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Commissioner of Income Tax Central-I Vs Amitabh Bachchan

CASE BRIEF

Decided On: 05/07/2012

Case Type: Civil

Bench: S.J. Vazifdar, M.S. Sanklecha, J.

Appellant: Commissioner of Income Tax, Central-I

Respondent: Amitabh Bachchan

Statutes Referred: Income Tax Act, 1961

Facts:

  • The appeal was made under Section 260A of the Income Tax Act, 1961.
  • It challenges the order passed by the Income Tax Appellate Tribunal in respect of the Assessment year 2002-03 on 19th March 2010.
  • On 13th October 2002, the respondent-assessee filed his return of income, declaring his income to be Rs.14.99 crores for the Assessment Year 2002-03 following which, he filed a revised return of income, declaring his income at Rs. 8.11 crores wherein he claimed expenses at 30% ad hoc amounting to Rs.6.31 crores on 31st March 2002.
  • Before the assessment for the Assessment Year 2002-03 could end, the revenue assessee withdraws his return along with his claim of deduction of 30% ad hoc expenses from his total income.
  • On 29th March 2005, assessment for the Assessment Year 2002-03 is completed, and the Assessing Office determines the respondent’s income at Rs.56.41 crores.
  • Seeking to reopen the assessment proceedings for the Assessment Year 2002-03, a notice under Section 148 of the Income Tax Act, 1961 was issued to the respondent-assessee on 5th April 2006. The reasons recorded for reopening the assessment were as under:

“3. On perusal of the records, it is seen that the assessee filed the revised return claiming estimated expenses @ 30% on the professional receipts, based on adhoc estimated expenses claimed by the Insurance Agents because they cannot prove certain expenses being incurred to persuade the Insurers. However, when the Assessing Officers asked to substantiate these expenses, the claim was withdrawn by the assessee without furnishing the details regarding sources for incurring these expenses were incurred out of undisclosed source which required further verification under the provisions of Sec.69 of the Income Tax Act. Further there are certain issues for verification like :

I) Applicability of Sec.40A(3) in respect of cash journal expenses.

II) Personal element in respect of vehicle expenses claimed.

III) Professional expenses claimed were exactly for the purpose of profession or not.

IV) Books of accounts maintained by the assessee were not examined.

V) Assessee maintained 7 bank accounts, but details in respect of 6 bank accounts were furnished. Details in respect of S.B. A/c. No.107456 with SBI were neither provided nor called for by the A.O. Which might have been maintained by the assessee for professional receipts from EEL/Star TV etc.

VI) Receipts of dividend from Vithal Nagar Co. op Society with reference to investment in house property.

VII)Sources of cash deposits in saving Bank A/c. 11155

VIII)Distribution income from M/s. Ethnic Enterprises.

IX)Deposits in S.B. A/c. No.11155 under the head “Receipts on behalf of Mrs. Jaya Bachchan.”

  • As a result of the above notice by an order dated 31st December 2007, the respondent was assessed to a total income of Rs. 20.05 crores, after adding an amount of Rs. 6.31 crores as unexplained expenses under Section 69C of the Income Tax Act, 1961 for which, a notice under Section 148 of the Income Tax Act, 1961 had been issued.
  • The initiation of the proceeding under Section 147 of the Income Tax Act, 1961 and the consequent completion of reassessment by order dated 31st December 2007 was challenged by the respondent-assessee, and the matter was carried to the Commissioner of Income Tax(Appeal).
  • By an order dated 4th March, 2009 the Commissioner of Income Tax (Appeal) set aside the reassessment order dated 31st December 2007 by holding that the Assessing officer has wrongly assumed jurisdiction under Section 147 of the said Act.
  • The material that was used to justify the reopening of the assessment was always available and usable during the original proceeding leading to the assessment order dated 29th March 2005.
  • Being aggrieved, an appeal was filed to the Tribunal by the appellant revenue.

