DCM Limited to file appeal against Income Tax assessment order on alleged bogus purchases

New Delhi: The Income Tax Department has passed an assessment order dated March 30, that the erstwhile Textile Business Undertaking (referred to as Demerged Undertaking) of DCM Limited, which was demerged into DCM Nouvelle Limited under a scheme of arrangement, had made bogus purchases of Rs 25.89 crore from a supplier during the FY 2018-19.

“In the assessment order, the said conclusion has been drawn by the Department primarily on account of non-receipt of information/reply from the said supplier in pursuance of notice issued by the Department to the said supplier u/s 133(6) of the Act and in the absence of any corroborative evidence from the said supplier," DCM Limited said.

“As per the notice of demand u/s 156 of Income Tax Act, zero demand has been determined to be payable by the Company (basis of the said notice of demand has not been made available in detail and hence, the impact is not quantified appropriately as on date)”, the company said.

DCM Limited is examining the order/notice received and shall take appropriate steps including filing of appeals, rectification applications, seeking indemnity for the claim.

“Also as per the order of NCLT dated 01.05.2019, all liabilities and dues of the demerged undertaking shall stand transferred to DCM Nouvelle Limited. Pursuant to the above, management does not expect the said order to have any material impact on the financial, operation or other activities of the Company as any liability and/or demand arisen under the said assessment order pertains and belongs to DCM Nouvelle Limited,” DCM Limited said.

“The Company intends to file an appeal before the Appellate Authority against the said Assessment order within time limits prescribed under Income Tax Act including contesting the penalty proceedings initiated u/s 274 read with section 271 AAC(1) of the Act. The said proceedings shall be initiated by the Company on notice or as per the advice of DCM Nouvelle Ltd for their benefit and at their cost and consequences,” it added.