Madras High Court Stays IT Dept's Order Imposing ₹1.5 Crore Penalty On Actor Vijay For Undisclosed Income

The Madras High Court on Tuesday granted an interim stay on the proceedings initiated by the Income Tax Department against Actor Vijay for "admitted" undisclosed income of Rs. 15 crore in the financial year 2015-16. The bench of Justice Anita Sumanth passed the interim order on an application filed by the actor and directed the Department to file its counter by September 16.The penalty was imposed based on raids conducted at the actor's residence in September 2015. Vijay alleged that the penalty order was passed after the expiry of limitation period to initiate such action.A notice was issued along with an assessment order which was challenged before the Commissioner of Income Tax (Appeals) and was partly allowed. The Income Tax Department challenged this order before the ITAT which partly allowed the appeal in estimating the rasigar mandram expenses for the purpose of computation of taxable total income. Pursuant to this order, penalty proceedings were initiated under Section 271 (1)(c) and an order was passed levying penalty for the sustained portion of estimated rasigar mandram expenses. Search action was conducted under Section 132, and notice under section 271AAB of the Act read with section 274 was issued. Though objections were raised, the department again issued notice against the petitioner.In the meantime, a show cause notice under section 263 of the Income Tax Act dated 30.07.2019 to revise the assessment order in so far as on presumption of non-initiation of penalty proceedings under section 271AAB of the Act w.r.t the surrendered income of Rs 15 crores during the course of the search.The petitioner challenged the show cause notice on the ground that it was barred by limitation. The plea stated that the department overlooked Vijay's tax history and created undue hardship and loss. It was submitted that the order imposing penalty was passed beyond the time limit prescribed under Section 275(1)(c) of the Income Tax Act. Further, the respondent department had erred in not considering the objections raised by the actor with respect to the aspect of limitation.The petitioner also contended that there was perversity in passing the order as the respondent had failed to appreciate the scope of appeal before the ITAT while challenging the order of revision under Section 263. Further, the respondent had failed to appreciate that the time limit for imposition of penalty expired even before the issuance of the show cause notice under Section 263 of the Act.The petitioner thus sought for an interim stay restraining the respondents from recovering the amount as per the demand notice issued under Section 156 of the Act for the assessment year 2016-2017 and also sought a stay on the operation of the impugned order issued under Section 271 AAB of the Income Tax Act and for quashing the orderCase Title: C Joseph Vijay v. The Deputy Commissioner of Income Tax and othersCase No: WP No. 21006 of 2022

Madras High Court Stays IT Dept's Order Imposing ₹1.5 Crore Penalty On Actor Vijay For Undisclosed Income

Upasana Sajeev

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