AP High Court stays IT Departments order to attach Mahindra Satyams bank accounts

The problem for Mahindra Satyam management is far from over. The Andhra Pradesh High Court has ordered both Mahindra Satyam and the Income Tax department to restrain from accessing the bank accounts in Hyderabad till a final order is passed. The interim order was passed by the Divisional bench, comprising Justices V.V.S. Rao and Ramesh Ranganathan..The problem for Mahindra Satyam management is far from over. The Andhra Pradesh High Court has ordered both Mahindra Satyam and the Income Tax department to restrain from accessing the bank accounts in Hyderabad till a final order is passed. The interim order was passed by the Divisional bench, comprising Justices V.V.S. Rao and Ramesh Ranganathan..The IT Department had on March 22, frozen the bank accounts of Mahindra Satyam after the latter failed to pay a tax demand of Rs. 617 crore. Mahindra Satyam moved the AP High Court seeking a stay challenging the demand notice of Central Board of Direct Taxes (CBDT)..The demand for tax has been raised on the basis of the income declared by the company during disgraced former chief Ramalinga Raju’s time i.e. from 2002-08. The present management believes that this income is forged..The IT department has refused to agree that Satyam had fictitious income and instead insisted that it was real income. The IT department is not willing to accept the restated account because as per the Income Tax Act, 1961 financial documents once made and approved by the AGM cannot be altered after a year..Senior Counsel who specializes in income tax litigation, S. Ganesh appearing for Mahindra Satyam argued that when the disputed tax liability is about Rs. 617 crore, the garnishee orders issued to various banks, where the aggregate deposits stand at Rs. 1300 crore are arbitrary and illegal. Mahindra Satyam’s lawyer Vivek Reddy assisted Senior Counsel S. Ganesh..IT department lawyer J.V. Prasad opposed any interim orders being passed at this stage.Meanwhile, the Court has directed the company to submit a written undertaking to the Court that the accounts will not be operated till March 31..Vineet Nayyar, Chairman of Mahindra Satyam speaking to ET said “Foreign tax credit is irrelevant if you do not have income. We feel this claim is not fair because Raju had fabricated huge revenues. Government investigating agencies, including the CBI and the SFIO had said Mahindra Satyam paid tax on this fictional income, which is more than required”..The main issue here is that since the accounts were fudged earlier so how is it possible to pay taxes for unreal income..The matter is now listed on March 30.