against themChennai, Nov 14 (PTI) In a relief to P Chidambaram, theMadras High Court quashed an order of the Income Taxdepartment seeking payment of tax by the former financeminister and his family on income from a coffee estate ownedby them for 2008-09 financial year after re-assessing it.
Justice T S Sivagnanam yesterday quashed March 31, 2016demand notice and the consequential December 30 reassessmentorder issued by the assistant commissioner of Income Tax,Chennai, seeking payment of about Rs 6 lakh from Chidambaramand others.
He was allowing petitions by Chidambaram and his familymembers challenging the notice and the re-assessment order.
The matter relates to the petitioners claiming exemptionof entire income from sale of coffee and pepper from theirestate in Coorg in Karnataka in 2008-09 as agricultural incomeunder section 10(1) of the Income Tax Act, which was allowedthen.
The I-T department had issued the demand notice sayingthere was reason to believe that income chargeable to tax hadescaped assessment.
Challenging this, the petitioners alleged that the I-Tdepartment's action in reopening the assessment andreassessing the income for 2008-09 six years later was illegaland arbitrary and made only with an intention to defame them.
Besides Chidambaram, the senior Congress leader's sonKarti, daughter-in-law Srinidhi and wife Nalini are the otherpetitioners.
They submitted that income from the sale would attracttax only if they were involved in curing coffee. But they onlysold raw coffee seeds and proceeds of sale of which was anagricultural income exempted under the I-T act.
They further claimed there were several hundreds ofcoffee growers whose income had been exempted from tax on thisground.
The reassessment order was issued without disposing oftheir objections to the reopening of assessment and withoutpassing a speaking order, the petitioners contended addingthis was in violation of the law laid down by the SupremeCourt.
Justice Sivagnanam, in his order, said as stated in aSupreme Court verdict the obligation on the part of theassessee does not extend beyond fully and truly disclosing allprimary facts and it was for the assessing officer to take aninference on facts and law based on such disclosure.
The respondent's submission that the reassessment wasmade since his predecessor did not come to a proper inferenceon the facts disclosed (on agricultural income) was no groundto reopen the matter, he said adding it only reflected achange of opinion.
Further, there was no allegation against the petitionersthat they had not disclosed fully and truly all material factsnecessary for assessment for that year, the judge said.
"The impugned proceedings, namely, the notice forreopening and the consequential assessment orders are held tobe illegal, unsustainable and a clear case of change ofopinion and the impugned proceedings are quashed," he ordered.
PTI COR VS TVSZMN.
This is unedited, unformatted feed from the Press Trust of India wire.