BREAKING | Madras High Court Dismisses Actor Vijay's Plea Challenging Rs 1.5 Crore Penalty In Undisclosed Income Case

The Madras High Court on Friday dismissed a plea by actor-turned-politician Vijay challenging a Rs 1.5 crore penalty imposed on him by the Income Tax Department in connection with alleged undisclosed income of Rs 15 crore for the financial year 2015–16.

The judgment was pronounced by a single judge, Justice Senthilkumar Ramamoorthy, after reserving the same on January 23, 2026.

The court noted that the show cause notice was passed within the time limit prescribed under Section 263 of the Income Tax Act. Noting that there was no infirmity in the manner in which the show cause notice was issued, the court did not go into other aspects.

The court also gave liberty to Vijay to challenge the notice and order before the appellate tribunal by raising other grounds except that of limitation.

The case arose from income tax searches conducted at Vijay's residence in September 2015. An assessment order was passed in December 2017, followed by initiation of penalty proceedings under Section 271AAB(1) in December 2018.

Vijay challenged the assessment before the Commissioner of Income Tax (Appeals), who partly accepted his case. The department carried the matter to the Income Tax Appellate Tribunal, which partly ruled in its favour, including on certain expenses linked to Vijay's fan association.

Separately, penalty proceedings continued in respect of the Rs 15 crore surrendered during the search. In July 2019, the department issued a notice under Section 263 seeking revision of the assessment, arguing that the penalty proceedings had not been properly initiated.

That revision was, however, set aside by the ITAT in May 2022. According to it, no further proceedings were warranted once penalty proceedings had already been initiated.

When the matter came up before the High Court, the focus shifted to a narrower issue, namely, whether the final penalty order had been passed within the limitation period prescribed under Section 275 of the Act.

At an interim stage, another bench of the court had found that the order appeared to be barred by limitation and, on that basis, stayed recovery of the penalty.