Vijay suffers another setback as Madras HC upholds Rs 1.5 crore I-T penalty

The Madras High Court on Friday (February 6) dismissed actor-politician Vijay's writ petition challenging a Rs 1.5 crore penalty imposed by the Income Tax Department. The penalty arises from his failure to voluntarily disclose an additional Rs 15 crore of income earned during the financial year 2015-16, attributed to his remuneration for the film Puli.

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Justice Senthilkumar Ramamoorthy delivered the verdict after reserving orders on January 23, 2026, rejecting Vijay's arguments and upholding the department's penalty order passed on June 30, 2022. The ruling comes at a crucial juncture for Vijay, who has fully pivoted to politics ahead of the 2026 Tamil Nadu Assembly elections, positioning TVK as an alternative force against the DMK and AIADMK.

I-T raids

The case dates back to September 30, 2015, when Income Tax officials conducted searches at premises associated with Vijay and the producers of Puli. Seized documents revealed that Vijay received approximately Rs 4.93 crore in cash, in addition to Rs 16 crore paid through banking channels, from producers PT Selvakumar and Shibu Thameens of SKT Studios. While tax was deducted at source on the cheque payments, none was withheld on the cash component. During the search, Vijay reportedly admitted to receiving the undisclosed amount and agreed to pay taxes on it. He later included Rs 15 crore in a revised return filed on July 29, 2016, declaring a total income of Rs 35.42 crore for the assessment year 2016-17.

The I-T Department, however, viewed the disclosure as non-voluntary, triggered solely by the search operation. Penalty proceedings were initiated under Section 271AAB(1) of the Income Tax Act for undisclosed income detected during search, culminating in the ₹1.5 crore levy.

Disclosure not voluntary

Vijay's counsel argued that the penalty order was time-barred, contending that under the applicable provisions, it should have been passed by June 30, 2019. They asserted that the delayed 2022 order violated limitation rules and should be quashed. The petitioner also maintained that since the additional income was eventually declared and tax paid, the penalty was unwarranted.

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Countering this, senior standing counsel for the I-T Department, A.P. Srinivas, defended the penalty's validity, emphasising that voluntary disclosure requires revelation before detection by authorities. The department argued that the income surfaced only due to incriminating evidence from the search, justifying the concealment charge. On the limitation issue, the department submitted that the order complied with legal extensions and provisions.

The single bench accepted the department's position, finding no merit in the limitation plea and holding that the disclosure lacked voluntariness. The writ petition was dismissed without costs.

Challenges ahead

Political observers note that while the case pertains to events over a decade old from Vijay's acting career, the upheld penalty could provide ammunition to rivals questioning his emphasis on transparency and anti-corruption in TVK's manifesto. The party has projected Vijay as a clean, people-centric leader, and any adverse legal outcome risks denting that narrative as he builds grassroots momentum.

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TVK spokespersons have downplayed the development, calling it a "closed chapter from the past" unrelated to politics. Sources close to Vijay indicate a possible appeal to a division bench. The verdict adds to recent challenges for the actor-turned-politician, following delays in his purported final film Jana Nayagan due to separate censor disputes.