The Madras High Court on Monday rejected an order of the Income Tax Department issued to former Union minister P Chidambaram and his family members, seeking the payment of tax for income earned from a coffee estate owned by them, PTI reported.
“The impugned assessment order passed is wholly illegal and the entire proceedings are flawed,” Justice TS Sivagnanam said, according to The Times of India. “A mere reading on the reasons for reopening clearly show that there is no allegation against the petitioner that there has been omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment for that year.”
The High Court was hearing a petition filed by Chidambaram, his wife Nalini, son Karti and daughter-in-law Srinidhi against the Income Tax order. The petitioners had said that in 2008-’09, they had claimed exemption of income tax from the sale of coffee and pepper from their estate in Coorg, Karnataka, under Section 10 (1) Income Tax Act, 1961, as agricultural income was exempt from being taxed at the time.
However, the I-T department had issued a demand notice saying there was reason to believe that income that could be taxed had escaped assessment. In December 2016, the I-T department had sought payment of tax, along with a penalty, amount to around Rs 5 lakh per petitioner. The petitioners had alleged that the I-T department was reopening the assessment with an intention to defame them.
“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,” Justice TS Sivagnanam ordered.