Thangaraju Vs Chief Commissioner of Income Tax (Madras High Court)
Madras High Court has dismissed a writ petition filed by an advocate, Mr. Thangaraju, challenging an income tax notice issued by the Chief Commissioner of Income Tax for the assessment year 2017-2018. The court affirmed that individuals handling significant cash transactions, even as Power of Attorney (POA) holders, are obligated to file income tax returns.
The case revolves around a property sale executed by Mr. Thangaraju on April 25, 2016, in his capacity as a Power of Attorney holder. The property was sold for Rs. 55,80,000. Mr. Thangaraju stated that he withdrew the entire sale consideration from the bank account in two tranches on April 28, 2016, and April 30, 2016, and subsequently paid the cash to the principal, the property owner, as requested. A receipt for this payment was also submitted by Mr. Thangaraju.
The Income Tax Department, however, considered the withdrawn amount as Mr. Thangaraju’s income due to the non-filing of income tax returns for the relevant period. Consequently, the department initiated proceedings against him and issued multiple show cause notices.
The petitioner’s counsel argued that Mr. Thangaraju merely acted as a Power of Attorney and was not the property owner. Therefore, any notice concerning the withdrawal of the amount should have been directed to the principal, who was the absolute owner of the property. The counsel contended that the impugned notice was issued without a proper basis and sought its quashing.
