Govt considering special audit to fix tax liability of Satyam
April, 20th 2009
The tax department is considering a special audit of the accounts of the scam-ridden Satyam to ascertain tax liability of the IT firm.
"We are considering a special audit of the books of Satyam. An order for special audit of the accounts of Satyam is likely to be passed within a week," a tax official said.
The Income Tax Department can order a special audit of the accounts under section 142 (A) of the Income Tax Act in the interest of revenue. Under the special audit, the books of accounts are re-examined by the auditors appointed by the department.
When contacted, the Central Board of Direct Taxes (CBDT) spokesperson declined to comment on the issue.
"Special audit for Satyam is the only viable option", said Aseem Chawla, Partner of Amarchand Mangaldas, the law firm which was engaged by the government-nominated board of the Satyam Computer to facilitate acquisition of the company.
According to Chawla, the special audit of the IT company to ascertain its actual tax liability was necessary in view of the admission of fudging of accounts.
Satyam plunged into a crisis in January after its founder B Ramalinga Raju revealed an accounting scam involving thousands of crores of rupees. He admitted to doctoring of accounts and inflating profits for the past many years.
Although the new Satyam board had appointed global auditing firms KPMG and Deloitte to re-state the books of accounts, it would be difficult for the department to accept the report of these auditors as they were not appointed by the authorities.
"We can only conduct an audit or even order it after other firms restating the accounts of Satyam hand over the company's books to us," sources said.
The tax officials further said the department will take a decision on special audit of Satyam after getting the books of accounts.