Tamilaga Vettri Kazhagam President Vijay Faces Income Tax Penalty Challenge

The Income Tax (I-T) department has strongly opposed a case filed by Tamilaga Vettri Kazhagam (TVK) president and actor C. Joseph Vijay concerning a penalty of ₹1.5 crore. This penalty was imposed for failing to voluntarily disclose an additional income of ₹15 crore during the financial year 2015-16.

During a hearing before Justice C. Saravanan, who is overseeing a 2022 writ petition filed by Vijay challenging the penalty, I-T department senior standing counsel A.P. Srinivas asserted that the fine had been justifiably imposed under Section 271AAB(1) of the I-T Act. He argued that the writ petition should be dismissed.

The petitioner’s counsel argued that the penalty proceedings were affected by a limitation period, indicating that such actions should have been initiated on or before June 30, 2019, and not on June 30, 2022. In response, the judge requested the petitioner’s counsel to provide a ruling by October 10, 2025, from a similar case that he had adjudicated concerning limitation.

Mr. Srinivas elaborated on the background of the writ petition. He explained to the court that I-T officials had conducted a search and seizure operation at Vijay’s premises on September 30, 2015, during which incriminating materials were found. These materials suggested that P.T. Selvakumar and Shibu from SKT Studios, who produced Vijay’s 2015 movie Puli, had paid him ₹4.93 crore in cash, in addition to ₹16 crore via cheques. However, the Tax Deducted at Source (TDS) was only deposited for the cheque amount, excluding the cash.

Upon confronting the actor with the evidence, he reportedly acknowledged that he had received ₹5 crore in cash and agreed to pay taxes on it. When questioned about any unaccounted income he might have earned over the previous six years, he claimed he had not received any unaccounted cash apart from the ₹5 crore related to Puli.

In an effort to cooperate with the I-T department and settle tax issues amicably, Vijay agreed to disclose an additional ₹15 crore of income (including the cash received) for the financial year 2015-16, committing to pay the necessary taxes on this amount. Subsequently, on July 29, 2016, he submitted his income tax return for the assessment year 2016-17, declaring a total income of ₹35.42 crore, which included the additional ₹15 crore. Alongside this, he claimed depreciation on assets worth ₹17.81 lakh and sought exemption for expenses related to his fans’ club amounting to ₹64.71 lakh.

However, the I-T department disallowed these claims and issued an assessment order on December 30, 2017, which determined the taxable income to be ₹38.25 crore. The order noted that Vijay would not have disclosed the additional income had it not been for the search and seizure operation.

Consequently, the I-T department imposed penalties under Sections 271(1)(c) and 271AAB(1) of the I-T Act. While he initially chose to file an appeal against the assessment order and the penalty under Section 271(1)(c), he specifically challenged the penalty under Section 271AAB(1) through a writ petition.

Upon admitting the writ petition on August 16, 2022, Justice Anita Sumanth temporarily restrained the I-T department from recovering the penalty amount. This interim order was periodically extended until Justice Abdul Quddhose stated on February 21, 2023, that the order would remain in effect until further notice.

The writ petition was last scheduled for hearing in December 2023 and reappeared on the docket recently, as Justice Saravanan commenced the final hearing of long-pending income tax cases.