chartered Accountants of India for life.

Sections 21 and 22 of the Chartered Accountants Act, 1949  talk about in the order has since been amended on mainly procedural aspect and some new Sections has been inserted in year 2006. Provisions of corresponding Sections in the Company Secretaries Act, 1980 and the Cost and Works Accountants Act, 1959 earlier had and now have similar provisions related to professional misconduct.

Without giving in details of these provisions, we can say sister professions have similar statutory duties for society and also have legal consequences for misconduct.

One comment is made in Para 7 of the High Court order:

Though there are many frauds in which Chartered Accountants are involved, but there are very few cases in which the complaints against them are pursued to its logical end and the Institute take disciplinary action against its members.

This paragraph may need careful thought from all sister professions and their councils.

I have no observation at my own, Please.

Please note: This blog invite readers to share their comments, suggestions, hardship, queries and everything in comment section. This blog post is not a professional advice but just a knowledge sharing initiative for mutual discussion.

4 responses to “Accommodation Entry of Professional Misconduct


    Very diplomatic post. In my personal view that the High Court is correct to send clear signal for the Professionals to mend their laid down roles. Still, Mr Vivek Kapoor is given option to Appeal. Let us wait and see.

    Liked by 1 person

  2. This reminds me the Case of Ratnamani Engineering Limited case of dividend paid out of capitall, illegal payment of dividend , out of mere book entry of profit allowed and declared dividend only this profit . Did not reported the same at all. Not for one year but 2 Consecutive years. 31.10.1992 Rs 40 Lacs added in Profit as Job Charged not at all received from any body and 31.03.1994,Job Charges and Service Charges Know How Fees Rs 65 Lacs not received from any body , Also In Tax Audit Report (C R Sharedalal & Co Chartered Accountants of Ahmedabad ) . In subsequent year 31.03.1995 accounts also not at all reported that the dividend was paid was illegal??? What more than Accomodation!! and More???Not only this but also in 31.03.2013 By Mehta Lodha & Co (Prakash D Shah of Ahmedabad )Ahmedabad and S R Batliboi & Co LLP (Arpit Kantibhai Patel ) Ahmedabad )also the other modus operandi similar to the earlier years , by way of Valuation of closing stock of Raw Materials From cost to Market price resulting in profit not at all reported , being considered as below Fraud in Accounts Rs 1 Crore and more only to be reported.!!!>> As per Companies Act 2013 !!!! Only in Notes in Accounting as accounting Notes stated as ” INCREASE IN PRoFIT BY Rs 98.37 Lcas) not commented by Auditors in their report and also not reported by Directors (INdependent Director also). What is more than accommodation entry allowed by CA ? This is a serious issue to be noted as a professional.


  3. Yes , absolutely correct. If he had not at all Represented Before Hon. Council, Before Hon High Court , he has no Locus standi to argue any thing at all.


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