The Income Tax (I-T) Department on Tuesday strongly opposed a writ petition filed by Tamilaga Vettri Kazhagam (TVK) president and actor C. Joseph Vijay challenging the imposition of a Rs 1.5 crore penalty for not voluntarily disclosing an additional income of Rs 15 crore during the financial year 2015-16.
Appearing before Justice C. Saravanan, senior standing counsel A.P. Srinivas stated that the penalty was correctly imposed under Section 271AAB(1) of the Income Tax Act and the petition should be dismissed. The actor's counsel argued that the penalty proceedings were time-barred, as they should have been initiated by June 30, 2019, not June 30, 2022. The court directed him to produce a relevant verdict in a similar case by October 10, 2025.
Background of the Case
- On September 30, 2015, the IT department conducted a search and seizure operation at Vijay's premises, recovering incriminating evidence.
- Investigations revealed that producers of his 2015 film Puli, P.T. Selvakumar and Shibu of SKT Studios, had paid Vijay Rs 4.93 crore in cash, apart from Rs 16 crore via cheques. TDS was deposited only on the cheque payments.
- The actor admitted to receiving Rs 5 crore in cash and agreed to pay the taxes on it. Additionally, he voluntarily disclosed an extra Rs 15 crore income for FY 2015-16, including the cash component, filing his return on July 29, 2016, with total income declared as Rs 35.42 crore.
Assessment and Penalty
- The department disallowed claims for depreciation (Rs 17.81 lakh) and fans' club expenses (Rs 64.71 lakh), determining taxable income as Rs 38.25 crore on December 30, 2017.
- While Vijay pursued statutory appeals against the assessment and penalties under Section 271(1)(c), he challenged only the Section 271AAB(1) penalty through the writ petition.
Interim Orders and Current Status
- Justice Anita Sumanth, admitting the writ petition on August 16, 2022, temporarily restrained the I-T department from recovering the penalty.
- Interim orders were extended periodically, and Justice Abdul Quddhose in February 2023 confirmed that the interim relief would continue until further notice.
- The case reappeared on Tuesday as Justice Saravanan began the final hearing of pending income tax cases, including Vijay's challenge.
This case highlights the IT department's efforts to enforce tax compliance for high-value transactions uncovered during search operations and underscores the legal scrutiny faced by celebrities regarding undisclosed incomes and penalties under the IT Act.
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