Recently, a scrutiny assessment was conducted on SKM for income tax. For those who don’t know:
The income tax assessment is a critical procedure conducted by the Income Tax Department to authenticate the details furnished by taxpayers in their tax returns. This assessment is designed to verify the precision and legality of the assertions, deductions, and other particulars provided by taxpayers in their returns.
After the assessment, SKM have been ordered to pay a total sum of Rs 3.5 Cr over disputed additions to taxable income. This is a step in the wrong direction for SKM.
A company has the following options with the assessment:
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Accept the order issued by the Income Tax authority and pay any outstanding taxes or claim a refund.
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If there’s a clerical error, submit a claim for reimbursement under Section 154.
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Submit a revised application to the Commissioner of Income Tax under Section 263/264.
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Appeal the judgment if necessary.
SKM have opted for option 4 to appeal the judgement with "strong facts and legal
propositions in favour of the company ". Good news about this is: Until the appeal is concluded, they don’t have to pay the demanded amount. This could take several months. And if the appeal moves in SKM’s favour, then this will all just go away. Bad news: Hurts investor trust. Might lead to a lot of FUD in the coming days.
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