TaxTMI 
TaxTMI 
TaxTMI 
2020 (9) TMI 443
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....ublic limited company and limited by shares, was incorporated on 31.08.1989 and is in the business of manufacturing iron ingots. 3. It is also stated that the petitioner-company in the month of July, 2013, availed cash credit limit of Rs. 6,75,00,000/- and LC Limit of Rs. 2,50,00,000/- from Punjab and Sindh Bank, Mandi Gobindgarh Branch. Due to the recession in the market, the petitioner-company failed to repay the said loans and hence, the bank on 28.12.2015, classified the account of the petitionercompany as Non-Performing Asset ('NPA') and on the said date the outstanding balance of the loan account was Rs. 9,20,24,133/-. The bank also sent a notice under Section 13(2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, for recovery of the said outstanding amount, vide notice dated 28.12.2015. However, thereafter, the petitioner-company entered into One Time Settlement ('OTS') dated 31.08.2018 with the said bank and settled the total aforesaid outstanding amount as full and final settlement and made the payment as per the said OTS; and accordingly, the bank closed the said loan account and that there was no amount due wit....
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....'Short Term Borrowings' to the effect that the account is NPA and therefore, the interest accrued on NPA account is not shown under the said head. Further, the interest accrued during the said three financial years has been shown as expense in the profit and loss statement of the respective financial statement and therefore, the profit and loss account of the petitioner-company for the said three financial years is also not showing the correct position and therefore, it is imperative that the profit and loss account of the said financial statements be also corrected, due to the accounting mistake committed at the ends of the bank and subsequently, ignored by the management of the petitioner-company, the financial statements for the years ended on 31.03.2016, 31.03.2017 and 31.03.2018 do not show a fair and true view of the affairs of the petitioner-company and hence, could not comply with the provisions of Section 129 of the Act and hence, the CP. 7. It is also stated that the Board of Directors of the petitioner-company has passed a resolution dated 22.07.2019 (Annexure A-7) for filing the present petition and the petition is filed on 05.08.2019, i.e. within 14 days from the date....
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.... 10. The Income Tax Department filed short reply/objections, vide Diary No.5426 dated 09.10.2019, wherein, it is stated that the assessment proceedings for the assessment year 2017-18, relevant to financial year 2016-17 are pending and investigations are under progress and no change in the financial statements/balance sheets can be made at this juncture as the same would affect the revenue adversely. It is also stated that the profit and loss account of the company reveals that yearly interest component has been claimed as an expense item in the profit and loss account with respect to financial years, hence, the interest for the financial years 2015-16, 2016-17 and 2017-18 is also required to be reduced from the expense side of the profit and loss account corresponding the increased net profit in the financial years and would have the following tax affect. S. No. Financial Year Increase in Profit (In Rs.) Approximate Tax Effect (In Rs.) 1. 2015-16 49,87,464 16,46,000 2. 2016-17 1,55,48,648 51,31,000 3. 2017-18 1,30,73,388 43,14,000 11. It is also stated that the petitioner has not disclosed the corresponding change in the profit nor the increase in ....
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....e previous financial statement or report do not comply with the provisions of section 129 or section 134; and (b) the making of any necessary consequential alternation. (3) The Central Government may make rules as to the application of the provisions of this Act in relation to revised financial statement or a revised director's report and such rules may, in particular-- (a) make different provisions according to which the previous financial statement or report are replaced or are supplemented by a document indicating the corrections to be made; (b) make provisions with respect to the functions of the company's auditor in relation to the revised financial statement or report; (c) require the directors to take such steps as may be prescribed." 16. It is also relevant to note Rule 77 of the 2016 Rules and the same reads as under:- "77. Application under section 131. - (1) Where it appears to the directors of a company that the financial statement of the company or the report of the Board do not comply with the provisions of section 129 or section 134, the application shall be filed in Form No. NCLT-1 within fourteen days of the decision taken by the Board. (....
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....ertaining to Advances Portfolio of the Reserve Bank of India and its applicability to the loans given by the banks when the said loans become NPA. The petitioner has filed Annexure A-5 i.e. statement of the loan account and the OTS letter issued by the bank to show that the bank has not followed the RBI Circular, while treating the loan which was classified as NPA and the subsequent OTS, whereunder the loan was closed on payment of the required amount as a full and final settlement of the loan account. A perusal of Section 131 of the Act, which was notified with effect from 01.06.2016, reveals that the same was provided to meet the situations as mentioned in the petition, subject to fulfilling the requirements therein. Once Section 131 of the Act, provides for revision of the financial statements in respect of "any of the three preceding financial years", it clearly encompasses three prior years upon notification of the concerned section. Thus the contention of the ROC that the petition is not maintainable in respect of any financial year prior to 2016-17 cannot be accepted. Further, once the Act itself provides for a voluntary revision of financial statements or Board's reports, i....