The Income Tax (I-T) department on Tuesday vehemently opposed a case filed by Tamilaga Vettri Kazhagam (TVK) president and actor C. Joseph Vijay against imposition of a penalty of ₹1.5 crore for not having voluntarily disclosed an additional income of ₹15 crore during the financial year 2015-16.
Appearing before Justice C. Saravanan who is seized of a 2022 writ petition filed by the actor against the penalty, I-T department senior standing counsel A.P. Srinivas said, the fine had been rightly imposed under Section 271AAB(1) of the I-T Act and therefore, the writ petition must be dismissed.
However, when the petitioner’s counsel contended the penalty proceedings were hit by limitation period since they ought to have been initiated on or before June 30, 2019 and not on June 30, 2022; the judge asked him to produce by October 10, 2025 a verdict that he had delivered in a similar case related to limitation.
Earlier, explaining the background of the writ petition, Mr. Srinivas told the court the I-T sleuths had conducted a search and seizure operation at the premises belonging to Mr. Vijay on September 30, 2015 and seized incriminating materials.
The materials indicated that P.T. Selvakumar and Shibu of SKT Studios, producers of the actor’s 2015 movie Puli, had paid him ₹4.93 crore in cash apart from the remuneration of ₹16 crore through cheques. They had deposited the Tax Deducted at Source (TDS) only for the cheque amount and not the cash transaction.
When the actor was confronted with the records, he reportedly admitted to have received ₹5 crore in cash and agreed to pay the taxes for it. When asked how much of unaccounted income had the actor earned in the last six years, he replied he hadn’t received any unaccounted cash but for the ₹5 crore for Puli.
Nevertheless, in order to cooperate with the I-T department and to resolve the tax issues in an amicable manner, the actor agreed to disclose an additional income of ₹15 crore (including the cash transaction of ₹5 crore) for the financial year 2015-16 and pay the necessary taxes for it.
Subsequently, on July 29, 2016, he filed his return of income for the assessment year 2016-17 declaring his total income to be ₹35.42 crore including the additional ₹15 crore. While filing the returns, he claimed depreciation of assets worth ₹17.81 lakh and sought exemption for his fans’ club expenses of ₹64.71 lakh.
However, the department disallowed his claims and passed an assessment order on December 30, 2017 determining the taxable income to be ₹38.25 crore. The assessment order also stated the actor would not have disclosed the additional income but for the search and seizure operation.
Therefore, the department imposed penalty under Sections 271(1)(c) and 271AAB(1) of the I-T Act. Though, he chose to go on statutory appeal against the assessment order as well as the penalty imposed under Section 271(1)(c), the penalty under Section 271AAB(1) alone had been challenged by way of a writ petition.
While admitting the writ petition on August 16, 2022, Justice Anita Sumanth had restrained the I-T department from recovering the penalty amount for a limited period. Thereafter, the interim order was extended periodically until Justice Abdul Quddhose on February 21, 2023 said, the interim order shall continue till further orders.
The writ petition was listed for hearing last in December 2023 and reappeared in the cause list again on Tuesday since Justice Saravanan had begun final hearing on the income tax cases pending for long.
