I-T breather for Jaya as SC stays proceedings

NEW DELHI: In a relief to AIADMK supremo J Jayalalithaa and her close friend Sasikala, the Supreme Court on Wednesday stayed proceedings against them before a trial court in Chennai relating to a case of non-filing of income tax return during 1991 to 1994.

A bench comprising Justice B N Agrawal and Justice P P Naolekar admitted the petition filed by them challenging the Madras High Court order declining to discharge them in the case. The trial court in Chennai had directed the former Chief Minister to be personally present before it on January 29 on the hearing for the framing of charges.

The High Court had dismissed their revision petition saying that the Magistrate had rightly found that there was a prima facie case against them under section 276 CC of the Income Tax Act for "wilful failure" to file income tax returns.

Jayalalithaa and Sasikala were being prosecuted individually for not filing IT returns in their capacity as partners in Sasi Enterprises whose IT returns were not filed during the years 1991-92 and 1993-94. Senior advocate Harish Salve, appearing for the AIADMK chief, sub-mitted that the High Court wrongly confirmed the order of the trial court declining to discharge them in the case.

In the Special Leave Petition (SLP), they contended that the High Court miscontrued the scope and ambit of section 276 CC of the Act. The SLP said that since the firm has been assessed to nil tax liability the prosecution against them cannot be permitted to proceed with.

However, Additional Solicitor General Gopal Subramanium said that the partnership firm was obliged under the Act to file return even if it did not have taxable income. He said the prosecution was not only for evasion of tax but failure to furnish returns. The ASG said it was the case where notices were giving but no returns were filed.