The High Court of Kerala has stayed disciplinary proceedings initiated by the Institute of Chartered Accountants of India against a member for exceeding the limit on the number of tax audits.

Disposing a writ filed by Shaji Poulose, a Chartered Accountant practising in Malappuram District of Kerala, requesting a stay on the disciplinary action, the Court directed the highest body of respondents to hear the petitioner and pass suitable orders within a time frame. It granted a stay on the disciplinary action till a decision of the highest body is communicated to the petitioner.

The petitioner had listed the ICAI, its President of the Disciplinary Directorate of the Institute, and the Chairman of Direct Taxes Committee as respondents.

Poulose in his writ contended that the cap on the number of tax audits under Section 44AB was struck down as unconstitutional by the Madras High Court and the appeal – later dismissed by the Supreme Court.

The Court had then held that such notifications, fixing a ceiling limit on the number of tax audits that could be conducted by a member, is in violation of Article 14 of the Constitution.

It further observed that the main objective of the Chartered Accountants Act is to regulate the conduct of its members in carrying out their professional duties.

Stating that there is no sanctity in restricting the number of tax audit assignments by a practising chartered accountant to 45 in a financial year, the petitioner said much would depend on the practitioners experience and ability to fulfil more number of tax audits.

By artificially imposing such restrictions, it impinged on one’s fundamental right to practice the profession guaranteed under Article 19 (1)(g) of the Constitution.

He further said that a client must be free to choose his Chartered Accountant, just like a lawyer, and also that accepting larger number of audits cannot be regarded as professional misconduct. (The Hindu Business)