Legal Heirs Not Replied to Income Tax Notices: Madras HC remits case Subject to Deposit of 20% of Disputed demand Excluding Interest [Read Order]

The Madras High Court remitted an income tax reassessment case back to the Assessing Officer (AO) after noting that the legal heirs of the deceased assessee failed to respond to the show cause notices issued to them.

However,the Court directed that the matter would be reconsidered only if the petitioner deposits 20% of the disputed tax demand excluding interest.

Ms. R. Lakshmi Priya, daughter and legal heir of Late Shri Yelchur Ranganathan, filed a writ petition. The heir challenged the reassessment order dated 30.10.2024 passed under Section 147 read with Section 144 of the Income Tax Act, 1961 for AY 2016-17.

It was submitted that present case was the second round of litigation, as an earlier assessment order dated 31.05.2023 had been passed in the name of the deceased assessee, even though he had died on 19.08.2019.

Earlier, the said assessment order was challenged by the petitioner’s half-sister in W.P. No.24251 of 2023, and the High Court had quashed it.

In the earlier challenge, the court directed the Department to continue proceedings only after issuing proper communication to all legal heirs and granting them an opportunity of hearing before passing a fresh order.

After the instruction, the Department issued two show cause notices dated 09.10.2024 and 18.10.2024 to all legal heirs, granting seven days’ time each to respond.

However, none of the legal heirs replied to the notices or sought additional time. Therefore the Assessing Officer passed the impugned reassessment order on 30.10.2024.

Justice C. Saravanan observed that there are no procedural irregularities in the order and therefore interference under Article 226 is not needed.

At the same time, the court said that considering the fact that the legal heirs had not filed any reply and that the total assessed demand (including interest) was ₹4.18 crore, it decided to provide one final opportunity to the petitioner to contest the matter on merits.

Accordingly, the court quashed the reassessment order and remitted the matter back to the Assessing Officer. The court made a condition that the petitioner has to deposit 20% of the disputed tax excluding interest under Sections 234A, 234B and 234C within 60 days.

That amounts to 20% of ₹1,33,05,275 (tax after interest excluded). Additionally, it was instructed to consider the contested assessment order as an addendum to both show cause notices and to submit a thorough response to them along with supporting documentation.

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates