Vijay must pay ₹1.5cr penalty for tax evasion: Madras HC
What's the story
The Madras High Court has upheld a ₹1.5 crore penalty on actor-turned-politician Vijay for allegedly failing to disclose income of ₹15 crore during the 2015-16 financial year. The court ruled that the Income Tax Department's notice was issued within the prescribed time limit, allowing the penalty to stand. The case stems from income tax searches at Vijay's residence in September 2015.
Legal proceedings
Court rules show cause notice issued within time limit
The Madras High Court dismissed Vijay's writ petition challenging the Income Tax Department's order imposing a ₹1.5 crore penalty for non-disclosure of income in 2015-16. Justice Senthilkumar Ramamoorthy delivered the verdict on Friday, ruling that the show cause notice issued by tax authorities was within the time limit prescribed under Section 263 of the Income Tax Act. The court found no procedural infirmity in its issuance and refrained from examining other aspects of the case, reported Live Law.
Appeal option
Liberty granted to approach ITAT on other grounds
While dismissing the plea, the bench granted Vijay the liberty to approach the Income Tax Appellate Tribunal (ITAT) to challenge the notice and penalty order on grounds other than limitation. The case had its roots in income tax searches at Vijay's residence in September 2015, followed by an assessment order in December 2017 and penalty proceedings under Section 271AAB(1) initiated in December 2018.
Judicial journey
Vijay challenged assessment before Commissioner of Income Tax (Appeals)
Vijay challenged the assessment before the Commissioner of Income Tax (Appeals), who partly ruled in his favor. The department later appealed before the ITAT, which also partially upheld its stand, including on certain expenses linked to Vijay's fan association. Parallelly, penalty proceedings continued regarding the ₹15 crore surrendered during the search. In July 2019, a notice under Section 263 sought revision of the assessment, claiming that penalty proceedings had not been properly initiated.
Verdict details
ITAT set aside this revision in May 2022
The ITAT set aside this revision in May 2022, stating that no further action was needed once penalty proceedings were underway. When the matter reached the High Court, it was limited to whether the final penalty order had been passed within the limitation period under Section 275 of the Income Tax Act. Earlier, another bench had stayed the recovery of the penalty after prima facie observing that the order appeared time-barred.