MCA levies penalty on Auditors for Non-Reporting of Non-Compliance in Audit report
The Ministry of Corporate Affairs has imposed penalty on Auditors for Non-Reporting of Non-Compliance in Audit report in the matter of Sonasuman Constech Engineers Private Limited.
Facts of the Case:
As per Section 129(1) of the Companies Act 2013, the Financial Statements shall give true and fair view of the state of affairs of the Company, comply with the accounting standards notified under section 133 and be in form as provided in Schedule III.
For each class of equity share capital as per Schedule III of the Companies Act, 2013, the Company needs to disclose in the financial statements, the shares held by each shareholder holding more than five percent shares specifying the number of shares held.
Further, the company did not disclose the number of shares issued, subscribed and fully paid, and subscribed but not fully paid, reconciliation of number of shares outstanding at the beginning and at the end of the reporting period.
Further, company had received loans from relative but same was not separately disclosed as advance from relatives nor sub-classified as secured/ unsecured etc. Neither did it disclose related party transaction and the nature of relationship or name of related party.
However, the company has not disclosed the same in the financial statement for FY 2019-20 and has contravened the provisions of section 129 read with Schedule III of Companies Act, 2013.
Thus, the auditor has failed to comment on the same in Audit report, for the aforesaid financial year.
Whereas, this office has issued show cause notice for default under section 143 of the Companies Act, 2013 vide this office letter no. ROC/PAT /SCN/sec.143/36124/2216-2217 dated 05.12.2022.
However, this office has not received any reply from the abovesaid auditors. Hence, the provisions of Section 143 of the Companies Act, 2013 has been contravened by the auditors and therefore they are liable for penalty u/s. 450 of the Companies Act, 2013 for the Financial Years 2017-2018, 2018-2019 and 2019-2020.
Having considered the facts and circumstances of the case and after taking into account the provisions of Rule-11 of Companies (Adjudication of Penalties) Rules, 2014 (as amended), MCA hereby impose a penalty of Rs. 10,000 (Ten Thousand) on Shri Ravikant Kumar, Kumar Vivek & Associates and Rs. 5000 on Shri Basant Kumar Jaiswal, Basant Jaiswal & Associates as per Table in the order for violation of Section 143 of the Companies Act, 2013 for the financial years 2017- 2018, 2018-2019 and 2019-2020.
The noticee shall pay the amount of penalty individually by way of e-payment (available on Ministry website) under “Pay miscellaneous fees” category in MCA fee and payment Services within 90 (ninety) days of this order. The Challan/SRN generated after payment of penalty through online mode shall be forwarded to this office.
Appeal against the said order may be filed with the Regional Director within 60 days from the receipt of this order.
To read the order CLICK ME.
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