The Supreme Court Wednesday held that the Mumbai Income Tax Commissioner was “perfectly justified” in conducting an inquiry into expenditure reportedly incurred by actor Amitabh Bachchan for security purposes during the assessment year 2001-02.
A bench of Justices Ranjan Gogoi and P C Pant upheld the order of Commissioner of Income Tax (CIT) whereby Bachchan’s tax assessment was reopened and revised. It allowed the revenue deparment’s appeal against orders of Bombay High Court and Income Tax Appellate Tribunal, which had struck down the CIT’s order.
By filing a re-revised I-T return in 2003, Bachchan had claimed additional expenses to the tune of 30 per cent of his gross professional receipts (Rs 3.17 crore). Explaining the claim, he had told the assessing officer that the money was spent on security since “he has to protect himself from various threats to his life… and to avoid extortion of money from gangsters”. While not disclosing details of security agencies on ground of personal safety, he had said the payments were made out of cash balances available.
Later, he sought to withdraw the claim. When the assessing officer asked him why the expenses claimed should not be treated as unexplained expenditure, he said he was wrongly advised in making the claim as a standard deduction and that since he had now himself chosen to withdraw it, Rs 3.17 crore need not be treated as his income for such financial year. The assessing officer accepted the reply and dropped the matter, but CIT reopened it, saying the case required further probe.
Saying that it “wholly” agrees with CIT’s view, the bench held: “Making a claim which would prima facie disclose that the expenses in respect of which deduction has been claimed has been incurred and thereafter abandoning/withdrawing the same gives rise to the necessity of further enquiry in the interest of the Revenue. The notice issued under Section 69-C of the Act could not have been simply dropped on the ground that the claim has been withdrawn.” It revived CIT’s order of revised assessment in March 2006 by which the previous tax assessment was set aside. Subsequently a fresh tax liability was arrived at by order in December 2006 and the bench has now said this re-assessment order could be challenged by Bachchan, “if he is so inclined and so advised”.
Reacting to the order, Bachchan’s chartered accountants and legal advisory team said the case has not been re-opened and that the actor has been given the right to appeal against the re-assessment order.
A statement released by his legal team said, “The case has not been reopened and also the case has no relation to KBC (Kaun Banega Crorepati) whatsoever in any matter or context.”
It also said the apex court has given Bachchan “the right to appeal against the re-assessment order”.
(With inputs from Sonup Sahadevan)