ADJ
– DG - 05
PENALTY FOR DEFECT IN INFORMATION MENTIONED IN
AOC-4 XBRL
Date: 26.07.2023
SHORT
SUMMARY:
As Per Rule 8(3) of
Chapter XXIV, The Companies (The Registration Offices and Fees) Rules,2014: The
authorized signatory and the professional, if any, who certify e-form shall be
responsible for the correctness of the contents of e-form and correctness of
the enclosures attached with the electronic form.
Every
corporation must comply with the above provision in order to preserve good
governance. Many Companies registered with the MCA (Ministry of Corporate
Affairs) do not follow this clause of the Company Act 2013.
Ministry of Corporate Affairs appointed
undersigned as Adjudicating Officer in exercise of the powers conferred by
Section 454 of the Act, 2013
The Company AT
& T Communication Services India Private Limited launched a Suo moto
submission of an application respecting the terms of As Per Rule 8(3) of
Chapter XXIV, The Companies (The Registration Offices and Fees) Rules, 2014. In
this editorial we will discuss one of those order issued by ROC Delhi ;&
Haryana. The complete matter shall be covered here.
“Adjudication Order in the Matter of
AT & T COMMUNICATION SERVICES INDIA PRIVATE
LIMITED”
1. FACTS
OF THE CASE:
a)
Company had erroneously reported the total amount of
turnover from its principal product or services under the HSN Code.
b)
Such turnover came into the attention of the company
when it received the Show Cause Notice from the Cost Audit Branch of Ministry
of Corporate Affairs on 09.05.2021.
c)
The Cost Audit Department sent a letter to company
on 23.03.2023 for some clarifications.
d)
In response, the reply have been given by the
Company on 01.04.2023, 28.04.2023 & 12.05.2023 which includes a certificate
from CA who has certified HSN code wise break up of Annual Turnover for the
F.Y. 2020-21.
e)
As per Reply given by the Company, Cost audit Branch
of MCA observed that company had erroneously reported the total amount of
turnover in the said AOC-4 XBRL for F.Y. 2020-21.
f)
A show cause notice was issued to the company and
its signatories on 31.05.2023
g)
Company has given reply against notice on 09.06.2023
and it was Stated that company had erroneously reported the total amount of
turnover in the e-form AOC-4 XBRL for F.Y. 2020-21.
h)
The Company has filed a Suo-moto application vide
GNL-1 e-form on 25.01.2023 filed by the company regarding adjudication of the
defect in filing of e-form AOC-4 XBRL dated 28.10.2021.
2. ORDER:
As
per Section 450 (Punishment where no specific penalty or punishment is provided)
of Companies Act 2013: If a Company or any officer of a Company or any other
person contravenes any of the provisions of this Act or the rules made
thereunder, for which no penalty or punishment is provided elsewhere in this
Act, the Company and every officer of the Company who is in default or such
other person shall be liable to a penalty of ten thousand rupees, and in case
of continuing contravention, with a further penalty of one thousand rupees for
each day after the first during which the contravention continues, subject to a
maximum of two lakh rupees in case of a company and fifty thousand rupees in
case of an officer who is in default or any other person.
ROC Carefully Perused the Reply Made by the Company and
Found that:
I.
There
is a default /non-compliance of the provision of Rule 8(3) of the Companies
(Registration Offices and Fees) Rules, 2014 and as such there is no specific
penalty under these rules. Hence, provision of section 450 of the Companies
Act, 2013 gets attracted.
II.
Directors
& Certifying Professional certifying the form with Incorrect Information,
accordingly they are also liable for the violation.
Important Point: The subject company does not get
covered under the purview of small Company as defined u/s 2(85) of the Act.
Hence, the benefit of section 446B would not be applicable on the company.
The Adjudicating Officer do hereby impose a penalty under
Section 450 on the Company and Professional who certified the form as per Table
below for violation of Rule 8(3) of Chapter XXIV, The Companies (The
Registration Offices and Fees) Rules,2014.
|
Violation Section
|
Penalty
imposed on Signatories
|
Penalty
Imposed (Rs.
|
|
Rule
8(3) of Chapter XXIV, The Companies (The Registration Offices and Fees)
Rules,2014.
|
Director
|
10,000
|
|
Certifying Professional
|
10,000
|
|
|
Total
|
20,000
|
3.
CONCLUSION: -
The foremost reason of receiving of notice form cost audit
department can be followings:
ü Misreporting in Financial Statement.
ü Misreporting of activity code in AOC-4 (Filing of Financial
statement)
ü Misreporting activity code in MGT-7 (Annual Return)
Professionals should take proper care
while filing the above-mentioned forms and documents.
Further, Every Company Secretary and
auditor of the Company should report this non-compliance in MGT-7, MGT-8, and
their Statutory Audit report to avoid future penalties.
Author – CS Divesh Goyal, GOYAL DIVESH & ASSOCIATES Company
Secretary in Practice from Delhi and can be contacted at csdiveshgoyal@gmail.com.
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