TAMIL NADU Tribunal quashes tax assessment order of ₹57.43 crore against T.T.V. Dhinakaran

TAMIL NADU Tribunal quashes tax assessment order of ₹57.43 crore against T.T.V. Dhinakaran
Sanjay Vijayakumar
CHENNAI, MAY 22, 2021 16:42 IST
UPDATED: MAY 22, 2021 16:50 IST
It said that the assessment was not completed within the time-frame permitted under the provisions of the Income Tax Act

The Income Tax Appellate Tribunal (ITAT), Chennai has quashed an Income Tax Department assessment order determining undisclosed income of about ₹57.43 crore against Amma Makkal Munnetra Kazhagam (AMMK) general secretary T.T.V. Dhinakaran.

It said that the assessment was not completed within the time-frame permitted under the provisions of the Income Tax Act.

The case pertains to the reassessment of Mr. Dhinakaran’s income tax for the block period April 1, 1986 to March 31, 1996 and April 1, 1996 to July 15, 1996, consequent to searches made by the Enforcement Directorate, Chennai for alleged violation of the Foreign Exchange Regulation Act.

Initially in 1997, the Assessing Officer had made an assessment of undisclosed income of ₹57.43 crore for the subject block period, which Mr. Dhinakaran had challenged before ITAT. In 2010, the ITAT set aside the assessment and directed the Assessing Officer to redo the assessment. In 2002, Mr. Dhinakaran moved the Madras High Court against the assessment proceedings and the Court had passed an interim order and stayed the second round of block assessment proceedings till further orders.

In December 2018, the Madras High Court dismissed Mr. Dhinakaran’s plea and told the Income Tax Department to complete the assessment proceedings without any further lapse of time. In 2019, Mr. Dhinakaran told the Income Tax Department that the assessment proceeding is time barred by limitation. The Department rejected the grounds taken by him and determined the income to be ₹57.43 crore, which was the same as determined in the first round of proceedings.

Against the second assessment, Mr. Dhinakaran moved the ITAT citing that it was barred by limitation as per provisions of section 153(2A) of the Income Tax Act and not sustainable both on facts and in law.

The ITAT ruled that, taking into account the High Court proceedings, the assessment should have been completed on or before April 14, 2019. But, the Department completed the assessment on December 31, 2019 and therefore, the assessment order was clearly barred by limitations as per the samended provisions of sec