The Madras High Court on Friday dismissed a writ petition filed by actor and Tamilga Vetri Kazhagam (TVK) president C Joseph Vijay. ₹1.5 crore fined by the Income Tax Department for “voluntary non-disclosure” of excess income ₹15 crores in the financial year 2015-16.
Vijay (ANI Video Grab)Justice Senthilkumar Ramamurthy said the Income Tax Department had issued the show cause notice “within the two-year limitation prescribed under Section 263 of the Income Tax Act”. The judge said he found no legal infirmity in issuing the notice and declined to examine the merits of the disciplinary proceedings.
The court, however, gave liberty to Vijay, an actor-turned-politician, to challenge the notice and consequent penalty order before the Income Tax Appellate Tribunal (ITAT) on grounds other than limitation.
In September 2015, IT department authorities conducted a search and seizure operation at Vijay’s house. The department claimed to have found undisclosed income during the search. Vijay later disclosed the additional income ₹15 crore for assessment year 2016-17 and tax paid thereon.
In December 2017, the department passed an assessment order determining Vijay’s taxable income ₹38.25 crore after disallowing certain claims including depreciation and expenses related to his fan association, Rasiga Mandram. Thereafter, in December 2018, the department initiated disciplinary proceedings under section 271AAB(1) of the Act.
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Vijay challenged the assessment before the Commissioner of Income Tax (Appeals), who accepted his case in part. The department then approached the ITAT, which partially ruled in its favor that certain expenses incurred by fan associations could not qualify for exemption.
Separately, department related penalty proceedings continued ₹15 crore surrendered during the search. In July 2019, it issued a show-cause notice to modify the assessment order, holding that the penalty proceedings had not been properly initiated.
Vijay challenged the revision proceedings before the ITAT. In May 2022, the tribunal set aside the section 263 proceedings, saying they served no purpose as the department had already initiated disciplinary proceedings under section 271AAB.
Vijay then approached the High Court, arguing that the penal process suffered from limitations and distortions. He contended that the authorities had failed to appreciate the scope of the ITAT’s order and that the period of limitation for imposition of penalty had lapsed before issuing the Section 263 notice.
The Income Tax Department opposed the plea and maintained that it imposed the penalty legally.
Justice Ramamurthy rejected Vijay’s limitation challenge and said the department had acted within time. The judge thus kept the writ petition before the Appellate Tribunal leaving open other remedies.
