A dramatic reassessment that sought to inflate the taxable income of former IPL commissioner Lalit Kumar Modi from ₹54.81 lakh to ₹20.12 crore has been struck down by the Income Tax Appellate Tribunal.
The Tribunal ruled that the tax department had no authority to initiate reassessment proceedings while a regular scrutiny assessment was still underway, rendering the entire exercise legally unsustainable.
A Massive Jump in Alleged Income
The reassessment related to the 2010–11 assessment year. Authorities had reopened the case claiming large unexplained expenditures, including:
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₹4.24 crore in credit card spending
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₹9.65 crore linked to lease rentals and fuel for a private jet
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₹5.66 crore in liabilities associated with Golden Wings Pvt Ltd
On the basis of these entries, the department recalculated Modi’s income at ₹20.12 crore—an enormous jump from the ₹54.81 lakh declared in his tax return.
Tribunal Finds Fundamental Legal Flaw
The Tribunal bench observed that the reassessment notice was issued while scrutiny proceedings under Section 143(3) of the Income Tax Act, 1961 were still pending. According to the bench, launching a reassessment under Sections 147 and 148 in such circumstances is impermissible.
In its ruling, the Tribunal stated that initiating reassessment during the pendency of a scrutiny assessment stripped the assessing authority of jurisdiction. As a result, the order passed under the reassessment provisions was declared null and void.
Ignored Objections Add to Procedural Breach
The bench also flagged another procedural lapse. Modi had filed detailed objections to the reopening of his assessment. However, the assessing officer completed the reassessment without first deciding those objections.
This step was found to be contrary to the procedure laid down by the Supreme Court in GKN Driveshafts (India) Ltd v. ITO, which requires tax authorities to dispose of such objections before moving ahead with reassessment.
During appellate proceedings, the department itself reportedly acknowledged that there was no record showing whether those objections had been addressed.
Case Ends on Jurisdictional Grounds
Because the reassessment itself was found invalid, the Tribunal did not examine the substance of the alleged tax additions tied to credit card expenses, private jet costs, or liabilities connected with Golden Wings Pvt Ltd.
With the jurisdictional defect proving decisive, the Tribunal set aside the reassessment order entirely—closing the matter without delving into the underlying financial allegations.
