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Commissioner of Income Tax-I, Mumbai v. Amitabh Bachchan

Civil Appeal · Neutral citation not assigned (Civil Appeal No. 5009 of 2016)Decided 11 May 2016
Civil Appeal No. 5009 of 2016
Justice Ranjan Gogoi · Justice Prafulla C. Pant

Background

For assessment year 2001-2002, the Commissioner of Income Tax (CIT) used his revisional power under Section 263 to set aside Amitabh Bachchan's assessment order and order a fresh assessment, citing inadequate enquiry by the Assessing Officer on several issues, including an additional-expenses claim (for personal security) that Bachchan had initially made and then withdrawn. The Income Tax Appellate Tribunal reversed the CIT, holding the CIT had gone beyond the specific grounds listed in his show-cause notice and thereby breached natural justice; the Bombay High Court summarily upheld the Tribunal. The Revenue (tax department) appealed to the Supreme Court.

Decision Breakdown

The Supreme Court held that Section 263, unlike the reassessment provision (Section 147), does not require a mandatory show-cause notice confining the Commissioner to specific pre-listed grounds: it only requires that the assessee be given a genuine opportunity of hearing, which Bachchan's representative did receive over multiple sessions. On the facts, the Assessing Officer had not adequately examined why Bachchan withdrew his claim for large "security expenses," and the CIT was justified in treating this as warranting revision. The Court restored the CIT's revisional order and set aside both the Tribunal's and the High Court's rulings, allowing the Revenue's appeal (and the connected appeal on the consequential reassessment), while clarifying the assessee remains free to contest the merits of any fresh assessment.

Lesson Learnt

A taxpayer cannot assume that withdrawing a dubious expense claim ends the matter: tax authorities can still require an explanation of the underlying facts, and a revisional notice under Section 263 need not list every ground in advance so long as a fair hearing is given before the final order.

Official source (sci.gov.in)View Judgment (PDF)

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