Income Tax Department serves notice to University of Madras seeking over ₹424 crore in arrears

University of Madras receives notice from Income Tax Department to pay ₹424 crore as dues, resulting in frozen bank accounts and bounced cheques.

The University of Madras has received a notice from the Income Tax (I-T) Department to pay over ₹424 crore as dues for the assessment years 2017-2018 to 2020-2021. The I-T Department has also frozen the university’s bank accounts. The 164-year-old public university has not been able to settle bills due to this.

The I-T notice, issued on February 6 to the chief branch manager of the State Bank of India branch in the University’s Chepauk campus, has cited Section 226 (3) of the Income Tax Act, 1961, which deals with income tax/penalty/interest/fine, and warned that if the institution failed to pay it would been deemed as default. The assessee has also been informed that any amount lying in the account of the assessee may be sent to the I-T office with the amount “rounded off to the nearest rupee.”

The I-T Department has said pending payment of the dues, it had frozen 37 fixed deposit accounts of the university. As a result, the cheques issued by the university in the past two days have bounced. With it being a non-working weekend, the university is in a bind.

A university official said the institution was exempt from income tax. Though the university’s auditor had filed the returns regularly, the same was not reflected in the I-T website, he said. “On our side, the documents are clear, and we have sufficient proof. The institution is exempt under Section 10 (23C) of the I-Tax Act. The evidence must be placed before the I-T Department by the auditor. We are in the process of doing that, and the issue will be set right,” the official said.

Another official said the institution has been denied funds by the government since 2017 owing to audit objections. Since then, the institution was managing with funds generated from other sources.

“If an institution receives more than 50% as grants from the government, it is exempted from income tax. For the past few years, due to audit objections, the grants hover around 47% or 48%. We have been generating 60% of funds from outside, including from the Institute of Distance Education. This has led to the misconception that we are not exempt,” the official added.

University sources said its officials were in discussion with I-T officials and the issue would be set right by Monday.