Show cause notices cannot be kept in the call book indefinitely; unreasonable delay can bar adjudication and justify quashing.

Madras HC stated that show cause notices cannot remain in the call book for an inordinately long period on the basis of contested audit objections. It held that adjudication must be completed within a reasonable time, and that administrative transfer to the call book is only a temporary measure, not a licence for indefinite delay. The Court noted that the delay of about 21 years was wholly unjustified, and that the later statutory time-bound approach in Section 11A(11) reflected the same principle. On that basis, the proceedings were treated as barred by limitation and the impugned notices were quashed.

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Issues: (i) Whether the impugned show cause notices could be revived and adjudicated after an extraordinary delay by keeping them in the call book on the basis of contested audit objections, and whether such delay rendered the proceedings barred by limitation.

Analysis: The Court noted that the notices were issued between 1999 and 2001, but the hearing notices for adjudication were issued only in 2020, leaving a gap of about 21 years. It held that the then-prevailing Board circulars contemplated completion of adjudication within a reasonable time, generally six months, and that transfer to the call book was only a temporary administrative measure and not a licence to keep matters pending indefinitely. The Court further observed that contested audit objections were internal departmental issues that had to be resolved within a reasonable period, and that the later statutory insertion in Section 11A(11) reflected the same time-bound approach. The delay in the present case was found to be wholly unjustified.

Conclusion: The proceedings were barred by limitation and the challenge was allowed in favour of the assessee.

Final Conclusion: The impugned show cause notices were quashed for inordinate and unexplained delay, and the writ petitions were allowed.

Ratio Decidendi: A show cause notice cannot be kept pending in the call book for an inordinately long period on contested audit objections, and adjudication must be completed within a reasonable time; otherwise, the proceedings become liable to be quashed as barred by limitation.

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