Relief for Shah Rukh Khan, HC stays IT notice

In a reprieve for Bollywood superstar Shah Rukh Khan, the Bombay High Court on Thursday stayed a notice issued against him by the Income Tax (IT) Department. The IT department had accused Khan of obtaining profit by purchasing multiple shares of Kolkata Knight Riders at an undervalue.

A division bench of Justice MS Sanklecha and Justice Riyaz Chagla, ‘prima facie’ held that the IT department had erred in issuing the notice.

“We are of the prima facie view that the impugned notice served upon the petitioner indicates a change of opinion as earlier the assessing officer of the IT department had found no impropriety in the transaction. We accordingly, stay the notice and direct the IT department not to pursue the case till further orders,” the bench said.

The judges heard a writ petition filed by the actor challenging the notice served upon him by the IT department.

In its notice, the IT department claimed that the actor had purchased the shares of Kolkata Knight Riders at the rate of Rs. 10 per share, while the exact face value of each share was nearly Rs. 33. The department while defending its notice, highlighted the fact before the court that Khan had purchased the shares through his own firm – Red Chillies Entertainment. The department claimed that the actor earned profits (of Rs. 23 on each share) by undervaluing the shares. It claimed the actor purchased the shares for nearly Rs 1 crore and earned profits of nearly Rs 40 crore.

The department claimed that the actor misrepresented his income and had accordingly issued this notice to remove Shahrukh’s name from the registry of income tax practitioners.