Reopening, Revision, and Periodical Results

In one line

Books may be reopened only on a court's or the Tribunal's order under section 130, and the directors may revise a statement or report only with the Tribunal's approval under section 131, while section 129A lets the Government require periodical results from prescribed unlisted companies.

Why the law is strict here

A financial statement laid before the members is a public act. Members voted on it, the Registrar holds a copy under section 137, lenders and buyers relied on it, and the tax authorities assessed on it. If a company could rewrite it at will, none of that reliance would be worth anything. So the Act shuts the door and then cuts two narrow doors into it.

Route one, forced: reopening under section 130

Sub-section (1) is a prohibition first and a permission second.

A company shall not re-open its books of account and not recast its financial statements, unless an application is made and an order is made.

Who may apply:

1. the Central Government;
2. the Income-tax authorities;
3. the Securities and Exchange Board;
4. any other statutory regulatory body or authority; or
5. any person concerned.

Notice who is missing: the company. The company cannot apply under section 130. Its own route is section 131.

Who orders: a court of competent jurisdiction or the Tribunal.

On what grounds, and there are only two:

The proviso requires notice. Before passing any order the court or Tribunal shall give notice to the Central Government, the Income-tax authorities, the Securities and Exchange Board, any other statutory regulatory body or authority concerned, or any other person concerned, and shall take their representations into consideration.

Sub-section (2): the accounts so revised or recast shall be final. There is no second reopening of the same period.

Sub-section (3) is the time limit, and it is the eight years again. No order shall be made for reopening books relating to a period earlier than eight financial years immediately preceding the current financial year.

With a proviso that ties back to section 128(5): where the Central Government has directed under the proviso to section 128(5) that books be kept for longer than eight years, the books may be ordered to be reopened within that longer period.

The two sections lock together. Section 128(5) says keep the books eight years; section 130(3) says they can be reopened for eight years. The retention period and the reopening window are the same window on purpose, and if one is extended the other extends with it. This is the connection to make in an answer, and few students make it.