On Friday, Madras High Court rejected a writ petition filed by actor and Tamilaga Vettri Kazhagam (TVK) president C. Joseph Vijay on the ground that the 1.5 crore penalty of income tax levied by the Information and Revenue Department under the pretext of failing to voluntarily disclose additional income of 15 crore in the 201516 financial year was invalid.
Justice Senthilkumar Ramamoorthy stated that the Income Tax Department had given the show-cause notice within two years of the limitation period given in Section 263 of the Income Tax Act, 1961. The court did not see any legal weakness in the commencement of the proceedings and refused to look into the merits of the penalty, at this point.
The case is based on the fact that in September 2015, the Income Tax authorities had searched the residence of Vijay and stated that officials had discovered undisclosed income. Vijay has since reported other income of 15 crore on assessment year 2016 -17 and paid the amount of taxes payable.
In December 2017, the department issued an assessment order determining Vijay had axed claims of depreciation and expenses incurred in connection with the fan association, Rasigar Mandram, and fixes his taxable income at 38.25 crore.
In December 2018, one year later, penalty proceedings were brought against under-Section 271AAB(1) of the Income Tax Act, which is the penalty on undisclosed income discovered in search operations under-Section 132.
Trying to appeal against the proceedings, Vijay went to the High Court, stating that the notice and penalty could not be maintained. The court however sustained the move by the department and noticed that the requirements of the statute had been complied with and it rejected the plea.
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