High Court grants 'status quo' on Kalaignar TV Tax Dispute Case

April 03, 2019:

On Tuesday, in an interim relief to Kalaignar Television, the Madras High Court directed the Income Tax department to maintain status quo on its arrears of tax demand against the channel for assessment years 2009-10 and 2010-11.

Justice Anita Sumanth, before whom a petition from Kalaingnar TV came up seeking quashing of the department's March 7 demand notice that reaffirmed its determination of tax made earlier, granted status quo till the next date of hearing.

The Judge granted the relief after hearing the petitioner who sought a direction to the department not to enforce its arrears of demand assailing it as violative of natural justice and provisions of the Constitution.

The Court issued notice to the Assistant Commissioner of Income Tax, Non-Corporate Circle here for filing counter by April 24.

According to the petitioner, it filed the Income Tax returns showing a loss of ₹3,59,37,531 for 2009-10 and a loss of ₹6,39,01,141 for 2010-11.

The tax department, however, on March 28, 2013 had determined its income as ₹21,41,65,756 for 2009-10 and ₹177,27,33,650 for 2010-11.

Challenging it, the channel approached the Income Tax Appellate Tribunal and then the Madras High Court which directed the petitioner to file a stay application before the Assistant Commissioner of Income Tax, Non-Corporate Circle.

On grounds including financial hardship, the petitioner filed the application praying for stay of the entire demand.

After another round of litigation, the department again confirmed the same income (on Dec 31, 2017) for the petitioner and sent the notice for payment of tax on March 7, 2019 demanding to pay 10 per cent of the demand.

The notice was issued without even considering the grounds in its stay application, the petitioner alleged.

Also, the assessment order showed complete non-application of mind since it was identical to the initial order passed.

The petitioner further said the impugned assessment order was contrary to the orders of the High Court, the appellate authority and related agencies and hence violative of the principles of natural justice.

It was also arbitrary, perverse and violative of Articles 14 (equality), 19(1)(g) (right to carry on any trade) and 265(no tax shall be levied expect under the authority of law) of the Constitution, the petitioner contended.

On such grounds, the petitioner sought quashing of the Mar 7 demand notice and a direction not to enforce the arrears of demand.

The interim prayer is to stay its operation.

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