On Monday, Oct 14 the actor, through her counsel Percy Pardiwalla, opposed the commissioner's appeal, but a bench headed by Justice S Radhakrishnan thought it fit to admit it. The Bachchan bahu, who was then at the start of her career, had, in her IT returns for the assessment year 1996-97, declared a total income of Rs 2.14 lakh.
But in 2000, during a search and seizure on her premises, the IT department found that her passport showed her to be a resident as against her claim of being an NRI during the assessment year. She was out of India for only 92 days and not for 186 days as she 'falsely claimed", said the taxman,' and three years later (in 2003) reopened the proceedings against Rai under the Income Tax Act.
In 2004, IT authorities ordered that the income of 50,000 pounds (equivalent to approx Rs 26 lakh) she had received for winning the Miss World title must be added to her income and she be taxed accordingly. The tax amount was approximately Rs 14 lakh which, IT officers say, with interest would now amount to almost Rs 50 lakh.
Rai challenged the 2004 order and got partial relief that November. But she filed another appeal before the Income Tax Appellate Tribunal (ITAT) challenging the department's power and moved to reopen her assessment. The ITAT had, in October 2007, ruled in her favour, deleting the addition of her Miss World pageant income from her 'block assessment proceedings'.