The Madras High Court on Friday granted interim stay on petitions filed by former Union minister P Chidambaram and his family, seeking quashing of a notice issued under the Income Tax Act for reopening of the assessment for the year 2010-11. Chidambaram’s family had earlier got a reprieve from the high court in connection with reopening of the IT assessment for 2009-10.
The petitions challenging the notice issued by assistant commissioner of Income Tax, Chennai for reopening of the assessment for 2010-11 came up before Justice T S Sivagnanam. The judge, in his order, said, “In the light of the fact in respect of the previous assessment years the petitioners challenged reopening proceedings with identical facts were involved and that this court allowed the said writ petitions, the petitioners have made out prima facie case for grant of interim stay. “Accordingly there will be an order of interim stay.”
Chidambaram’s family had filed four writ petitions challenging the notice issued for the reopening of the 2010-11 2010-11 under Section 148 of Income Tax Act. According to Chidambaram and his family members, they grow coffee and after pulping and drying, sell the coffee as raw coffee and the process of pulping and drying is completely different from curing and mere pulping and drying the coffee seeds does not result in cured coffee. Proceeds of sale of raw coffee are an agricultural income exempted under Section 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, they said.
The petitioners submitted that they 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 subjected to only pulping and drying was accepted under Section 10(1) of the Act. They also stated that there are several hundreds of coffee growers including them, whose income has been exempted.
However, the Income Tax department chose to issue notice under Section 148 of the Act for the subject assessment year on the ground that income chargeable to tax has escaped assessment as they had failed to disclose fully and truly all the material particulars. Challenging the notice issued by the I-Tepartment, Chidambaram family filed the writ petitions.
When the matter came up today, Additional Solicitor General G Rajagopalan, assisted by counsel for the IT department, submitted that the department was yet to receive the certified copy of the judgement dated November 13 and they required some time to go through the same and sought time to get instructions and file a counter. The judge then posted the matter to December 21 for filing of counter by the I-Tepartment.