The Madras High Court on Tuesday set aside a batch of notices issued by the Income Tax department against former union finance minister P Chidambaram and his family members for the assessment year 2010-11.
Justice T S Sivagnanam granted the relief while allowing writ petitions from Chidambaram and his family members. The judge had on November 13 last year granted a similar relief to them for the 2009-10 assessment year. He noted on Tuesday that the court had quashed the reopening proceedings related to the 2009-10 AY with identical facts and said the petitioners had made out a prima facie case to set aside proceedings in the present case.
The petitioner submitted that he and his family grow coffee and after pulping and drying, sell the raw coffee. Proceeds of its sale are agricultural income exempted from the applicability of Section 10(1) of the Income Tax Act, he said.
The I-T department had issued the demand notices saying there was reason to believe that income chargeable to tax had escaped assessment. The petitioner submitted he had been assessed under the act for several years, including the subject assessment year 2010-11, where the claim for exemption of income from sale of coffee had been subjected only to pulping and drying, which was accepted under Section 10(1) of the act.
Though there were several hundred coffee growers, whose income had been exempted, the IT department issued notice only to him and his family under Section 148 of the act for 2010-11, the petitioner submitted.
The notices were issued on the ground that income is chargeable to tax and it has escaped assessment as they failed to disclose fully and truly all material particulars, he said.