Income Tax department has asked hardline Kashmiri separatist leader Syed Ali Shah Geelani to pay Rs 1.73 crore in tax dues over a period when he had not filed his returns after rejecting his appeal.

The IT sleuths, who had swooped on residences of Geelani and his family members in 2002 and seized valuable items including a diamond-studded watch gifted by Pakistan Government, had raised a tax demand of over Rs 1.5 crore.

Geelani challenged the demand and approached the Commissioner of Income Tax (appeals) for review of the case and also sought a waiver, saying he did not earn anything other than the pension from Government of Jammu and Kashmir and from agriculture land.

The case dragged on for nearly three years and recently the appeal was dismissed after which he was asked to deposit Rs 1.73 crore as tax liabilities by the end of 2010.

Geelani, who heads the breakaway faction of Hurriyat Conference, has still the option to go to the Income Tax Appellate Tribunal (ITAT).

The Tax Department had raised the demand of Rs 1.73 crore against the firebrand Jamaat-e-Islami leader after giving him ample opportunities to furnish answers to a questionnaire about his sources of income.

The questionnaire followed an assessment of Geelani's wealth by the department following a series of raids conducted at his house and other places in June 2002.

The department had raided Geelani's house and other places of his kin on June 9, 2002 and seized Rs 10.2 lakh and 10,000 US dollars in cash, vouchers showing purchase of substantial amount of jewellery, a diamond-encrusted watch inscribed with "From Pakistan Government" besides documents pertaining to purchase of property and vehicles.

Geelani had shown an annual income of Rs 17,100--Rs 7,100 as pension from the state Assembly as a former MLA and Rs 10,000 as agriculture income.

However, according to the assessment made by the Income Tax Department, the monthly expenditure of Geelani allegedly ranged from Rs one lakh to Rs 1.5 lakh as he had 15 servants at his house and his wife had confirmed that she used to get Rs 25,000 per month for kitchen expenses.

When asked to comment, Geelani said he had not received the notice as yet and would like to first understand the grounds of rejection before reacting.