Section 130 - Re-opening of Accounts on Court's or Tribunal's Order
# Section 130 - Re-opening of Accounts on Court's/Tribunal's Order
## When Applicable
A company shall re-open Books of Accounts and re-state Financial Statements only when:
### Step 1: Application to Court/Tribunal by Specified Authority
An application must be made to a competent court or Tribunal by:
1. Central Government (CG)
2. Income Tax Authority
3. SEBI
4. Any other statutory regulatory body or authority
5. Any person concerned
### Step 2: Grounds for Application
The applicant must satisfy the court/tribunal that:
Relevant earlier accounts were prepared in a fraudulent manner, OR
The affairs of the company were mis-managed during the relevant period casting a doubt on the reliability of financial statements.
### Step 3: Notice and Representation
Before passing the order, the court/Tribunal shall:
Give notice to CG, IT Authority, SEBI, or any other regulatory body, and
Take into consideration representations made by them.
### Step 4: Order and Effect
The accounts so revised or re-cast shall be final.
## Maximum Period for Re-opening (Inserted by Amendment)
BoA shall not be re-opened or re-cast for a period earlier than 8 financial years immediately preceding the current financial year.
Exception: Where under Section 128(5), CG has directed a company to keep BoA for a period longer than 8 years (extended retention direction), accounts may be re-opened for that longer period.
## Important Points
This is a compulsory provision - once court/Tribunal orders, the company MUST re-open.
This is different from Section 131 (voluntary revision) which is at the option of the company.
Worked example
### Example 1
Example 1: In FY 2025-26, Income Tax Authority discovers that ABC Ltd.'s accounts for FY 2014-15 were prepared fraudulently. Can it apply to re-open?
Answer: No. FY 2014-15 is 11 years before the current year, which is beyond the 8-year limit. The maximum permissible re-opening is from FY 2017-18 onwards (8 years preceding FY 2025-26). Exception: if CG had earlier directed extended retention beyond 8 years, then the longer period applies.
### Example 2
Example 2: Mr. X, a shareholder of XYZ Ltd., directly approaches NCLT to re-open accounts. Is this maintainable?
Answer: Yes. 'Any person concerned' can apply under Section 130. However, Mr. X must satisfy NCLT that earlier accounts were fraudulent OR there was mismanagement casting doubt on reliability. NCLT must give notice to CG, IT, SEBI etc. and consider their representations before passing any order.
⚠️ Common exam mistakes
Confusing Section 130 (compulsory, court/tribunal order) with Section 131 (voluntary, by company itself).
Forgetting the 8 financial years preceding limit - re-opening cannot go beyond this period.
Missing that BOTH grounds (fraud OR mismanagement causing doubt on reliability) are alternatives, either suffices.
Forgetting the procedural requirement of notice to CG/IT/SEBI before the court/Tribunal passes the order.
Thinking only CG can apply - actually CG, IT Authority, SEBI, any regulator, or any concerned person can apply.
Bare-Act text Section 130 · Companies Act, 2013 · click to expand
Section 130 - Re-opening of accounts on court's or Tribunal's orders:
(1) A company shall not re-open its books of account and not recast its financial statements, unless an application in this regard is made by the Central Government, the Income-tax authorities, the Securities and Exchange Board, any other statutory regulatory body or authority or any person concerned and an order is made by a court of competent jurisdiction or the Tribunal to the effect that—
(i) the relevant earlier accounts were prepared in a fraudulent manner; or
(ii) the affairs of the company were mismanaged during the relevant period, casting a doubt on the reliability of financial statements:
Provided that the court or the Tribunal, as the case may be, shall give notice to the Central Government, the Income-tax authorities, the Securities and Exchange Board or any other statutory regulatory body or authority concerned or any other person concerned and shall take into consideration the representations, if any, made by that Government or the authorities, Securities and Exchange Board or the body or authority concerned or the other person concerned before passing any order under this section.
(2) Without prejudice to the provisions contained in this Act, the accounts so revised or re-cast under sub-section (1) shall be final.
(3) No order shall be made under sub-section (1) in respect of re-opening of books of account relating to a period earlier than eight financial years immediately preceding the current financial year.