Chennai: The Madras high court has stayed the operation of another set of income tax notices issued to Congress MP and former Union finance minister P. Chidambaram and his family members. When petitions filed by them came up for hearing before, Justice T.S. Sivagnanam, the judge said, “In the light of the fact in respect of the previous assessment years the petitioners challenged the re-opening proceedings with identical facts were involved and that this court allowed the said writ petitions, the petitioners have made out a prima facie case for grant of interim stay. Accordingly, there will be an order of interim stay.”
Chidambaram and his family members, in the petitions, challenged the notices issued by assistant commissioner of income tax, Chennai, for re-opening of the assessment of the year 2010-11. According to them, they grow coffee and after pulping and drying, sell the coffee as raw coffee. The process of pulping and drying is completely different from curing and mere pulping and drying the coffee seeds does not result in curing coffee. Proceeds from the sale of raw coffee are an agricultural income exempted under Section 10 (1) of the Act. In case of sale of cured coffee, 25 percent of the income is subjected to tax as business income under Rule 7B (1) of the Income Tax Rules.
They were assessed under the Act for several years, including the assessment year 2010-11, wherein the claim for exemption of income from the sale of coffee subjected to only pulping and drying was accepted under Section 10 (1) of the Act. There were several hundreds of coffee growers, including the petitioner whose income had 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 have failed to disclose fully and truly all the material particulars.
When the matter came up for hearing, Justice T.S. Sivagnanam has granted an interim stay on the notices issued to Chidambaram family for the assessment year 2010-11. Later, the judge posted the matter for filing the counter by the income tax department.
