Section 47 of the Code on Wages, 2019: Presumption about Accuracy of Balance Sheet and Profit and Loss Account

Section 47 of the Code on Wages, 2019 deals with the evidentiary treatment of audited balance sheets and profit and loss accounts of corporations and companies, other than banking companies, in specified proceedings relating to bonus disputes and appeals under the Code.

Current legal status: The Code on Wages, 2019 has been brought into force substantially with effect from 21 November 2025. Sections 43 to 66, which include Section 47, were brought into force from that date.

What Section 47 Provides

It applies to a corporation or company, other than a banking company.
It concerns balance sheets and profit and loss accounts produced in specified proceedings under the Code.
The accounts must have been duly audited by the Comptroller and Auditor-General of India or by auditors qualified under Section 141 of the Companies Act, 2013.
The authority, appellate authority, Tribunal or arbitrator may presume the statements and particulars in those audited accounts to be accurate.
The corporation or company ordinarily need not separately prove their accuracy by affidavit or another mode.
The presumption is not conclusive. If the adjudicating authority considers the accounts inaccurate, it may take necessary steps to determine their accuracy.
A Trade Union, or employees where there is no Trade Union, may seek clarification regarding an item in the balance sheet or profit and loss account.

Section 47 - Statutory Provision

47. (1) Where, during the course of proceedings before -

(a) the authority under section 45; or

(b) the appellate authority under section 49; or

(d) an arbitrator referred to in clause (aa) of section 2 of the Industrial Disputes Act, 1947,

in respect of any dispute of the nature specified in sections 45 and 46 or in respect of an appeal under section 49, the balance sheet and the profit and loss account of an employer, being a corporation or a company (other than a banking company), duly audited by the Comptroller and Auditor-General of India or by auditors duly qualified to act as auditors of companies under section 141 of the Companies Act, 2013, are produced before it, then, the said authority, appellate authority, Tribunal or arbitrator, as the case may be, may presume the statements and particulars contained in such balance sheet and profit and loss account to be accurate and it shall not be necessary for the corporation or the company to prove the accuracy of such statements and particulars by the filing of an affidavit or by any other mode:

Provided that where the said authority, appellate authority, Tribunal or arbitrator, as the case may be, is satisfied that the statements and particulars contained in the balance sheet or the profit and loss account of the corporation or the company are not accurate, it may take such steps as it thinks necessary to find out the accuracy of such statements and particulars.

(2) When an application is made to the authority, appellate authority, Tribunal or arbitrator, as the case may be, referred to in sub-section (1), by any Trade Union being a party to the dispute or as the case may be, an appeal, and where there is no Trade Union, by the employees being a party to the dispute, or as the case may be, an appeal, requiring any clarification relating to any item in the balance sheet or the profit and loss account, then such authority, appellate authority, Tribunal or arbitrator, may, after satisfying itself that such clarification is necessary, by order, direct the corporation or, as the case may be, the company, to furnish to the Trade Union or the employees such clarification within such time as may be specified in the direction and the corporation or, as the case may be, the company, shall comply with such direction.

Meaning and Effect of Section 47

Section 47 creates a procedural presumption concerning specified audited financial statements. Where the conditions in the section are satisfied, the relevant authority may treat the statements and particulars contained in the audited balance sheet and profit and loss account as accurate without requiring the employer to prove every entry independently.

The provision is particularly relevant to disputes concerning bonus because financial statements may be important in determining matters connected with allocable surplus, available surplus and bonus payable under the Code.

The word "may" is important. Section 47 does not make an audited balance sheet or profit and loss account absolutely conclusive. It permits the authority to presume accuracy when the statutory conditions are satisfied, while preserving its power to examine the accounts where their accuracy is questioned.

Who Can Rely on the Presumption?

The provision concerns an employer that is a corporation or a company, but expressly excludes a banking company. The financial statements must also satisfy the audit requirement specified in Section 47.

The accounts may be considered in proceedings before the authority under Section 45, the appellate authority under Section 49, a Tribunal, or the arbitrator referred to in the statutory provision.

Audit Requirement under Section 47

The presumption applies where the balance sheet and profit and loss account have been duly audited by the Comptroller and Auditor-General of India or by auditors duly qualified to act as company auditors under Section 141 of the Companies Act, 2013.

Section 141 of the Companies Act, 2013 deals with the eligibility, qualifications and disqualifications of company auditors. Among other requirements, it provides the statutory framework governing who is eligible to be appointed and act as an auditor of a company.

Presumption of Accuracy Is Rebuttable

The proviso to Section 47(1) protects the adjudicatory process where the financial statements appear unreliable. If the authority, appellate authority, Tribunal or arbitrator is satisfied that the statements or particulars in the balance sheet or profit and loss account are not accurate, it may take such steps as it considers necessary to determine their accuracy.

Therefore, an audit does not prevent further scrutiny where circumstances justify examination of the figures or particulars appearing in the financial statements.

Right to Seek Clarification under Section 47(2)

Sub-section (2) provides an important mechanism for obtaining clarification about items appearing in the balance sheet or profit and loss account. A Trade Union that is a party to the dispute or appeal may apply for such clarification. Where there is no Trade Union, employees who are parties to the dispute or appeal may make the application.

The authority must first satisfy itself that the requested clarification is necessary. It may then direct the corporation or company to provide the clarification within the period specified in its direction. The corporation or company is required to comply with that direction.

Relationship with Sections 45, 46 and 49

Section 47 should be read together with the surrounding provisions of the Code. Section 45 concerns disputes regarding bonus payable under the Code. Section 46 deals with reference of specified disputes, while Section 49 provides for appeals.

Section 47 supplies an evidentiary rule for audited corporate financial statements when such statements become relevant in those proceedings.

Current Labour Law Note

The Central Government brought the four Labour Codes into effect from 21 November 2025. The commencement notification for the Code on Wages, 2019 includes Sections 43 to 66 and therefore covers Section 47.

The enacted text of Section 47 contains a reference to an arbitrator under clause (aa) of section 2 of the Industrial Disputes Act, 1947. That statutory wording has been reproduced above as appearing in the Code. For current industrial-relations proceedings, the Code on Wages should also be read with the applicable commencement, repeal, savings and transitional provisions of the labour-code framework.

Practical Importance of Section 47

Section 47 reduces unnecessary formal proof of duly audited corporate accounts while retaining safeguards against inaccurate financial statements. It also gives participating Trade Unions or employees a statutory route to request clarification about relevant accounting entries.

In practical terms, the provision seeks to balance procedural efficiency with the need for scrutiny of financial information where the accuracy of that information is material to a bonus dispute or appeal.