New Delhi: A two Judge bench of Supreme Court comprising Justice Ranjan Gogoi and Justice Prafulla C Pant today allowed the appeal by the Commissioner of Income Tax, Mumbai, and restored the suo motu revisional order that had been passed in the case of film star Amitabh Bachchan for the assessment year 2001-2002 on 20 March, 2006. The apex court also set aside the order of 11 January, 2010 passed by the Income Tax Tribunal and the order of 29 February, 2012 passed by the High Court setting aside the revisional order issued by the C.I.T. Mumbai.
In this case, the assessment year in question is 2001-2002 andthe assessment order is dated 30th March, 2004.
However as the re-assessment order of 29 December, 2006 had not been tested on merits the assessee would be free to do so, “if he is is so inclined and so advised”, the apex court has ordered
The CIT had issued the revisional order on 20th March, 2006 under Section 263 of the Income Tax Act setting aside the assessment order for the assessment year 2001-2002 and directing fresh assessment, a fresh assessment had been made by the Assessing Officer through an order of 29 December, 2006. Against this order, Amitabh Bachchan had filed an appeal before the Commissioner of Income Tax (Appeals). By an order on 18 October, 2007, the Commissioner of Income Tax (Appeals) had set aside the assessment order of 29 December, 2006 as in the meantime, on 28 August, 2007, the Income Tax Appellate Tribunal the issued an order setting aside the revisional order of 20 March, 2006. The Revenue’s (CIT’s) appeal before the
Tribunal against the order of 18 October, 2007 was dismissed on 11 January, 2000 and by the High Court on 29 February, 2012. Against this order of the High Court, the Revenue (CIT) had filed an appeal in the Supreme Court.
In the appeal filed in Supreme Court by the CIT, the Revenue had challenged the High Court order of 7 August, 2008 whereby the appeal filed by it under Section 260A of the Income Tax Act, 1961 had been reversed.
After the assessment for the assessment year in question was finalized, a show cause notice was issued by the CIT on 7 November, 2005 under Section 263 of the Act detailing as many as eleven (11) issues/grounds on which the assessment order was proposed to be revised under Section 263 of the Act. Mr. Bachchan filed his reply to the show cause notice and on 20 March, 2006 the C.I.T. set aside the order of assessment issued on 30 March, 2004 and directed a fresh assessment to be made. Aggrieved by this order Mr. Bachchan challenged the reassessment assessment order before the Income Tax Tribunal which was allowed on 28 August, 2007.
Aggrieved by the order of the Tribunal, the Revenue filed an appeal under Section 260A of the Act before the High Court of Bombay. This appeal was disposed by the Court on 7 August, 2008 holding that as the C.I.T. had gone beyond the scope of the show cause notice of 7 November, 2005 and had dealt with the issues not covered or mentioned in the notice, the revisional order was in violation of the principles of natural justice.
The assessment in question was set aside by the C.I.T. by the order dated 20th March, 2006 on the principal ground that requisite and due enquiries were not made by the Assessing Officer prior to finalization of the assessment by order dated 30th March, 2004. In this connection, the C.I.T. on consideration of the facts of the case and the record of the proceedings came to the conclusion that in the course of the assessment proceedings despite several opportunities the assessee did not submit the requisite books of account and documents and deliberately dragged the matter leading to one adjournment after the other.
Eventually, the Supreme Court order brings on record, the Assessing Officer, to avoid the bar of limitation, had no option but to “hurriedly” finalize the assessment proceedings which on due and proper scrutiny disclosed that the necessary enquiries were not made. On this basis the C.I.T. came to the conclusion that the assessment order in question was erroneous and prejudicial to the interests of the Revenue warranting exercise of power under Section 263 of the Act. Consequently, the assessment for the year 2001-2002 was set aside and a fresh assessment was ordered.