Preparation of Balance Sheet and Profit & Loss Account for a Financial year Exceeding 12 Months

As per the Department of Company Affairs opinion given in 1977, a company cannot reopen and revise its accounts after their adoption at the annual general meeting. The Institute of Chartered Accountants of India has also opined that the accounts .QD.ce
adopted by the me~rs ofa cO.E!Pan~;~ot b«:.!~9pened under al1}' ci.[Cumstances.
(Guidal1ce Note 011 Revisiol1/Rectificatiol1 0 mal1clal Statemel1ts-Compendium ofGuidal1ce . i'
" .
Notes, Vol. I, 211d Ed., 1987, pp. 368-369).
In 1987, in partial modification of its above view, the Department of Company I"~ ".
Affairs clarified that a.£9-IUpi!!!Y c..0~l~ re-open a~!.evise its..as:.counts_ev€!!!.. '!tter !!teir I.
adoptio.n in the annual general meeting in ord.:: to comply withtechnisal.re~eI!lents
of taxatloQlaw£. In such event, the revised annual accounts would be, required to be adopted in the subsequent annual general meeting and filed with the Registrar of Compmues after such adoption.
(iii) Preparation of Balance Sheet and Profit & Loss Account for a Financial year Exceeding 12 Months
The balance sheet and the profit and loss account contemplated by ~~O and Section 211 has to_be for the fin~ncial year and not for the part of the financial year. The financial
'year may be less or more than a calendar year, i.e. 12 months, but it should not, normally exceed 15 mon~. With the special permission of the Registrar, the annual accounts may,
however, be prepared for a penod upto ~nth1 [Section 210 (4»). In regard to profit
and loss account there is an additional requirement, as to the gap between its closing date
and the date of AGM at which it is la~ the c~s~ of first profit and loss account which
may be prepared after the incorpora .91 the company, the gap shotiHn6t exceed 9 months; in respect of profit and loss accounts thereafter, it should not be more than 6 months, except when an extension is granted by the Registrar under proviso to sutJ-sectlon (4) of Section 210, and in which event the gap could be upto 9 months.
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Q£ Mis Take It Easy Holdings Ltd. has filed the annual accounts for the year
ended 31.3.1998 with the Registrar of Companies, Calcutta. The Registrar, after examination of the accounts issued a show cause notice to the company and its Directors as to why prosecution proceedings should not be launched for not disclosing true and fair view of the state of affairs of the company. After careful examination you find that the Registrar is justified in issuing the show cause notice. Advise as to how the company and its Directors can save themselves from th<:tRrosecution proceedings
under the provisions of the Companies Act. UJr.;' ~ ,' JCA. (Final) May, 1999J
, '" ."'J II;
.9Lns. According to the provisions contained in Section 621A of the Companies Act, 1956 notwithstanding anything contained in the Code of Criminal Procedure, 1973, any offence punishable under the Act not being an offence punishable with imprisonment only or with imprisonment and also with fine, may be compounded by the Company Law Board or by the Regional Director on payment of such compounding fees as may be specified in the Order: Further, the compounding fee in any case cannot exceed the maximum amount of fine fixed for such offence under the Act. In case the fine amount fixed in the Act is more than Rs. 50,000' then the compounding will be done by the Company Law Board and in case it is Rs. 50,000* or less the Regional Director will be the authority for compounding the matter (with Court's approval).
AII-19
. As per the Companies (Amendment) Act, 2000.