Madras High Court Asks Income Tax Department Not To Take Coercive Steps Against Higher Education Minister K Ponmudi In Illegal Wealth Case

The Madras High Court has directed the Income Tax Department not to take any coercive steps against Higher Education Minister K Ponmudi in a case alleging that the minister had received illegal wealth from one SRS Mining Company. 

Justice Abdul Quddhose allowed the Income Tax department to file their counter and posted the matter to 27th February. 

Post the matter for counter and disposal on 27.02.2023. However, it is made clear that no coercive steps shall be taken by the respondents against the petitioner until further orders of this Court. 

The Minister had moved the court challenging an assessment order passed by the Income Tax department. The department had issued the assessment order based on documents allegedly recovered during a search conducted of SRS Mining Company. 

The petitioner minister challenged the order contending that even after repeated requests, the respondent authorities have failed to furnish proof for the allegations that the Minister has received illegal payments amounting to twenty lakhs from SRS Mining. The petitioner also submitted that the authorities had arbitrarily and illegally denied his request for cross examining one of the partners of the firm. 

The petitioner also submitted that the documents had merely stated that payments were made to a "Villupuram VIP" which need not necessarily mean the petitioner. Further the authorities had failed to bring in any independent material to corroborate that the payments were in fact made to the minister. 

It was further submitted that to invoke Section 69A of the Income Tax Act, must be found to be the owner of the money. In the present case, however, the evidence discovered during the course of search only points to alleged payment of cash to the assessee and not actually receipt by the assessee. Even from a perusal of the bank details of the petitioner, thr authority was unable to fish out any questionable deposit. 

The petitioner also contended that the show cause notice was only for a sum of Twenty thousand rupees whereas in the assessment order, the tax liability and interest was shown to be around seventy eight thousand rupees. 

Thus, claiming that there was a violation of principles of natural justice, the petitioner sought for quashing of the assessment order. 

Senior Counsel P Wilson appeared for the Minister. 

Case Title: K Ponmudi v. Assistant Commissioner of Income Tax

Case No: WP. No.2202 of 2023