HC stays I-T proceedings against Chidambaram

The department has asked him to file fresh returns on income generated from coffee estate

P. Chidambaram

The Madras High Court on Wednesday stayed proceedings initiated by the Income Tax Department against former Union Minister P. Chidambaram, his wife and senior advocate Nalini Chidambaram, son Karti and daughter-in-law Srinidhi.

Passing an interim order, Justice Rajiv Shakdher said, “Pending adjudication of the writ petitions, further proceedings pursuant to the demand notice are stayed,” and posted the plea to March 16.

The issue pertains to demand notices issued by the department seeking Mr. Chidambaram and his family to file fresh returns in connection with the income generated from a 200-acre coffee estate held by the family in Coorg.

According to the Congress leader and his family, the coffee estate was inherited by Mr. Chidambaram from his grandfather Raja Annamalai Chettiar in 1956.

Agricultural income

The estate has been divided into five units of 40 acres each, in the name of Mr. Chidambaram, his wife, son, daughter-in-law, and granddaughter.

All along, the family had been claiming tax exemption for the income generated from the estate showing it as agricultural income. The I-T department, on March 31, 2016, issued individual notices to the family members instructing them to file fresh returns for the assessment year 2009-2010.

The family filed replies and fresh returns. However, the department again issued demand notices directing them to pay taxes of over ₹6 lakh each. Assailing the demand notices, the family approached the court seeking to quash the proceedings.

During the hearing on Wednesday, the petitioners claimed that the department’s action in reassessing the income for 2009-2010, after six years, was illegal and arbitrary, and was intended to defame the family.