Achuthan Rajarajan Vs Assessment Unit (Madras High Court)
Conclusion: Assessment and penalty orders issued against assessee was set aside considering pathology reports of assessee as a valid reason for failing to respond to various income tax notices.
Held: Assessee was a legal heir of the late Shri Achuthan Nair, had sold an immovable property in February 2014 and deposited the sale proceeds in a bank account. The subsequent creation of fixed deposits totaling ₹60,04,090/- triggered proceedings under the Income Tax Act, 1961. Assessee did not respond to notices issued under Sections 148A(b), 148, and 142(1), nor to subsequent show-cause notices. This led to the issuance of an assessment order on December 29, 2023, and a penalty order on June 20, 2024. Assessee explained the non-compliance by citing a diagnosis of Grade 2 Carcinoma of the tongue in October 2023, supported by pathology reports from the Cancer Institute, Adyar. Since assessee did not respond to several notices issued earlier, on instructions, he agreed to remit a sum of Rs.2,00,000/- towards the income tax demand as a con-dition for remand. It was held that while assessee’s diagnosis occurred after some notices were issued, the show-cause notices in August and December 2023 coincided with the period of illness. The Court found this explanation acceptable for the failure to respond during that time but underlined tassessee’s overall non-compliance since the initiation of proceedings in April 2022. To balance revenue interests and procedural fairness, the impugned order was set aside on the condition that assessee remitted ₹2,00,000/- towards the tax demand within four weeks. Assessee was also allowed to file a reply to the show-cause notice, with AO directed to provide a personal hearing via video conferencing and issue a fresh order within four months.
