The National Financial Reporting Authority (NFRA) has slapped a penalty of Rs 50 lakh on an auditor found guilty of professional misconduct for FY19 to FY21 in the matter of Quess Corp Ltd.
In August 2022, Director General of Income Tax (Investigation), Bengaluru, had shared information about the claim of deduction under Section 80JJAA of Income Tax Act totalling Rs 1,135.41 crore by Quess based on Form 10DA issued by two chartered accountants for 2016-17, 2017-18, 2018-19, 2019-20, and 2020-21.
Section 80JJAA of the IT Act allows eligible enterprises to claim deductions against additional staff costs during an Assessment Year (AY).
NFRA had thereafter initiated action to look into the professional conduct of the chartered accountants and their firms involved in the said certification.
In its order passed on Wednesday, NFRA found that the auditor, Pawan Jain, failed to exercise due-diligence and obtain sufficient information before issuing reports under the Income Tax Act.
Jain failed to apply the necessary checks, such as verify re-organisation of business with various parties and excluding employees whose Employee Pension Scheme (EPS) contribution was paid by the government, NFRA said.
He also failed to correctly report the number of additional employees in FY21 and also did not verify the payment of additional employee cost made by account payee cheque/ draft/ electronic means, it added.