Shahrukh Khan wins Income Tax Litigation on Legal Point

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Shahrukh Khan wins Income Tax Litigation on Legal Point

shahrukh Khan AIT News Network

MUMBAI. Shahrukh Khan has proved to be a Superstar even in Income Tax litigation by winning Appeal in Tribunal on legal ground that the block assessment order was passed beyond the time permitted by law and the same was time barred and hence illegal and invalid.

F A C T S:
A search had taken place at Shahrukh Khan’s residence cum office No. 702-A, 7^th Floor, Amrit Bldg., Cater Road, Bandra (W), Mumbai on 18.12.1996 and continued till 19.12.1996. The search had taken place in lieu of the warrant of authorization dated 17.12.1996. Certain papers, files etc. were seized. Locker keys were also seized and Panchanama was drawn on 19.12.1996. It was mentioned in the Panchanama that the search has been temporarily concluded.

Two warrants of authorization were issued on 23.12.1996 with regard to each of the said lockers for which the keys were seized on 19.12.1996. Locker of Hongkong Bank was searched on 23.12.1996 which was found to be empty and Panchanama was drawn on that date which mention that the search was finally concluded. Locker of Grindlays Bank was also searched on 23.12.1996 where jewellery worth Rs. 6.99 lakhs was found inventory was prepared and Valuation was done. Panchanama was drawn on 23.12.1996. It was mentioned in the said Panchanama that the search is finally concluded.

Two warrants of authorization were issued on 23.12.1996 with regard to each of the said lockers for which the keys were seized on 19.12.1996. Locker of Hongkong Bank was searched on 23.12.1996 which was found to be empty and Panchanama was drawn on that date which mention that the search was finally concluded. Locker of Grindlays Bank was also searched on 23.12.1996 where jewellery worth Rs. 6.99 lakhs was found inventory was prepared and Valuation was done. Panchanama was drawn on 23.12.1996. It was mentioned in the said Panchanama that the search is finally concluded.

The jewellery found at locker was brought to said residence on 23.12.1996 and was placed in an Alimirah in the bedroom and P.O. was clamped. A Panchanama was prepared to the said effect on 23.12.1996 at residence. A statement of Shahrukh u/s. 132(4) was recorded on 23.12.1996 and question was asked to the assessee to explain the source of jewellery. In reply to the said question Shahrukh had stated that most of the jewellery was gift from wife’s parents and some jewellery have been purchased after 31.03.1996 and sought some time to produce the purchase bill. There was no mention of said statement in the Panchanama prepared at residence on 23.12.1996.

On 10.01.1997 another statement of Shahrukh was recorded u/s. 131 and at that time no question was asked with regard to the jewellery.

On 30.01.1997 the search party again visited the residence-cum-office of Shahrukh and lifted the P.O. and released jewellery. Statement of Shahrukh was recorded, in which he stated that he has produced the purchase bills of jewellery of Rs. 1,50,000/- and the balance jewellery is gifts from friends and relatives and fans on various occasions and some of the jewellery belongs to his late mother. However, he requested the search party not to seize the jewellery and voluntarily offered to Rs. 4 lakhs as income on account of jewellery over and above his earlier offer of Rs. 20 lakhs. Panchanama was drawn on 30^th January 1997 and it was mentioned that the search was finally concluded.

The assessment has been completed vide order dated 23.01.1998. The main plea of Shahrukh was that the time limitation for the purpose of section 158BE starts form 23.12.1996 and the block assessment order could have been passed on or before 31.12.1997 as per the provisions of section 158BE(1)(a) i.e. within one year from the end of the month in which last of the authorization of search u/s. 132 was executed. Accordingly the block assessment order passed on 23.01.1998 was barred by the time limitation. Whereas the plea of the Revenue is that the time limitation will start from 30.01.1997 and the assessment order passed on 23.01.1998 is within the time provided u/s. 158BE(1)(a).

R U L I N G :

The copies of the authorizations warrants clearly shows that the authorization dated 17.12.1996 was in respect of the residence-cum-office of the assessee and it was used on 18.12.1996, 23.12.1996 and on 30.01.1997. The authorizations dated 23.12.1996 were in respect of two lockers and same could not have been used to enter the residence of the assessee on 23.12.1996 as such it is clear that the PO was clamped at the residence on 23.12.1996 in execution of authorization warrant on 17.12.1996. The copy of the authorizations dated 23.12.1996 clearly shows that the same were used only once for the purpose of searching the lockers on 23.12.1996.

The section 158BE clearly states that the limitation will start from the end of the month in which last of the authorizations was executed. It pre-supposes that there can be a situation where more than one authorizations for search u/s. 132 are issued and the execution of the last of the such authorizations is to be considered as the starting point for the purpose of limitation. It clearly refers to the last authorizations in case where more than one authorizations are issued. As such it cannot be held that all the authorizations are issued. As such it cannot be held that all the authorizations issued should be treated as a common kitty and any one of the authorization which is executed at the end should be considered for the purpose of limitation.

The last of the authorizations issued in the case of the assessee dated 23.12.1996 was executed on that day itself. The assessment was required to be concluded with one year from the end of the month in which last of the authorizations were executed. Meaning thereby that as per the provision of section 158BE the assessment was required to be completed by 31^st December 1997. Hence the assessment order passed u/s. 158BC on 23.01.1998 was barred by time limitation and same is quashed.

( Click here for full text of ruling AIT-2006-101-ITAT )