Chennai: In an apparent set back for AIADMK chief Jayalalithaa, the Madras High Court on Monday set aside an order of the Income Tax Settlement Commission (ITSC) accepting her application for disclosure of an amount Rs 1.72 crore for the assessment year 1998-99 under the Samadhan scheme.
Allowing a petition by the IT Commissioner challenging the February 15, 2005 order of the ITSC, a Division Bench of Justice S J Mukhopadhya and Justice N Paul Vasanthakumar held that the inclusion of the amount in the I-T returns was not a "disclosure" by Jayalalithaa but a discovery by the assessment officer.
Citing a Supreme Court judgement, the Bench said: "We are of the view that Jayalalithaa was not entitled to take advantage of section 245 (C) as the amount of Rs 1.72 crore had already been discovered by the assessing authority and added to the total income of the assessee."
The court directed the ITSC to reject the application of Jayalalithaa.
She made an application under section 245 (C) of the Income Tax (IT) Act making disclosure of her income.
On receipt of the application, the ITSC called for a report from the Commissioner of IT and on its basis allowed Jayalalithaa's application to be proceeded further in accordance with the provisions of the IT Act. This was challenged by the Commissioner of IT in the present petition.
The former chief minister had filed a return for the assessment year 1998-99 disclosing a total income of Rs 3,51,788 which was revised to Rs 4,57,520. Later certain additions were made to the assessment, including a sum of Rs 1.72 crore in respect of loans from creditors.
Jayalalithaa had appealed against the assessment before the Commissioner of IT (appeals). During the pendency of the appeal, she filed an application under the samadhan scheme act before the ITSC.
The bench said it has been accepted by Jayalalithaa that a sum of Rs 1.72 crore for which claim had been made was not the income disclosed by the assessee. But it had not been disputed on her behalf that the sum of Rs 1.72 crore was shown by her as loans from creditors. However, this was not accepted by the assessing officer, who included the amount to the income of Jayalalithaa.
Apart from plain reading of section 245 (C), from the judgement of the Supreme Court, it will be evident that the disclosure under the said section must be of an income not disclosed before the assessing officer, the Bench said.
The bench said the Apex Court in a case had observed that if the assessing officer of the I-T had already discovered it or has either gathered materials to establish the particulars of such income, in such case it cannot be said that the assesee was acting voluntarily or in good faith.
Such assessee should not be allowed to take advantage of the comparatively easy course of settlement. He/she must be allowed to face the normal channel of assessment/appeal.
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