The tax has been computed for two assessment years 2002-03 and 2007-08, when B. Ramalinga Raju fiddled with the accounts by overstating the the company's profits and cash balances.

The company was took over by Mahindra & Mahindra's software unit Tech Mahindra in April 2009 through a government-led auction.

In a release to the stock exchanges, the company said that it has received the notice from the Additional Commissioner of Income Tax of draft of proposed assessment orders together with draft notices of demand under the Income Tax Act, 1961, for Rs 1,037.69 crore and Rs 1,075.73 crore for assessment years 2002-03 and 2007- 08, respectively.

In September 2010, Mahindra Satyam unveiled restated accounts with the accounting wangle by Raju of Rs 7,934.9 crore since 2002.

The STP tax facility, which the company was enjoying previously has been withdrawn from the current fiscal year.

The draft tax notices from I-T department include the fictitious income wrongly stated by Raju, the company described the move as unfair, claiming that the IT department had arrived upon the tax amount based on “fictional'' income generated during Ramalinga Raju's time, an argument that company has failed to convince the Central Board of Direct Taxes with.

Local authorities have refused to entertain the claim, as under local laws, past tax filings cannot be reviewed after a certain period of time.

Hence, the company has filed a several writ petitions before the Andhra Pradesh High Court to sought a reassessment of tax filings. These petitions are pending before the High Court, it said.
The company was ordered to get its accounts audited for this period under Section 142 (2A) of the Income-Tax Act. Sub-section 2A of Section 142 confers power on the assessing officer to order a special audit.

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