RST & Associates, Chartered Accountants, were conducting the statutory audit of Gee Infrastructure Ltd. for the financial year ended 31st March,…

CA Intermediate · Auditing and Ethics · MTP · September 2026
RST & Associates, Chartered Accountants, were conducting the statutory audit of Gee Infrastructure Ltd. for the financial year ended 31st March, 2026. During the audit, the auditor noted that proceedings had been initiated against the company under the Benami Transactions (Prohibition) Act, 1988 in relation to an immovable property allegedly held in the name of another person for the benefit of the company. The property had been acquired several years earlier and the authorities were investigating the nature of ownership, the identity of beneficiaries and the role of the company in the transaction. The auditor further observed that certain details relating to the property were not reflected in the books of account and management was required to make appropriate disclosures in the financial statements regarding the ongoing proceedings. In the light of above facts, state the disclosures required where proceedings have been initiated or are pending against a company for holding benami property.

Suggested Answer and Working Notes:

Disclosure in case of Benami Properties held by the Company: Where any proceedings have been initiated or pending against the company for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 and the rules made thereunder, the company shall disclose the following: Details of such property, including year of acquisition, Amount thereof, Details of Beneficiaries, If property is in the books, then reference to the item in the Balance Sheet, If property is not in the books, then the fact shall be stated with reasons, Where there are proceedings against the company under this law as an abetter of the transaction or as the transferor, then the details shall be provided, Nature of proceedings, status of same and company's view on same. In the given case of Gee Infrastructure Ltd., since proceedings have been initiated under the Benami Transactions (Prohibition) Act, 1988, the company is required to disclose complete particulars of the alleged benami property, beneficiaries, amount involved, reasons for non-recording in the books (if applicable), details of proceedings and management's view thereon, so that users of the financial statements are adequately informed about the matter.

Topics: Audit of Items of Financial Statements

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