{"id":761,"date":"2019-10-19T12:37:14","date_gmt":"2019-10-19T12:37:14","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=761"},"modified":"2022-11-16T16:01:05","modified_gmt":"2022-11-16T10:31:05","slug":"tribunal-overview-on-account-reopening","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/tribunal-overview-on-account-reopening\/","title":{"rendered":"A Tribunal Overview on Account Reopening"},"content":{"rendered":"\n<p class=\"has-drop-cap\">With the introduction of section 130 of Companies Act 2013, any statutory body, if cast the doubt about the accuracy of <a href=\"https:\/\/corpbiz.io\/learning\/basic-financial-statements\/\"><strong>financial statements<\/strong><\/a> prepared by a company or the accounts contain the misleading or fraudulent information,&nbsp;can approach Tribunal or court of law for account reopening of a company.<\/p>\n\n\n\n<p>If the Tribunal believes that the account was prepared in a fraudulent manner or Tribunal has a doubt relating to the company\u2019s affairs were mismanaged during previous years shall pass an order for account reopening or recast its&nbsp;financial statements&nbsp;&amp; books of accounts.Thus, this article presents a Tribunal overview on Account Reopening.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title ez-toc-toggle\" style=\"cursor:pointer\">Page Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/corpbiz.io\/learning\/tribunal-overview-on-account-reopening\/#Application_to_the_Tribunal_for_Books_Opening\" >Application to the Tribunal for Books Opening<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/corpbiz.io\/learning\/tribunal-overview-on-account-reopening\/#Voluntary_Revision_or_Restatement_of_the_Directors_Report\" >Voluntary Revision or Restatement of the Director\u2019s Report<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/corpbiz.io\/learning\/tribunal-overview-on-account-reopening\/#Duration_for_which_revision_is_permitted\" >Duration for which\nrevision is permitted<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/corpbiz.io\/learning\/tribunal-overview-on-account-reopening\/#Conditions_for_Books_Opening_or_Revising_Financial_Statements\" >Conditions for Books Opening or Revising Financial Statements<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/corpbiz.io\/learning\/tribunal-overview-on-account-reopening\/#Filing_of_revised_Financial_Statement\" >Filing of revised Financial Statement<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/corpbiz.io\/learning\/tribunal-overview-on-account-reopening\/#Difference_between_Voluntary_and_Compulsory_Accounts_Revision\" >Difference between Voluntary and Compulsory Accounts Revision<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/corpbiz.io\/learning\/tribunal-overview-on-account-reopening\/#Punishment_for_false_statement\" >Punishment for false\nstatement<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/corpbiz.io\/learning\/tribunal-overview-on-account-reopening\/#Experts_Opinion\" >Experts Opinion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Application_to_the_Tribunal_for_Books_Opening\"><\/span>Application to the Tribunal for Books Opening<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Following statutory bodies or stakeholders can apply to the competent court or Tribunal for the  account reopening or financial statement of a company:<\/p>\n\n\n\n<ul><li>Central Government<\/li><li>Income-Tax Authorities<\/li><li>SEBI<\/li><li>Any other regulatory body or statutory authority<\/li><\/ul>\n\n\n\n<p>Provided, on receipt of such application, Tribunal before passing any order under this provision shall give notice to such applicants or any other concerned person, and it shall consider the representation made by such applicants. And the accounts so revised after the order under this section shall be final and binding.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Voluntary_Revision_or_Restatement_of_the_Directors_Report\"><\/span>Voluntary Revision or Restatement of the Director\u2019s Report<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>As per Section 131 of&nbsp;<strong><em>Companies Act 2013<sup><a class=\"text-primary\" href=\"https:\/\/en.wikipedia.org\/wiki\/Companies_Act_2013\"><strong>[1]<\/strong><\/a><\/sup><\/em><\/strong>, financial statements and board\u2019s report of the company is allowed to be restated on the application of board of directors, if they assume that financial statement doesn\u2019t comply with the provisions of law.<\/p>\n\n\n\n<p>After approaching the Tribunal for revision of financial statements or account reopening and after receipt of such orders of Tribunal, directors can revise any of the preceding three financial year\u2019s board reports or financial statements.<\/p>\n\n\n\n<p>Such a revised financial statement shall not be filed more than once in a financial year. Detailed reason for such revision shall be disclosed in the board\u2019s report of the relevant financial year to which such a revised statement relates.<\/p>\n\n\n\n<p>Rules can be made by Central Government on this behalf that relates to a revised financial statement by issuing different provisions for replacing or supplementing the previous financial statements with revised statements along with stating the provisions for governing the functions of the company\u2019s auditors for such revised statements.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Duration_for_which_revision_is_permitted\"><\/span>Duration for which\nrevision is permitted<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The revision of board\nreport and financial\nstatements in\nreference to any of the three previous financial years are allowed\nby the Tribunal. The revised boards report and financial statements is not mandated to be prepared or filed for more\nthan one in a given\nfinancial year. The full\ndetails of the reason for which the revision of board report or financial statements is done shall be mentioned in the board\nreport during the\nrelevant financial year in which the revision is being made.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conditions_for_Books_Opening_or_Revising_Financial_Statements\"><\/span>Conditions for Books Opening or Revising Financial Statements<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p> <strong><em>Account reopening or revision of financial statements<\/em><\/strong> <strong><em>can be done<\/em><\/strong> <strong><em>in the following two conditions:<\/em><\/strong><\/p>\n\n\n\n<ul><li><strong>Mandatory:&nbsp;<\/strong>Company shall mandatorily revise its books of      accounts in the case where the order is passed by the Tribunal on an      application made to it by any regulatory or statutory authority for the      fraudulent or misleading accounts and information of a company.