Clause 1 – Part I – First Schedule Flashcards
CA Sahu, a newly qualified professional with certificate of practice, approached CA Subahu, the
auditor of his father’s company Apex Ltd., to allow him to have some practical and professional
knowledge and experience in his firm before he can set up his own professional practice. CA
Subahu allowed him to sit in his office for 6 month and allotted a small chamber with other office
infrastructure facility. In the course of his association with CA Subahu’ s office, he used to provide
tax consultancy independently to the client of the firm and also filed few IT and GST return and
represented himself before various tax authorities on behalf of the firm although no documents
were signed by him. During his association in CA Subahu’s office, he did not get any salary or
share of profit or commission but only re-imbursement of usual expenses like conveyance,
telephone etc. was made to him. After the end of the agreed period, he was given a lump sum
amount of ~ 2,50,000 by CA Subahu for his association out of gratitude. Give your comments with
reference to the Chartered Accountants Act, 1949 and Schedules thereto.
sahu = sant
subhau =p ant
Allowing Others to use firm’s name:
• As per Clause (1) of Part 1 of First Schedule to the Chartered Accountants Act, 1949, a CA in
Practice is deemed to be guilty of professional Misconduct if he allows any person to practice in
his name as a Chartered Accountant, unless such person is also a Chartered Accountant in
practice, and is in partnership with, or employed by himself.
• This clause is intended to sageguard the public against unqualified accountant practicing under the cover of qualified accountants. It ensures that the work of the accountant will be carried out by a CA who may be his partner, or his employee and would work under his control and supervision.
• In the present case, CA Pant allowed Mr. Sant, another Chartered Accountant, holding Certificate
of Practice to practice in his firm for a period of 6 months, whereas Mr. Sant is not a partner or
employee. Further after expiry of six months, Mr. Pant also gives Mr. Sant a lump sum amount of
~ 3,00,000 for his association out of gratitude.
Conclusion: Mr. Pant will be guilty of professional misconduct by virtue of Clause 1 of Part I of First
Schedule as he allows another person to practice in his firm name, whereas other person (Mr. Sant) is
neither a partner nor an employee.
