State Bank of India and Standard Chartered Bank have contested the demand raised by the Income Tax Department about the recovery of Harshad Mehta scam proceeds. | |
| In an appeal filed with the special court for trial of offences relating to transactions in securities, these banks have submitted that the claim of the Income Tax Department of around Rs 1,800 crore is a very "high". |
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| They have requested the court for inspection of the income tax assessment order. |
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| The special court, in its order dated December 21, 2004, had directed the Income Tax Department to hand over the assessment order to the banks for inspection. |
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| The department had made a claim of Rs 1,800 crore for the assessment year 1992-93 and 1993-94, whereas the banks have a claim of Rs 3,000 crore. |
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| This order has facilitated an inspection of the assessment order of income tax by any party who has a decree as a creditor to Harshad Mehta. |
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| However, the Income Tax Department in its petition had appealed that the assessment order is a confidential document under Section 138 of IT Act and could not be shared with any party. |
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| In 1996, the special court had directed an ad hoc payment of Rs 1,200 crore in subsequent years to the income tax on priority basis over others under section 11 (2) of IT Act. |
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| Being ad hoc in nature, the payments are liable to be returned to the court if any party puts an objection. |
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| In 2004, SBI objected to the ad hoc payment to income tax in an appeal to the Supreme court. The Supreme Court had asked the banks to approach the special court for redressal. |
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| The special court in its order has stated that if any party applies to the appropriate authority of the income tax department for inspection of the record in relation to any assessment proceedings, the application should be considered under three conditions. |
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| It will be considered if the income tax department is going to make a demand on the basis of the assessment order for being paid on priority basis under Section 11(2). |
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| The two other conditions are the person making an application has a decree against the notified party passed by a competent court and the person has paid the necessary fees. |
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