J. Venkatesan

Former Chief Minister to pursue appeal in income tax case before Commissioner

New Delhi: The Supreme Court has “dismissed as withdrawn,” a special leave petition filed by former Tamil Nadu Chief Minister Jayalalithaa against a Madras High Court judgment quashing an Income Tax Settlement Commission order in her favour in connection with her income tax returns filed for assessment year 1998-99.

Counsel for Ms. Jayalalithaa presented a plea before a Bench, comprising Justices S.H. Kapadia and B. Sudershan Reddy, to withdraw the SLP, stating that the petitioner would pursue the appeal before the Commissioner of Income Tax (CIT).

Allowing the plea, the Bench said the appeal before the CIT would be heard on merit, uninfluenced by any observation made by the High Court.

The facts stated in the application filed before the Settlement Commission should not be taken into account, it directed.

The matter relates to Ms. Jayalalithaa’s disclosure of Rs.3,51,780 as returns for the assessment year. This was revised to Rs.4,57,520. The assessing officer passed orders adding Rs.1.72 crore to the original amount. She went on appeal.

When the income tax officer did not accept the claim and assessed it as her income, she moved the Income Tax Commissioner (Appeals) against the finding.

While the appeal was pending, she approached the Settlement Commission, which accepted her contention.

Passing orders on a batch of writ petitions filed by Commissioner of Income Tax (Central II), Chennai, against Ms. Jayalalithaa and others, the High Court on December 10, 2007 held she was not entitled to take advantage of Section 245-C of the Income Tax Act.

It held that the inclusion of the amount in the returns was not a disclosure by her but a discovery by the assessment officer.

On the High Court judgment, Ms. Jayalalithaa in her SLP said amounts covered by the settlement application satisfied the requirement of Section 245-C of the IT Act in that the return of income originally filed did not include the said amounts but were added by the assessing officer.

The department argued that the Commission had no jurisdiction to entertain an application from Ms. Jayalalithaa, when she had failed to disclose the source of income.