HYDERABAD, INDIA: Satyam Computer Services, now Mahindra Satyam, which is struggling to get out of the financial scandal, said on Tuesday that the Income Tax Department has issued a notice to it to pay Rs. 616.53 crore in taxes. The Income Tax department also froze the bank accounts of Mahindra Satyam after the software firm failed to pay a tax demand.
In a regulatory filing, Satyam informed BSE that the Central Board of Direct Taxes, under Section 119 of the Income Tax Act, 1961, rejected the petitions filed by the company seeking reliefs for reopening of past assessments for the Assessment Years 2003-04 to 2008-09; determining the actual income based on the findings of investigating agencies; and granting a stay on recovery proceedings for the said assessment years.
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Following this, Satyam filed a writ petition before the High Court of Andhra Pradesh, Hyderabad challenging the order and seeking stay of further proceedings.
“Notice under Section 226(3) has been issued by the Additional Commissioner of Income Tax, Hyderabad, for recovery of Rs. 616,53,92,660. The company filed a writ petition before the Hon’ble High Court of Andhra Pradesh, Hyderabad, challenging the said impugned order and seeking stay of further proceedings,” the company said in a statement.
The Mahindra Group company said that it was surprising that the Central Bureau of Investigation (CBI) and other government agencies were prosecuting former Satyam chief B. Ramalinga Raju for showing fictitious income, but the CBDT made the same fictitious income a basis for demanding taxes.
Mahindra Satyam Chairman Vineet Nayyar argued that there cannot be any income tax on non-existing income. "Income tax will be paid only when there is income. In this case, it has been established that there was no income. Hence, there can't be any tax on that," he said.