CA Inter P2 · Chapter 8 · Question 6 of 10
Under section 130, the books of account of a company can be reopened and its financial statements recast:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) Only on an order of a court of competent jurisdiction or the Tribunal, and not for a period earlier than eight financial years immediately preceding the current year
Explanation
Section 130(1) allows reopening only on an order of a court or the Tribunal. The application may be made by the Central Government, the income-tax authorities, SEBI, any other statutory regulatory body or any person concerned. It must show that the accounts were prepared fraudulently or that the affairs were mismanaged, casting doubt on the reliability of the statements. Section 130(2) bars reopening for a period earlier than eight financial years preceding the current year.
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