Chennai: Madras HC Upholds ₹1.5 crore Tax Penalty on Vijay

The Madras High Court on Friday dismissed a writ petition filed by actor and TVK president C Joseph Vijay challenging the ₹1.5 crore penalty imposed by the Income Tax Department for not voluntarily disclosing an additional ₹15 crore income during the 2015-16 financial year. The court held that the show cause notice was issued within the two-year limitation period prescribed under Section 263 of the Income Tax Act and declined to examine the merits of the penalty proceedings. It, however, granted liberty to Vijay to challenge the notice and the consequential penalty order before the Income Tax Appellate Tribunal on grounds other than the limitation issue.

Earlier, in September 2015, the Income Tax Department conducted search and seizure operations at Vijay’s residence, after which the department claimed undisclosed income. Vijay subsequently disclosed an additional ₹15 crore for the assessment year 2016-17 and paid tax on it. In December 2017, the department passed an assessment order determining Vijay’s taxable income at ₹38.25 crore, disallowing certain claims including depreciation and expenses linked to his fan association Rasigar Mandram. In December 2018, the department initiated penalty proceedings under Section 271AAB(1). Vijay challenged the assessment before the Commissioner of Income Tax (Appeals), who partly accepted his case. The department then approached the ITAT, which partly ruled in its favour after holding that certain expenses linked to the fan association could not qualify for exemption. Separately, the department continued with the penalty proceedings.

The High Court’s decision keeps the ₹1.5 crore penalty in place but clears Vijay to pursue further arguments before the ITAT, highlighting the ongoing tension between tax investigations, assessments, and post-audit remedies in high-profile entertainment industry cases.

#VijayTaxCase #MadrasHC #TaxPenalty