HYDERABAD: Stating that Income Tax authorities were demanding payment of tax on fictitious income, as well as interest on such income, Tech Mahindra has disputed the decisions of the department to reject the amended tax returns for the years when Ramalinga Raju, former chairman of Satyam Computers, overstated the revenue.
Representing Tech Mahindra, senior attorney Jehangir Mistry, argued before the Telangana High Court that Income Tax refers to tax on actual income earned, and not on whatever was indicated in the previous tax returns submitted during the Raju era. Raju had inflated the company’s revenue with fake numbers, and even expressed in his resignation letter that he was “riding on a tiger” and saying “I don’t know how to get off without it devouring me”.
The Serious Fraud Investigation Offices (SFIO), Central Bureau of Investigation (CBI), and Law Board are investigating the false revenue for the assessment years 2009-2010 and 2010-2011. However, the Income Tax department seeks to impose a tax of Rs 2,000 crore by reopening assessments and withdrawing the company’s deductions, despite confirmation by the CBI, SFIO, and the High Court that the company had paid excess tax of around Rs 126 crore, Mistry said.
He said that the I-T department relies on conclusions of the CBI and SFIO that Raju manipulated the company’s books of accounts to deny deductions, but when it comes to assessing real income, it was not accepting these same conclusions.
Mistry cited a number of I-T department rulings that contradict the efforts of the Union of India.
He requested the court to undertake a ‘do novo’ real income assessment for Assessment Years (AY) 2002-03 to 2008-09, as an organisation may only be taxed on actual income according to Article 265 of the Constitution.
The bench heard Mistry for a considerable amount of time before adjourning the case to April 12, 2023.