'Entire Case Based On Records Already Considered During Scrutiny': Mumbai ITAT Quashes Reopening Of Assessment Against Shah Rukh Khan For AY 2012-13

The ITAT held so after perusing the AO's order disposing the assessee's objections, that the AO had simply tried to improve upon the reasons by making the allegation, which is completely impermissible.

The Division Bench of Sandeep Singh Karhail (Judicial Member) and Girish Agrawal (Accountant Member) observed that “The entire edifice of the re-assessment proceedings is based on the perusal of case records which were already considered during the scrutiny assessment proceedings concluded u/s 143(3)”. (Para 15)

As per the proviso to section 147, in a case where the assessment was completed under section 143(3), re-assessment under section 147 can be done after the expiry of 4 years from the end of the relevant assessment year, only if income has escaped assessment (i) due to failure on the part of the assessee to make a return under section 139 or in response to the notice issued under section 142(1) or section 148; or (ii) due to failure on the part of the assessee to disclose fully and truly all material facts necessary for its assessment.

Facts of the case:

The assessee, a well-known celebrity i.e., Shah Rukh Khan, filed his original return declaring a total income of Rs. 83,42,22,630, for AY 2012-13 and the same was selected for scrutiny, resulting in scrutiny assessment u/s 143(3), after making certain additions/disallowances. Subsequently, after the expiry of four years, notice u/s 148 was issued and reassessment order was passed u/s 143(3) r/w/s 147, assessing the total income of the assessee at Rs. 84,17,99,920, after completely denying the claim made u/s 90. This reassessment being confirmed by the CIT(A), the assessee approached the ITAT by way of present appeal.

Observations of the Tribunal:

In the present case, the Bench found that it needs to be examined whether the conditions prescribed in the proviso to section 147 are satisfied, when the return was filed by the assessee u/s 139(1).

From the perusal of the reasons recorded for reopening the assessment, the Bench found that there is not even an allegation by the AO that income chargeable to tax has escaped assessment due to failure on the part of the assessee to disclose fully and truly all material facts.

Further, the Bench noted from perusal of the order disposing the assessee's objections against the reopening of assessment, that it was for the first time there was any whisper of the allegation that there was gross failure on the part of assessee to disclose all the material facts fully & truly.

There is not even a mention of any new or tangible material which formed the basis to believe that income chargeable to tax has escaped assessment during the year under consideration, added the Bench.

Therefore, while allowing the assessee's appeal, the ITAT concluded that the re-assessment proceedings initiated by AO, are bad in law on more than one count and are not in conformity with the provisions of section 147, and quashed the same.

Counsel for Appellant/ Assessee: Advocates Aditya Ajgaonkar, Rupal Srimal and Sujay Ajgaonkar

Counsel for Respondent/ Revenue: Kavitha Kaushik

Case Title: Shah Rukh Khan vs Deputy CIT

Case Number: ITA No.6312/MUM/2024

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Case Distinguished:

Phool Chand Bajrang Lal v/s ITO - (1993) 203 ITR 456 (SC)

Click Here To Read/Download The Order