The Bombay high court has dismissed an appeal filed by the Income Tax department against actor Salman Khan for alleged tax evasion to the tune of Rs4 crore for the assessment year 2000-2001.
A bench of Justice JP Devdhar and Justice RP Sondurbaldota ruled that the actor had not been served the mandatory notice under section 143(2) of IT Act before the commencement of assessment proceedings.
The bench, while dismissing the appeal on June 6, mentioned its previous order pertaining to Salman saying that in the absence of mandatory notice, re-assessment orders can not be sustained.
In its appeal, the income tax department had disputed Khan's assessment of income for 2001-2001 and challenged the June 2009 order passed by the Income Tax Appellate Tribunal (ITAT), which had ruled in favour of the actor.
Khan had declared his income as Rs9.82 crore while the IT department had re-assessed it as Rs13.61 crore on the basis of post-assessment searches carried out at the premises of the actor's then secretary Sudhir Wahi on November 23, 2000.
Aggrieved with the re-assessment done by the IT department, Khan moved the commissioner of I-T (CIT appeals) against the order of the assessment officer contending that mandatory notice under the IT Act had not been issued to him before the start of the assessment proceedings.
The CIT granted relief to the actor. However, the department filed an appeal in ITAT which too ruled in Khan's favour. The ITAT held that the assessment made by CIT was "bad in law".
The matter finally came for hearing before high court which dismissed the IT's appeal saying that the re-assessment order cannot be sustained in the absence of the mandatory notice under IT Act.
