Secured loan

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Kunal (Querist)
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04 February 2016 if secured loan taken from bank but it skip in balance sheet...what will happen or shown only 50% amount of the loan..is it valid

Ganeshbabu K

Ganeshbabu K (Expert)
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04 February 2016 I am unable to understand how balancesheet will tally if you do that,
secured loan sanctioned was required to be entered in books of accounts,
prepare balancesheet again incorporating secured loan details properly

Kunal

Kunal (Querist)
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04 February 2016 Actually it is shown only half portion of the loan... e.g. loan amount 100 lac but shown only 50 lac...and t/o is slightly increased shown as compared with previous year

Asha Kanta Sharma online

Asha Kanta Sharma online

(Expert)
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23 July 2025 Understating a **secured loan** in the balance sheet — whether deliberately or by error — has **serious legal, regulatory, and financial consequences**. Here's a breakdown of what happens and what you **must do**:

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### 🔍 What Happens if Only 50% of the Loan Is Shown?

If the actual **loan amount is ₹1 crore**, but only **₹50 lakhs is shown**:

1. **Balance Sheet Misstatement**:

* Your liabilities are understated.
* Your balance sheet will likely not tally unless you’ve made corresponding manipulations (e.g., inflated revenue or assets).
* This is a **violation of accounting standards** and **Companies Act, 2013**.

2. **Violation of Accounting Standards**:

* As per **AS 1 (Disclosure of Accounting Policies)** and **AS 9/AS 11 (Revenue/Foreign Exchange)**, all financial liabilities must be properly disclosed.
* Misstatement is considered **window dressing** or **fraudulent representation**.

3. **Company Law Violation**:

* Under **Section 129** and **Section 134** of the Companies Act, 2013, financial statements must give a **true and fair view**.
* Directors who sign off knowingly on such statements are **personally liable**, and the **company can be penalized**.
* Auditor may report it as a fraud under **CARO (Companies Auditor’s Report Order)** and **Section 143(12)**.

4. **Banking Consequences**:

* If the bank discovers this misreporting, it may lead to:

* Recall of the loan
* Withholding further disbursements
* Blacklisting the company or promoters

5. **Income Tax Impact**:

* The understatement may be viewed as **attempt to evade taxes** (especially if revenue or turnover is artificially inflated to balance books).
* Could lead to reopening of assessment and penalties under **Section 271J / 270A** of the Income Tax Act.

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### 🛠️ What You Should Do Now:

#### ✅ Immediate Action:

* **Revise the Financial Statements** if not yet filed with ROC.
* If already filed:

* File **revised financials** along with **revised Board Report** (possible only if AGM is not yet held).
* If AGM is over, you may consider **restating under Section 131** of Companies Act, with NCLT approval.

#### ✅ Inform the Auditor:

* Let your auditor know ASAP; they are legally bound to report any known misstatement.

#### ✅ Correct Future Reporting:

* Make sure next year’s **opening balances** reflect full liability and reconcile discrepancies.

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### 📌 Summary

> ❌ **Showing only part of a secured loan in the balance sheet is not valid.**
>
> ✔️ **It must be shown entirely**, and financials must reflect the true nature of the company’s position. Any misreporting invites **regulatory scrutiny**, **legal penalties**, and **audit complications**.

If you want, I can help you prepare a correction note or revised financial summary.

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