Madras HC dismisses dismisses S.P. Velumani’s petition against I-T assessment order on 2016 Assembly poll expenses

The Madras High Court on Tuesday (March 24, 2026) dismissed a writ petition filed by former AIADMK Minister S.P. Velumani in 2023 challenging an assessment order passed against him by the Income Tax (I-T) department in 2022 after finding that he had given ₹7 crore in cash to SRS Mining for distribution to various constituencies during the 2016 Legislative Assembly elections held in Tamil Nadu.

Justice C. Saravanan dismissed the plea, with liberty to prefer a statutory appeal, after I-T department senior standing counsel A.P. Srinivas contended that the assessee ought not to have filed the writ petition challenging the order passed for the assessment year 2017-18 without availing the statutory remedy of approaching the first appellate authority under the Income Tax Act of 1961.

Explaining the background of the case, the standing counsel told the court that Mr. Velumani, during his stint as Minister for Local Administration in the AIADMK government, had filed I-T returns on January 23, 2018 disclosing a total taxable income of just ₹4.92 lakh which included his salary of ₹4.44 lakh and ₹48,000 being income from other sources. The returns had been filed for the assessment year 2017-18.

However, a search and seizure operation conducted by the I-T sleuths in the premises related to businessman J. Sekar Reddy’s SRS Mining on December 8, 2016 had led to discovery of incriminating materials which revealed that Mr. Velumani had given ₹7 crore in cash to the private company for being distributed in constituencies in which AIADMK and its alliance partners had contested elections that year.

Further, the I-T sleuths recorded a sworn statement of K. Srinivasalu, who was then the director of JSR Infra Developers Private Limited, a connected company, that the seized diary notings were indeed related to the cash received by SRS Mining from Mr. Velumani for being distributed to individual contestants and also for the expenditure in various constituencies in which elections were held.

Responding to a notice issued by the I-T department seeking explanation as to why the ₹7 crore should not be added to his income for the purpose of recovering tax along with penalty, Mr. Velumani had feigned ignorance about any such money having been given by him to the private company and asserted that his income for the year 2017-18 was only ₹4.92 lakh as it had been declared in his I-T returns.

However, after taking into consideration the seized materials and the corroborative evidence, the assessing officer had treated the ₹7 crore as unexplained expenditure and determined the total taxable income of Mr. Velumani as ₹7.04 crore for the assessment year 2017-18. He also decided to initiate penalty proceedings and hence, the former Minister had rushed to the court with the present writ petition in 2023.