# Punishment for Contravention by Auditor / Company — Section 147

## Contravention by Company — Section 147(1)

If any of the provisions of Sections 139 to 146 (both inclusive) is contravened —

Company: Fine ₹25,000 minimum to ₹5,00,000 maximum.
Every officer in default: Fine ₹10,000 minimum to ₹1,00,000 maximum (in addition or imprisonment up to 1 year as applicable).

## Contravention by Auditor — Section 147(2)

If an auditor contravenes Sections 139, 143, 144 or 145:

Nature of contravention	Punishment
Default without intention to deceive	Fine ₹25,000 to ₹5,00,000 OR 4 times the remuneration, whichever is less
Default knowingly or wilfully, with intention to deceive the company / its shareholders / creditors / tax authorities	Imprisonment up to 1 year AND fine ₹50,000 to ₹25,00,000 OR 8 times the remuneration, whichever is less

## Consequences in Case of Wilful Default — Section 147(3)

Where an auditor has been convicted u/s 147(2), he shall be liable to:

1. Refund the remuneration received by him to the company; AND

2. Pay damages to the company, statutory bodies/authorities, or to any other persons for loss arising out of incorrect or misleading statements made in his audit report.

## Liability in Case of Audit Firm — Section 147(4)

Where it is proved that the partner(s) of the audit firm has or have acted in a fraudulent manner or abetted or colluded in any fraud:

Concerned partner(s) and the firm shall be liable jointly and severally for criminal and civil liabilities.
However, only the concerned partner(s) shall be liable for criminal proceedings.

## Quick Comparison

	Statutory Auditor	Cost Auditor (Sec 148)
Default	Fine 25K–5L OR 4× remn.	Same — applies via Sec 147(2) to (4)
Wilful default	Imprisonment + Fine 50K–25L OR 8× remn.	Same

Worked example

### Example 1

Q. Auditor of P Ltd, knowingly conceals a material fraud committed by directors. Penalty?

A. This is a wilful default with intent to deceive. He is punishable u/s 147(2) with imprisonment up to 1 year and fine ₹50,000 to ₹25,00,000 OR 8 times the remuneration, whichever is less. He must also refund remuneration and pay damages u/s 147(3).

⚠️ Common exam mistakes

Forgetting the 'whichever is less' qualifier between fine amount and multiple of remuneration.
Mixing up 4× / 8× of remuneration ratios for default vs wilful default.
Not realising that the audit firm AND concerned partner are jointly and severally liable for civil liability, but only the concerned partner faces criminal proceedings.
Forgetting the additional civil consequences in Section 147(3) — refund of remuneration + damages.

Bare-Act text Section 147 · Companies Act, 2013 · click to expand

Section 147(2): If an auditor of a company contravenes any of the provisions of section 139, section 143, section 144 or section 145, the auditor shall be punishable with fine which shall not be less than twenty-five thousand rupees but which may extend to five lakh rupees or four times the remuneration of the auditor, whichever is less: Provided that if an auditor has contravened such provisions knowingly or wilfully with the intention to deceive the company or its shareholders or creditors or tax authorities, he shall be punishable with imprisonment for a term which may extend to one year and with fine which shall not be less than fifty thousand rupees but which may extend to twenty-five lakh rupees or eight times the remuneration of the auditor, whichever is less.

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Punishment for Contravention — Section 147

Worked example

⚠️ Common exam mistakes