SC asks Satyam Rs 617 cr bank guarantee to defreeze accounts

SC asks Satyam Rs 617 cr bank guarantee to defreeze accounts

The Supreme Court on Friday directed Mahindra Satyam to file a petition before the CBDT relating to its tax dispute within two weeks, while asking the firm to furnish a bank guarantee of Rs 617 crore within 48 hours to defreeze its bank accounts.

A three-judge bench headed by Chief Justice S H Kapadia directed Satyam to file its representation before the Central Board of Direct Taxes (CBDT) within two weeks, asking to requantify its tax liability.

The court also fixed CBDT a time frame of two weeks to decide the Income Tax liability of the company and pass a "reasoned order".

"Within two weeks the petitioner company (Mahindra Satyam) would file a comprehensive petition making its representation before CBDT giving all requisite information for re-assessment of income for year 2003-2004 to 2008-09," the bench said.

"On the receipt of representation, CBDT would hear and decide the matter within two weeks," the bench added.

The apex court also said the accounts of the company will be defreezed, subject to payment of a bank guarantee of Rs 617 crore before its registry, by 25th April.

The apex body also made it clear that "the Chairman of Mahindra Satyam would file an undertaking within 48 hours before the registry of the Supreme Court that the company would file the bank guarantee by April 25".

When contacted a Mahindra Satyam official declined to comment stating the matter is subjudice.

However, the apex court also clarified,"we make it clear that we do not make any opinion or expression in this matter" and gave CBDT free hand to decide.

It also said that "Satyam can challenge the order of the CBDT if aggrieved".

During the proceedings, senior advocate Harish Salve representing the scam hit IT firm said that the demand of the Income Tax department was based on the cooked account books during the regime of its former founding Chairman B Ramalinga Raju.

"Even the Serious Fraud Investigation Officer (SFIO) in its report has charged the previous management with paying more income tax than the actual liability. The previous mangement has overstated the company's income," said Salve adding that Satyam has paid more tax than required.

He also requested the apex court to direct the company to file a fresh income tax return and reassess its income under section 147 of the Income Tax Act.

However, Attorney General Goolam E Vahanvati appearing for the government said the matter would then go on.

"Satyam's plea before the Andhra Pradesh High Court was that it was not given a chance to be heard, CBDT is ready to give it", he said.

"Let them raise all issues before CBDT," said Vahanvati.

Last year, the income tax department had served a notice to Mahindra Satyam, demanding an audit of its accounts for the assessment years 2003-04 to 2008-09 as the company was found guilty of illegally claiming tax credit on fictitious income during the period.

During Friday's hearing, Mahindra Satyam informed the Supreme Court that it will withdraw the petition filed against Tax Department in the Andhra Pradesh High Court challenging its direction to pay tax.

Satyam computer Services, which was hit my a multi-crore fraud committed its owner Ramalinga Raju, was taken over by the Mahindra group in 2009 and rechristened as Mahindra Satyam.