Issues:

  • Whether on the facts and in the circumstances of the case and in law the Tribunal was right in holding that the A.O. was not justified in initiating proceedings u/s. 147 of the Act and accordingly, upholding the order of the CIT(A) in holding that the whole assessment is annulled?
  • Whether on facts and in the circumstances of the case, the Tribunal in law was right in holding that the A.O. was not justified in initiating the proceedings u/s. 147 even though the Assessing Officer had sufficient reasons in the form of nine issues to believe that the income chargeable to tax has escaped assessment?

Contentions by the Parties:

Appellant’s Arguments:

  • On examination of the records, it has been seen that the respondent-assessee filed the revised return claiming expenses at 30% on the professional receipts, based on adhoc estimated expenses claimed by the Insurance Agents because they cannot prove certain expenses being incurred to persuade the Insurers. However, when it was asked by the Assessing Officer to substantiate these expenses, the claim was withdrawn by the assessee without shedding any light on the details regarding the sources for incurring these expenses which required further verification under the provisions of Sec.69 of the Income Tax Act.
  • Further there are certain issues for verification like :

I) Applicability of Sec.40A(3) in respect of cash journal expenses.

II) Personal element in respect of vehicle expenses claimed.

III) Professional expenses claimed were exactly for the purpose of profession or not.

IV) Books of accounts maintained by the assessee were not examined.

V) Assessee maintained 7 bank accounts, but details in respect of 6 bank accounts were furnished. Details in respect of S.B. A/c. No.107456 with SBI were neither provided nor called for by the A.O. Which might have been maintained by the assessee for professional receipts from EEL/Star TV etc.

VI) Receipts of dividend from Vithal Nagar Co. op Society with reference to investment in house property.

VII)Sources of cash deposits in saving Bank A/c. 11155

VIII)Distribution income from M/s. Ethnic Enterprises.

IX)Deposits in S.B. A/c. No.11155 under the head “Receipts on behalf of Mrs. Jaya Bachchan.”

Respondent’s Argument:

  • The initiation of the proceeding under Section 147 of the Income Tax Act, 1961 and the consequent completion of reassessment by order dated 31st December 2007 was challenged by the respondent-assessee, and the matter was carried to the Commissioner of Income Tax(Appeal).

Rationale:

  • It was held by the Tribunal that the reasons recorded for the initiating of the reassessment proceeding under Section 147 of the Income Tax Act, 1961 clearly shows that there wasn’t any new material that had come to the Assessing Officer’s notice in order to lead a reasonable belief that income assessable to tax had escaped assessment.
  • There was no fresh tangible material for the A.O. to be able to initiate reassessment proceeding under Section 147 of the Income Tax Act, 1961 since the adhoc expenses of 30% from the receipts was the subject matter of consideration of the Assessing officer when he passed the assessment order on 29th March,2005 under Section 143(3) of the said Act.
  • A conclusion had been reached upon jointly, by the Commissioner of Income Tax (Appeal) and the Tribunal, that that there was no fresh tangible material before the Assessing Officer to reach a reasonable belief that the income liable to tax has escaped assessment.
  • The order passed originally on 29th March 2005 under Section 143(3) of the said Act was passed after the respondent had made adhoc claim for expenditure at 30% of the professional receipts in the revised return of income which was later withdrawn. In actuality, the reasons recorded for reopening the assessment for the year 2002-03 itself states that the claim of 30% ad hoc expenses was withdrawn when the respondent-assessee was asked to substantiate the claim. Hence, the same material was a subject matter of consideration during the proceedings for assessment leading to order dated 29th March, 2005.

Judgement:

  • Taking into account the aforementioned points, no substantial question of law arises for consideration by this court. Appeal is dismissed. No order as to costs.

Rule of Law:

Review under the garb of reassessment is not permissible.

Conclusion:

It can be concluded that the same material cannot be a subject matter of consideration during the proceedings of assessment.

Prepared by Soumya Banerjee