I-T dept may reopen Satyam's 6-year returns

The taxman is awaiting restated accounts to initiate action.The Income Tax (I-T) department will relook into the Satyam case in view of the disclosure by the statutory auditor, Price Waterhouse, that its audit reports on the company should not be relied upon.While carrying out the investigation on its own, the department will also wait for the restated accounts of the company, whose erstwhile chairman and promoter B Ramalinga Raju has admitted that he had inflated the revenue and profit figures for years. Raju is now in judicial custody for various offences, including fraud.“If there is a case of gain in terms of additional tax collection, then Satyam’s returns will be reopened,” said an I-T official.Once the restated data is available, the department will examine and fit into the tax implication for the past six years, the maximum period up to which past tax returns can be reopened. If it is found that certain income has escaped the tax net or violation of income tax law has taken place, a notice may be issued under section 148 of the Income Tax Act to reopen the returns. The department will also examine whether the company has taken higher tax exemption on export income under the section 10A of the Act, which gives tax exemption to income earned from software exports under Software Technology Park Scheme. If found that income from domestic business was shown under the head of export income, then the department will initiate action to recover tax dues with interest and penalty.The department will also investigate the role of the auditors under Section 278 of the Act to see whether they have abetted the company to evade tax on income chargeable to tax. If found guilty, the auditors will be prosecuted, sources said.Among other documents, the department will examine the claim that Satyam produced physical documents before the auditors as proof of banks deposits, tax deducted at source (TDS) certificates and tax refunds, if any. The department may seek data from banks also. Price Waterhouse has informed all authorities including the Central Board of Direct Taxes that its audit report should not be relied upon in view of the admission of fraud in balance sheet by Raju.