CHENNAI, Jan 25:
The Madras High Court today stayed all proceedings against former Union minister P Chidambaram and his family members pursuant to a demand notice issued by the Income Tax department last year relating to income from a coffee estate owned by them for the 2008-09 financial year.
Justice Rajiv Shakder passed the interim order on petitions by Chidambaram, his wife Nalini and son Karti challenging the March 31, 2016 demand notice and consequential reassessment order dated December 30 last issued by the Assistant Commissioner of Income Tax, Chennai.
“Pending adjudication of the writ petitions, the further proceedings pursuant to the demand notice are stayed,” the judge said and adjourned the hearing to March 16 next.
The matter relates to the petitioners claiming exemption of entire income from the sale of coffee and pepper from their estate in Coorg in Karnataka in 2008-09 as agricultural income under section 10(1) of the Income Tax Act.
The I-T department last year had issued the demand notice claiming about Rs six lakh from the petitioners after reassessing the income for the period.
The counsel for senior Congress leader Chidambaram and others alleged that the I-T department’s action in reopening the assessment and reassessing the income for 2008-09 six years later was illegal and arbitrary.
Counsel Vijay Narain alleged that it had been made only with an intention to defame the petitioner and his family.
Stating that the petitioners had only sold raw coffee seeds, he argued that the income from the sale would attract tax only if they were involved in curing coffee. (PTI)