RE-OPENING BOOKS OF ACCOUNT

Generally a company can’t re-open it’s books of account so it is not possible for them to recast its financial statement. But there is one exception when a company can re-open its books of accounts and re-cast it’s financial statement.

According to section 130(1) of company act 2013 a company can re-open its books of account under following circumstances. A company can re-open it’s books of account only when an application is made by the following authority to court or tribunal in this regard.

1.       Central Government.

2.       Income Tax authority.

3.       Security Exchange Board of India.

4.       Any other statutory regulatory body or authority.

The competent court or tribunal shall made that order when they satisfy regarding the following condition:

1.       The relevant earlier accounts were prepared in a fraudulent manner.

                                        OR

2.       The affairs of the company were mismanaged during the relevant period, casting a doubt on the reliability of financial statements.

And after that the Court or Tribunal as the case may be shall give notice to the applicant to consider the representation if any made by the applicant. Finally issue re-opening order to the company.