Madras High Court Gives Relief To Chidambaram in Tax Case
In what would be a relief to former finance minister P Chidambaram, the Madras High Court quashed an order of the Income Tax department seeking payment of tax by him and his family, on income from a coffee estate owned by them for 2008-09 financial year, after reassessing the order.
Justice TS Sivagnanam quashed the March 2016 demand notice and the consequential 30 December reassessment order issued by the assistant commissioner of Income Tax, Chennai, seeking payment of about Rs 6 lakh from Chidambaram and others, on 13 November.
He was allowing petitions by Chidambaram and his family members challenging the notice and the reassessment order.
The I-T department had issued the demand notice, saying there was reason to believe that income chargeable to tax had escaped assessment.
Challenging this, the petitioners alleged that the I-T department's action in reopening the assessment and reassessing the income for 2008-09 six years later, was illegal and arbitrary, and made only with an intention to defame them.
Besides Chidambaram, the senior Congress leader's son Karti, daughter-in-law Srinidhi, and wife Nalini are the other petitioners.
They further claimed there were several hundred coffee growers whose income had been exempted from tax on these grounds.
The reassessment order was issued without disposing of their objections to the reopening of assessment, and without passing a speaking order, the petitioners contended adding that this was in violation of the law laid down by the Supreme Court.
Justice Sivagnanam, in his order, said that the obligation on the part of the assessee does not extend beyond fully and truly disclosing all primary facts, and that it was for the assessing officer to take an inference on facts and law based on such disclosure.
Further, there was no allegation against the petitioners that they had not disclosed fully and truly all material facts necessary for assessment for that year, the judge said.
"The impugned proceedings, namely, the notice for reopening and the consequential assessment orders are held to be illegal, unsustainable and a clear case of change of opinion and the impugned proceedings are quashed," he ordered.