Extended limitation notice must disclose specific grounds, or it fails for breach of natural justice and fair defence

A show cause notice proposing to invoke the extended period of limitation is unsustainable unless it clearly states the specific grounds and allegations supporting that invocation. The notice must disclose the factual basis for applying the longer period so the assessee can meet the case against it; otherwise, the notice violates natural justice and denies a fair opportunity of defence. On that reasoning, a notice that omits the necessary foundation for the extended period is liable to be quashed.

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Issues: Whether a show cause notice invoking the extended period of limitation was sustainable when the notice did not disclose the basis for invoking that extended period.

Analysis: The notice must inform the assessee of the specific allegation or ground on which the longer period of limitation is proposed to be invoked. Without such disclosure, the assessee is denied a fair opportunity to meet the case against it, which is contrary to natural justice. The absence of the necessary factual foundation in the notice made the invocation of the extended period unsustainable.

Conclusion: The show cause notice could not be sustained and was liable to be quashed.

Ratio Decidendi: A show cause notice proposing to invoke an extended period of limitation is invalid unless it clearly discloses the specific grounds and allegations on which such extended period is sought to be applied, so that the assessee is afforded a fair opportunity of defence.

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