MCA fines CA for failing to disclose breaches in audit report
Section 143(3)(d) of Companies Act, 2013 states that ‘the auditors report shall state whether, the company’s balance sheet and profit and loss account dealt with in the report are in agreement with the books of account and returns’.
It is apparent from the financial statements for the financial year ended 31.03.2021 Interest Accrued” on Secured Long-term borrowing has not been shown in the Balance sheet for the year ending 31.03.2021. Thereby affecting the true and fair view of the state of affairs of the Company in the financial year 2020-21 leading to violation of Section 129 read with Schedule III of the Companies Act, 2013.
It is also noticed that the auditor of the Company has not commented the same in his audit reports, thereby leading to violation of Section 143 read with Section 129 read with Schedule III of the Companies Act, 2013. Hence, it appears that the provisions of Section 143(3)(d) of the Companies Act, 2013 has been contravened by the auditor for the financial year 31.03.2021 and therefore he is liable for penalty u/s 450 of the Companies Act, 2013, for the financial year 31.03.2021.
On the date of hearing. Shri Sourabh Krishna, Company Secretary appeared on behalf of Shri Sanjay Jaiswal, however, no submission has been made regarding noncompliance. Hence, it is concluded that the provisions of Section 143 of the Companies Act, 2013 has been contravened by the auditor and therefore he is liable for penalty u/s. 450 of the Companies Act, 2013 for the Financial Year 31.03.2021.
Accordingly MCA imposes Penalty of Rs. 5000 for Non- reporting of violations in audit report on Shri Sanjay Jaiswal, Chartered Accountants.
the provisions of section 143(3)(d) states that “the auditors report shall state whether, the company’s balance sheet and profit and loss account dealt with in the report are in agreement with the books of account and returns”.
AND WHEREAS it is apparent from the financial statements for the financial year ended 31.03.2021 Interest Accrued” on Secured Long-term borrowing has not been shown in the Balance sheet for the year ending 31.03.2021. Thereby affecting the true and fair view of the state of affairs of the Company in the financial year 2020-21 leading to violation of Section 129 read with Schedule III of the Companies Act, 2013.
It is also noticed that the auditor of the Company has not commented the same in his audit reports, thereby leading to violation of Section 143 read with Section 129 read with Schedule III of the Companies Act, 2013. Hence, it appears that the provisions of Section 143(3)(d) of the Companies Act, 2013 has been contravened by the auditor for the financial year 31.03.2021 and therefore he is liable for penalty u/s 450 of the Companies Act, 2013, for the financial year 31.03.2021.
Whereas, this office has issued show cause notice for default under section 143 of the Companies Act, 2013 vide this office letter no. ROC/ PAT/ Inspn/14086/ 2358 dated 02.01.2023. However, this office has not received any reply from the auditor.
Whereas, this office had issued “Notice for Hearing” vide No. ROC/PAT/ fnspn/14086/ 2671 dated 16.022023 to the auditor in default to appear personally or through authorizsed representative under Rule 3(3), Companies (Adjudication of Penalties) Rules, 2014 on 14.03.2023 at 12.30 PM and also to submit their response, if any, one working day prior to date of hearing i.e. 13.032023.
That, on the date of hearing. Shri Sourabh Krishna, Company Secretary appeared on behalf of Shri Sanjay Jaiswal, however, no submission has been made regarding noncompliance. Hence, it is concluded that the provisions of Section 143 of the Companies Act, 2013 has been contravened by the auditor and therefore he is liable for penalty u/s. 450 of the Companies Act, 2013 for the Financial Year 31.03.2021.
Section 450 states that:- “If a company or any officer of a company or any other person contravenes any of the provisions of this Act or the rules made thereunder, or any condition, limitation or restriction subject to which any approval, sanction, consent, confirmation, recognition, direction or exemption in relation to any matter has been accorded, given or granted, and for which no penalty or punishment is provided elsewhere in this Act, the company and every officer of the company who is in default or such other person shall be liable to a penalty of ten thousand rupees, and in case of continuing contravention, with a further penalty of one thousand rupees for each day after the first during which the contravention continues, subject to a maximum of two lakh rupees in case of a company and fifty thousand rupees in case of an officer who is in default or any other person”.
Further Section 446B states that “if penalty is payable for non-compliance of any of the provisions of this Act by a One Person Company, small company, start-up company or Producer Company, or by any of its officer in default, or any other person in respect of such company, then such company, its officer in default or any other person, as the case may be, shall be liable to a penalty which shall not be more than one-half of the penalty specified in such provisions subject to a maximum of two lakh rupees in case of a company and one lakh rupees in case of an officer who is in default or any other person, as the case may be”.
As per clause 85 of section 2 of the Companies Act, 2013, small company means a company whose paid up capital and turnover shall not exceed rupees four crore and rupees forty crore respectively. As per MCA portal, paid up capital of the company- Tilak Proficient Nidhi Limited is Rs. 98,72,100/- and the revenue from operation is Rs. 1,14,38,225.58 as per balance sheet of the financial Year 31.03.2020. Therefore, the benefits of small company are extended to this noticee while adjudicating penalty.
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