Madras HC restrains I-T department from recovering ₹12.98 crore from DMK MP Kathir Anand

He claims that ₹11.48 crore seized during 2019 Lok Sabha polls does not belong to him

December 06, 2021 12:56 pm | Updated December 07, 2021 12:30 pm IST - CHENNAI:

D.M. Kathir Anand of Dravida Munnetra Kazhagam. File

D.M. Kathir Anand of Dravida Munnetra Kazhagam. File

The Madras High Court on Monday restrained the Income-Tax Department from recovering tax liability of ₹12.98 crore from Vellore Member of Parliament D.M. Kathir Anand of Dravida Munnetra Kazhagam (DMK) after he contended that ₹11.48 crore in cash, seized from the residence of a couple at Katpadi in Vellore district during the 2019 Lok Sabha election, did not belong to him.

Justice C. Saravanan passed the interim order on two writ petitions filed by the MP, who is also the son of DMK general secretary and Water Resources Minister Duraimurugan. The first writ petition had challenged an Additional Commissioner’s order under Section 144A of the Income Tax Act and the second petition had challenged the subsequent assessment order.

The judge adjourned the petitions for final hearing to January 3, 2022 and directed A.P. Srinivas and A.N.R. Jaya Prathap, standing counsel for the I-T Department, to ensure that counter affidavits were filed by then. In his affidavit, the MP asserted that the cash did not belong to him and that it was someone else’s money.

Petitioner’s counsel R. Sivaraman brought it to the notice of the court that the Income Tax officials had raided several places in Vellore in April 2019 and seized ₹11.48 crore from the premises of one Damodaran and Vimala. Subsequently, Ms. Vimala’s brother P. Srinivasan deposed to the officials that the cash belonged to him.

However, the I-T officials disbelieved his version on the ground that the money could not belong to a person who did not even have a car to travel and had pledged jewels to take loan from the Katpadi cooperative bank. They also stated that though he claimed to have got the cash through real estate business, there were no materials to prove it.

On the other hand, referring to documents related to Duraimurugan Educational Trust, which runs Kingston College of Engineering, having been seized along with the cash packed in plastic bags with labels containing details of the wards and number of voters in those wards, the officials concluded that the cash belonged to the MP.

They also referred to statements made by officials of a nationalised bank regarding Srinivasan having converted ₹12.49 crore into ₹200 denomination notes and inferred that ₹1.01 crore was expended and the rest of ₹11.48 crore was seized by the department. They included the entire amount in the MP’s income for the year 2019-20 and demanded tax with interest.

Assailing such demand, Mr. Sivaraman said an Assistant Commissioner of Income Tax issued a show cause notice to the MP on September 8 this year. The petitioner replied to the show cause notice on September 17. Thereafter, he filed an application before the Additional Commissioner under Section 144A on September 21 to review the action taken by the Assistant Commissioner.

“However, the Additional Commissioner rejected the 144A application on September 25 by simply reproducing the contents of the show cause notice, issued by the Assistant Commissioner, verbatim and had failed to apply his mind by conducting an independent inquiry to find out whether the assessing officer was proceeding in the right direction,” the counsel argued.

The first writ petition was filed challenging the Additional Commissioner’s order. Subsequently, the assessment order itself got passed on September 27 and hence the second writ petition. Mr. Sivaraman said, if the court allows the first writ petition and sets aside the Additional Commissioner’s order, it would consequentially lead to setting aside of the assessment order too.

On the other hand, Mr. Prathap told the court that the Additional Commissioner had only relied upon materials available in the files and the official had no other go but to do so because he could not traverse beyond materials available on record.

“The Additional Commissioner cannot deviate from the search and seizures conducted by the investigation wing of the department. The official had simply relied upon the materials available in the search files,” he said and stated that the entire process would be explained in detail by way of a counter affidavit.

When the judge wanted to know what was the relationship between the MP and the people from whom the cash had been seized, Mr. Sivaraman replied that there was no relationship.

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