Recently, Yash Raj Films had filed two petitions against the Income Tax (IT) department, seeking to stall reassessment of returns filed for 2004-05 and 2005-06 (assessment years 2005-06 and 2006-07 respectively).
However, the Bombay High Court has since dismissed both petitions. The petitions in question referred to the IT department that had conducted a survey on YRF's premises in 2009, during which certain documents were taken away and copies of certain computerised books of account made. When impounded material was compared with figures in returns filed by YRF, a discrepancy in taxable income close to Rs. 3 crore was found. The IT dept contended that YRF had tried to save on tax payable by showing excess expenditure and less income.
In 2010, the officer issued a notice to YRF, proposing to reopen assessment for the two years. YRF had requested the IT dept for reasons to reopen the assessment; the same were provided.
In court, YRF contended there was no need for reassessment after providing reconciliation, arguing that the impounded documents pertained only to their Production Division, while they had two others sections - Home Entertainment and Distribution. YRF's advocates argued that there was no escapement of income, as alleged.
However, the court accepted the submissions made by the IT department's advocate that the assessing officer had "tangible material" before him on the basis of which he had reason to believe that income has escaped assessment. Also, the assessment was being reopened within four years, as is allowed.
When contacted YRF's spokes person Rafiq Gangjee said, "The matter is under sub judice and therefore we would not like to comment on it."
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