In a significant setback to actor-turned-politician and TVK chief Joseph Vijay ahead of his party’s maiden electoral foray, the Madras High Court on Thursday (February 6) dismissed his writ petition challenging a ₹1.5 crore penalty imposed by the Income Tax Department for alleged non-disclosure of income for the 2015–16 assessment year.
The penalty stems from income tax searches conducted at Vijay’s residence in September 2015, during which the department claimed to have unearthed undisclosed income of nearly ₹15 crore. This included about ₹4.93 crore in cash and around ₹16 crore received through cheques, with tax deducted only on the cheque component.
Vijay subsequently disclosed the entire amount in his 2016–17 income tax return, while also claiming deductions towards depreciation and expenses related to fan clubs. Some of these claims were later disallowed by the department.
On the basis of the search findings, the tax authorities initiated penalty proceedings under Sections 271(1)(c) and 271AAB(1) of the Income Tax Act, asserting that the disclosure was not voluntary but made only after the search operation.
The department further alleged that a portion of the undisclosed income was linked to Vijay’s remuneration for the 2015 Tamil film Puli, with around ₹5 crore allegedly paid in cash and not reflected in his original returns.
An order dated June 30, 2022 imposed a penalty of ₹1.5 crore, which Vijay challenged before the High Court, specifically assailing the levy under Section 271AAB(1). His counsel argued that the penalty order was time-barred, contending that the statutory limitation for imposing such a penalty had expired on June 30, 2019. An interim stay on recovery of the penalty had been granted earlier and extended from time to time.
However, Justice Senthil Kumar Ramamurthy ruled that the show-cause notice issued by the tax authorities was valid and well within the two-year limitation period prescribed under Section 263 of the Income Tax Act, reckoned from the December 2017 assessment order. Finding no procedural infirmity, the court declined to examine other aspects of the case, including the voluntariness of the disclosure or the allowability of deductions.
The court also granted liberty to Vijay to challenge the notice and the consequential penalty order before the Income Tax Appellate Tribunal (ITAT) on grounds other than limitation. Observing that the income would not have been disclosed but for the search, the court accepted the department’s contention justifying the penalty as a deterrent.
The ruling reinforces the Income Tax Department’s authority to impose penalties for post-search disclosures under Section 271AAB(1) and may have wider implications for high-profile taxpayers in the film industry facing similar scrutiny.
The verdict has also triggered political reactions, with leaders of the ruling DMK—TVK’s principal political rival—describing the decision as a blow to Vijay’s anti-corruption narrative ahead of the Assembly elections.
Earlier, in July 2022, Vijay had received relief from the Madras High Court in a separate case relating to the import of a luxury BMW car from the US, where the court limited his liability for entry tax penalty to the period between January 29, 2019 and December 2021, following a 2019 ruling upholding the state’s power to levy entry tax.
Critics have since questioned Vijay’s public posturing on governance and taxation, arguing that political credibility must rest on demonstrable compliance with the law rather than cinematic rhetoric.
