CHENNAI: The Madras High Court has come to the rescue of former Union Finance Minister P Chidambaram and his family members by staying the Income Tax department’s proceedings for the assessment year 2010-11 too.
Justice TS Sivagnanam granted the relief while admitting writ petitions from Chidambaram, on Friday. The judge granted a similar relief to them for 2009-10 assessment year on November 13 last.
In the light of the fact that in respect of the previous assessment years, the petitioners challenged the re-opening proceedings with identical facts and this court had quashed the same, as the petitioners had made out a prima facie case. Now also a prima facie case is made out, the judge said and accordingly stayed the proceedings.
Chidambaram and his family members have filed four writ petitions challenging the notice issued for re-opening the case relating to assessment year 2010-11 under sec. 148 of the Income Tax Act.According to petitioners, they grow coffee and after pulping and drying, sell the raw coffee. The process of pulping and drying is completely different from curing, and mere pulping and drying of the coffee seeds would not result in cured coffee.
The proceeds of sale of raw coffee are an agricultural income exempted from the applicability of Sec. 10(1) of the Act. In case of sale of cured coffee, 25 per cent of the income is subjected to tax as business income under Rule 7B(1) of the Income Tax Rules.
The petitioners had been assessed under the Act for several years including the subject assessment year 2010-11, wherein the claim for exemption of income from sale of coffee had been subjected only to pulping and drying, which was accepted under Sec. 10(1) of the Act. The petitioners stated that there are several hundreds of coffee growers, whose income has been exempted.
However, the Income Tax Department chose to issue notice under Sec. 148 of the Act for the subject assessment year on the ground that income is chargeable for tax and the same has escaped the assessment as they have failed to disclose fully and truly all the material particulars, only respect of petitioner and his family, they contended.