Today, On 6th February, The Madras High Court dismissed actor Vijay’s plea challenging the Rs.1.5 crore income tax penalty. The penalty stemmed from 2015 searches at his premises that allegedly uncovered around Rs.16 crore in undisclosed income by the Income Tax Department.
The Madras High Court dismissed a writ petition filed by actor Joseph Vijay, who is also the founder of the Tamilaga Vettri Kazhagam (TVK).
The petition challenged a Rs.1.5 crore penalty imposed by the Income Tax Department for alleged non-disclosure of income.
Justice Senthilkummar Ramamoorthy delivered the ruling.
This penalty stemmed from income tax searches conducted at Vijay’s premises in 2015, during which authorities claimed to have discovered undisclosed income amounting to approximately Rs.16 crore.
The tax authorities alleged that this sum was tied to Vijay’s remuneration for the 2015 Tamil film Puli, claiming that around Rs.5 crore of it was allegedly paid in cash and not disclosed in his tax returns.
Following these findings, the department initiated penalty proceedings under the Income Tax Act, leading to an order on June 30, 2022, which imposed the Rs.1.5 crore penalty.
In the High Court, Vijay did not dispute the Income Tax Department’s authority to levy penalties when warranted. However, his legal team argued that the penalty order was issued beyond the stipulated time limit.
They contended that the statutory deadline for imposing such a penalty had lapsed on June 30, 2019, making the subsequent order legally invalid.
The Income Tax Department opposed Vijay’s claims, asserting that there were no procedural or legal violations.
They argued that the timelines had been calculated correctly, based on the nature of the assessment proceedings and the steps taken following the 2015 searches, confirming that the penalty was enacted in compliance with the law.
The High Court dismissed Vijay’s challenge, sided with the department’s position, and upheld the legitimacy of the penalty proceedings.
During the search, authorities alleged that Vijay had failed to disclose income amounting to nearly Rs 15 crore, comprising approximately Rs 4.93 crore in cash and Rs 16 crore received through cheques, with tax deducted only on the cheque payments. Vijay later disclosed the entire sum in his 2016–17 income tax return, while also claiming deductions towards depreciation and fan-club expenses, some of which were subsequently rejected by the department.
On this basis, the tax authorities levied penalties under Sections 271(1)(c) and 271AAB(1) of the Income Tax Act, contending that the income disclosure was a consequence of the search operation and not a voluntary declaration. Vijay has specifically challenged the penalty imposed under Section 271AAB(1) by filing a writ petition before the Madras High Court.
His legal team argues that the penalty order, passed in 2022, is invalid as it was issued after the statutory limitation period, which, according to them, lapsed in 2019. The High Court granted an interim stay on recovery of the penalty, which has been extended on multiple occasions. Justice C. Saravanan, who is hearing the matter, has directed Vijay’s counsel to place relevant judicial precedents on limitation before the court. The case is now listed for further hearing on October 10, 2025.
Vijay reported an income of 35.42 crores for the financial year 2016-17. However, the income tax department claimed that he did not report an additional 15 crores earned from the film “Puli,” based on documents seized during a raid at his home in 2015.
On August 16, 2022, a single judge admitted the plea and granted an interim stay on the operation of the department’s order. Vijay argued that the penalty should have been levied before June 30, 2019, and since the order was issued late, it should be annulled. In opposition, the department maintained that the penalty imposed on Vijay was valid under the Income Tax Act, urging that his petition be dismissed.
Case Title: C Joseph Vijay v. The Deputy Commissioner of Income Tax and others Case No: WP No. 21006 of 2022