Responsibility of auditor in respect of as 29 - urgent

One Case Study  -  One Corporate assesse is having legal litigation with his debtor in which high court has given order in favour of debtor ordering compensation of 5 lakhs plus interest. Corporate Assesse has filled simultaneous claim with MSME in same matter. Debtor in whose favour high court has given decision has informed auditor of Corporate Assesse to make provision in books to tune 5 lakhs plus interest. Corporate Assesse is not willing to make such provision in its book as on 31 March 2017. What shall be responsibility and risk of auditor as per IT Act and Companies Act if such provision is not by Corporate Assesse and also to what extent AS 29 shall apply?