The Madras high court today (February 6) dismissed a plea by Tamil film actor-politician Vijay challenging a Rs. 1.5 crore penalty imposed on him by the income-tax department in connection with alleged undisclosed income of Rs. 15 crore for financial year 2015-16. Justice Senthilkumar Ramamoorthy delivered the judgement.
The court noted that the show cause notice had been issued within the time limit prescribed under section 263 of the I-T Act. The court gave liberty to the actor-politician to challenge the notice and penalty order before the appellate tribunal by raising other grounds except that of limitation.
The case arose from income-tax searches conducted at Vijay’s residence in September 2015. Penalty for undisclosed income was levied under section 271AAB(1) of the Income-Tax Act in December 2018. Vijay challenged the assessment before the Commissioner of Income-Tax (Appeals), who partly accepted his case. The department then carried the matter to the Income-Tax Appellate Tribunal, which partly ruled in its favour.
Penalty proceedings continued separately in respect of the Rs. 15 crore surrendered during the search. In July 2019, the department issued a notice under section 263 seeking revision of the assessment, arguing that the penalty proceedings had not been properly initiated.
That revision was set aside by the ITAT in May 2022. When the matter came up before the high court, the issue was whether the final penalty order had been passed within the limitation period prescribed under section 275 of the Act. At an interim stage, another bench of the court had held that the order appeared to be barred by limitation and, on that basis, stayed recovery of the penalty.
