Section 130: Re-opening of accounts on court’s or Tribunal’s orders
This section is for allowing a company to re-open its accounts and recast its financial statements under a court or Tribunal's order, with certain conditions and time limits.
The section, clause by clause
What the section says
In plain terms
(1)A company shall not re-open its books of account and not recast its financial statements, unless an application in this regard is made by the Central Government, the Income-tax authorities, the Securities and Exchange Board, any other statutory regulatory body or authority or any person concerned and an order is made by a court of competent jurisdiction or the Tribunal to the effect that—
A company can only re-open its books of account and recast its financial statements if a court or the Tribunal orders it to do so, after an application is made and it is found that the earlier accounts were prepared in a fraudulent manner or the company's affairs were mismanaged.
(1)(i)the relevant earlier accounts were prepared in a fraudulent manner; or
(1)(ii)the affairs of the company were mismanaged during the relevant period, casting a doubt on the reliability of financial statements:
provisoProvided that the court or the Tribunal, as the case may be, shall give notice to the Central Government, the Income-tax authorities, the Securities and Exchange Board or any other statutory regulatory body or authority concerned 1[or any other person concerned] and shall take into consideration the representations, if any, made by that Government or the authorities, Securities and Exchange Board or the body or authority concerned 1[or the other person concerned] before passing any order under this section.
(2)Without prejudice to the provisions contained in this Act the accounts so revised or re-cast under sub-section (1) shall be final.
The revised or recast accounts made under the court or Tribunal's order will be final.
(3)No order shall be made under sub-section (1) in respect of re-opening of books of account relating to a period earlier than eight financial years immediately preceding the current financial year:
provisoProvided that where a direction has been issued by the Central Government under the proviso to sub-section (5) of section 128 for keeping of books of account for a period longer than eight years, the books of account may be ordered to be re-opened within such longer period.]
The right-hand column is written from the section text, not quoted from it, and it has no legal force. Where the two differ, the left-hand column is the law.
Amendment notes
- 1. Ins. by Act 1 of 2018, s. 34 (w.e.f. 9-2-2018).
- 2. Ins. by s. 34, ibid. (w.e.f. 9-2-2018).
This section refers to
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Reproduced from the official India Code print for reference. Check the current text on India Code before you rely on it, and read the section alongside its Rules. Nothing here is legal advice.