Bombay court rejects IT plea, ends Salman's tax trouble

Bollywood actor Salman Khan received a breather after the Bombay high court last week dismissed an appeal filed by the income tax (IT) department against its tribunal ruling in the actor’s favour in a dispute over alleged tax evasion of nearly Rs 4 crore.

A division bench of Justices JP Devadhar and RP Sondurbaldota on June 6 heard the IT’s appeal against Income Tax Appellate Tribunal’s (ITAT) June 2009 order which ruled in Khan’s favour. The tax dispute was for assessment year 2000-01 in which Khan declared his income at Rs9.32 crore. However, a reassessment put his income at Rs 13.61 crore.

The details of this income were revealed in post-assessment searches by the IT at the premises of his then-secretary Sudhir Wahi on November 23, 2000. The reassessment was opened on the basis of cash receipts worth Rs2.45 crore being recovered from producers Shyam Bajaj and Bobby Kent and also cash loaned to producer KC Bokadia along with the interest earned.

Khan challenged the assessing officer’s order with the Commissioner of Income Tax-Appeals saying no notice mandatory under Section 143 (2) of Income Tax Act was issued to him before starting the assessment proceedings. The CIT-A upheld the order but granted relief to Khan. IT then appealed before ITAT which in June 2009 ruled in Khan’s favour.

“In the present case, the reassessment year involved relates to the period prior to the insertion of Section 292 BB (under this, if an assessee is cooperating with the assessment, issue of notice is not required),” the judges wrote, dismissing the IT’s appeal.

Advocates Vimal Gupta and Padma Diwakar argued for the IT.