The Madras High Court on Tuesday stayed an order passed by the Income Tax department on June 30 imposing a penalty of ₹1.5 crore on actor C. Joseph Vijay for having not voluntarily disclosed an additional income of ₹15 crore during the financial year 2015-16.
Justice Anita Sumanth granted the interim stay after his counsel argued that the penalty imposed on the actor by invoking Section 271AAB(1) of the Income Tax Act had been passed beyond the period of limitation. The counsel claimed that the penalty ought to have been imposed before June 30, 2018 and not after that.
The judge directed Income Tax department senior standing counsel A.P. Srinivas to take notice and ensure that a counter affidavit to the actor's writ petition was filed by September 16.
In the penalty order, the department had stated that a search and seizure operation was conducted with regard to the actor on September 30, 2015. During the course of the search, certain incriminating materials were seized.
The I-T sleuths recovered materials indicating that P.T. Selvakumar and Shibu of SKT Studios, producers of the movie Puli, had paid the actor ₹4.93 crore in cash apart from the remuneration of ₹16 crore through cheque. Tax Deducted at Source (TDS) had been paid 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 unaccounted income had the actor earned in the last six years, he replied that he hadn't received any unaccounted cash but for the ₹5 crore for Puli.
However, in order to co-operate with the department in an amicable manner, he agreed to disclose an additional income of ₹15 crore (including the ₹5 crore) for the financial year 2015-16 and pay the necessary taxes for it.
Subsequently on July 29, 2016, the actor 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 the expenses of ₹64.71 lakh for his fans club.
However, the department disallowed his claims and passed an assessment order on December 30, 2017 determining the taxable income to be ₹38.25 crore. It held that he would not have disclosed the additional income but for the search and seizure operation.
In his affidavit, the actor told the court that he took the assessment order on appeal before the Commissioner of Income Tax (appeals) who partly allowed the appeal on August 20, 2018 leading to further appeal by the department before the Income Tax Appellate Tribunal (ITAT) which too allowed the appeal partly on December 22, 2021.
Subsequently, penalty proceedings were initiated under Section 271(1)(c) of the I-T Act levying penalty for the fan club expenses alone on June 30, 2022 and the actor had taken that penalty order on appeal before the first appellate authority.
Meanwhile, penalty proceedings were initiated under 271AAB(1) leading to levy of penalty of ₹1.5 crore and hence he had approached the High Court challenging such penalty.
