The Madras High Court on Tuesday quashed demand notices issued by the Income Tax department to former Union Minister P. Chidambaram and three of his family members, seeking payment of tax for the financial year 2010-11 as well. The order was passed on writ petitions filed by Mr. Chidambaram and his family members, challenging the demand notices.
The I-T department opposed the petitions, stating that it had decided to appeal against an earlier order of the court on November 13, quashing demand notices issued to the petitioners, seeking payment of tax along with penalty for income earned by them from a 200-acre coffee estate in Kodagu during the financial year 2009-10.
When Justice T.S. Sivagnanam wanted to know why the court should not allow the present writ petitions too by following the November 13 order, the I-T department counsel sought time to file a counter affidavit.
Rejecting his plea, the judge said there was no point in adjourning the present cases when the issue was squarely covered by the judgment passed by the court in the writ petitions filed by the same family with respect to the financial year 2009-10. “Don’t look at the cause title [the names of the litigants], look only at the cause,” the judge said and went on to quash the demand notices issued with respect to the financial year 2010-11 too.
When the judge pointed out that the I-T department could always take his orders on appeal, a standing counsel representing the department stated that an appeal would be filed shortly, challenging the November 13 order passed in the writ petitions filed by Mr. Chidambaram, his wife Nalini Chidambaram, son Karti P. Chidambaram and daughter-in-law, Srinidhi Karti Chidambaram, who were the owners of the coffee estate.
Kodagu coffee estate
In their affidavits, the petitioners had claimed that that they sold raw coffee grown on their estate to curing houses after pulping and drying to ensure that the quality of the produce did not deteriorate. They contended that the income derived through such sale of raw coffee would squarely fall under the definition of ‘agricultural income’ which was completely exempted from tax under Section 10(1) of the Income Tax Act of 1961.
After recording their submission, the judge, had, on November 13, held that the assessing officer had not given plausible reason for reopening the assessment in 2016 despite having completed the entire process and closing the files in 2011. He had also held that it was discriminatory to single out members of one particular family from among thousands of assessees and reopen their assessments after more than four years.
