The Income Tax Department imposed a financial penalty of ₹1.5 crore on Vijay because he failed to report his income for the 2015-16 assessment period according to the Income Tax Department. The Madras High Court rejected his petition because it challenged the Income Tax Department’s ₹1.5 crore penalty which the department had imposed on him.

The court denied Vijay’s request to cancel the tax authorities demand notice which he had received. The actor had declared an income of ₹35.42 crore for the 2016–17 financial year. The department claimed that documents seized during a raid at his residence in 2015 showed that he had not reported ₹15 crore in earnings from the film Puli. The Income Tax Department issued a penalty of ₹1.5 crore through an order which was signed on June 30, 2022.

Vijay challenged the high court decision because he believed the penalty order had been issued outside the approved time frame which needed to be delivered before June 30, 2019. The court had previously allowed the petition and granted temporary protection on August 16, 2022.

The department opposed Vijay’s arguments because it claimed that the penalty had been imposed according to the Income Tax Act’s regulations and that the penalty was legally enforceable. The high court rejected Vijay’s petition because it agreed with the tax authorities’ arguments and confirmed the ₹1.5 crore penalty.