<\/li><li><strong>Voluntary:<\/strong>&nbsp;Books can be revised voluntary by the company\u2019s board if its board of directors assumes the financial statement requires such revision or correction.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Filing_of_revised_Financial_Statement\"><\/span>Filing of revised Financial Statement<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The company can consider account reopening  or revise its financial statement even after its adoption in AGM and filing with ROC. However, a company cannot file more than one set of annual returns in a particular financial year until the same has been revised.<\/p>\n\n\n\n<p>It was a director to ROC to have a check and eye on such repeated filing of annual accounts.<\/p>\n\n\n\n<p>However, under this section, Tribunal cannot order to revise or account reopening of the books before eight financial years preceding the current financial year immediately except for those books which are ordered to be kept or preserved for more than eight years.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Difference_between_Voluntary_and_Compulsory_Accounts_Revision\"><\/span>Difference between Voluntary and Compulsory Accounts Revision<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><em><strong>Following is the difference between two provisions of companies acts governing revising of books of account  :<\/strong><\/em><\/p>\n\n\n\n<table class=\"table table-bordered\"><tbody><tr><td>\n  <strong>Basis of\n  Difference<\/strong>\n  <\/td><td>\n  <strong>Section\n  130<\/strong>\n  <\/td><td>\n  <strong>Section\n  131<\/strong>\n  <\/td><\/tr><tr><td>\n  Application\n  <\/td><td>\n  The\n  statutory body can apply to the Tribunal for directing the company to reopen\n  or revise its statement\n  <\/td><td>\n  The\n  company can apply to the Tribunal for the revision of its statement.\n  <\/td><\/tr><tr><td>\n  Reason for\n  revision\n  <\/td><td>\n  If the\n  financial statements are fraudulent, mismanaged, inaccurate, or misleading.\n  <\/td><td>\n  If the\n  financial statement is not prepared as per the provisions of law.\n  <\/td><\/tr><tr><td>\n  Financial\n  year\n  <\/td><td>\n  The\n  application can be made for opening the books of a maximum of 8 preceding\n  years.\n  <\/td><td>\n  The\n  application can be made for revising the books of a maximum of three\n  preceding years.\n  <\/td><\/tr><tr><td>\n  Restriction\n  on application\n  <\/td><td>\n  The\n  application can be made any such number of times with no restrictions upon\n  it.\n  <\/td><td>\n  Revised\n  statements can be filed only once in a financial year. &nbsp;\n  <\/td><\/tr><tr><td>\n  Fraud\/misleading\n  information\n  <\/td><td>\n  Fraud or\n  misleading information is a necessary element before applying.\n  <\/td><td>\n  No such\n  requirement under this section.\n  <\/td><\/tr><tr><td>\n  Mode of\n  application\n  <\/td><td>\n  This is a\n  compulsory form of revision to be done following the Tribunal orders\n  <\/td><td>\n  Voluntary\n  revision of financial statements.\n  <\/td><\/tr><\/tbody><\/table>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Punishment_for_false_statement\"><\/span>Punishment for false\nstatement<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul><li>Section 448 provides that, if in any financial statement, report, return, prospectus, certificate, document required for the purposes of any provisions of the Companies Act 2013 or the rules that is made there under or any person makes any such statement,<ul><li>which is false in any particular matter knowing it to be false; or<\/li><li> which has omitted any material fact, even on knowing it to be material, such person shall be liable under section 447.<\/li><\/ul><\/li><\/ul>\n\n\n\n<p>Thus, every professional who gives or signs or certifies or attests a financial statement, return, certificate, report etc. under the 2013 Act shall be punishable under section 447 if the provision stated in Section 448 is fulfilled.<\/p>\n\n\n\n<ul><li>There is no particular penal provision given\nin this section 130. Hence, under section 450 the given penal provision shall\napply in cases of non-compliance of this section. Consequently, for any such\ncontravention the company and the officer\u2019s of the company who are in default\nshall be liable for the punishment with a fine up to Rs.10,000 and wherein case\nof the continued contravention then the fine levied shall be Rs. 1,000 each\nday. Also, the offences are compoundable under this section of the Act.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Experts_Opinion\"><\/span>Experts Opinion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>As we understand from the above article that the Government of India, with its intention to curb the occurrence of fraud and corruption, has introduced these provisions to keep the mismanagement or incorrect information to the lowest. Through these strict provisions, the government keeps an eye on fraudulent activities of companies to make the operations of companies more transparent and compliant.<\/p>\n\n\n\n<p><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/voluntary-revision-of-financial-statement\/\">Voluntary Revision of Financial Statement\n<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>With the introduction of section 130 of Companies Act 2013, any statutory body, if cast the doubt about the accuracy of financial statements prepared by a company or the accounts contain the misleading or fraudulent information,&nbsp;can approach Tribunal or court of law for account reopening of a company. If the Tribunal believes that the account [&hellip;]<\/p>\n","protected":false},"author":7,"featured_media":27567,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[128],"tags":[136],"acf":{"service_id":"103"},"authorName":"Savvy Midha","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2019\/10\/Savvy-Midha.jpg","authorDescription":"Savvy Midha holds the degrees of Bachelor of Commerce(honors), LL.B and Company Secretary. She is an experienced Legal and Financial writer with expertise in research, drafting, and copy-writing.","postViews":6914,"readingTime":4,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/761"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/7"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=761"}],"version-history":[{"count":26,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/761\/revisions"}],"predecessor-version":[{"id":50781,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/761\/revisions\/50781"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/27567"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=761"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=761"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=761"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}