The Income Tax Appellate Tribunal, Chennai, has quashed an Income Tax Department order determining an undisclosed income of ₹57.43 crore against AMMK general secretary T.T.V. Dhinakaran. It said the assessment was not completed within the time permitted under the Income Tax Act.
The case pertains to the reassessment of Mr. Dhinakaran’s tax for the block period from April 1, 1986, to March 31, 1996, and April 1, 1996, to July 15, 1996, consequent to the searches made by the Enforcement Directorate for an alleged violation of the Foreign Exchange Regulation Act.
In 1997, the assessing officer made an assessment of ₹57.43 crore in undisclosed income for the block period. Mr. Dhinakaran challenged it before the Tribunal. In 2010, the Tribunal set the assessment aside and directed the assessing officer to redo the assessment.
In 2002, Mr. Dhinakaran moved the Madras High Court against the assessment proceedings. Through an interim order, the court stayed the second round of the proceedings till further orders.
In December 2018, the court dismissed Mr. Dhinakaran’s plea and told the Income Tax Department to complete the proceedings without any further lapse of time. In 2019, Mr. Dhinakaran told the Income Tax Department that the proceeding was time-barred by limitation. It rejected the grounds taken by him and determined the income to be ₹57.43 crore, the same as the one determined in the first round.
Against the second assessment, Mr. Dhinakaran moved the Tribunal, arguing that it was barred by limitation as per Section 153(2A) of the Income Tax Act and not sustainable in facts and law.
The Tribunal ruled that taking into account the court proceedings, the assessment should have been completed by April 14, 2019. But the Income Tax Department completed it on December 31, 2019; therefore, the assessment order was barred by limitation as per the amended provisions of Section 153(2A).
