scn can not issue for 5 years

[jagathjeevan guntu]

can a SCN issue for 5 years report if an audit completed every year

[Mahir S]

Yes sir, SCN can surely be issued for 5 years period,even if audit undertaken by the department.

[CSSANJAY MALHOTRA]

SCN can be issued for past 5 years from the relevant date if there happens to be suppression, misrepresentation, element of fraud...Nothing to do with the audit....

Important aspect to consider is the "Non applicability of Extended Period of Limitation". If the assessee quotes some instances that the activity under dispute was in the knowledge of the department or was intimated earlier through any written letter / taken up during Audit / any other facts, then Appellate Authorities can set aside the SCN.....

[YAGAY and SUN]

Dear Jagath,

In continuation to the reply of Mr. Malhotra, It is now settled legal position that if audit had been conducted every year by the Department, then, liability for last five years cannot be fasten on the assessee. Department cannot ask that such facts were not known to them. This aspect had been dealt in Nahar Spinning Mills matter by the Hon'ble Tribunal.

This is for your kind information.

Regards,

YAGAY and SUN

[CSSANJAY MALHOTRA]

Thanks to YAGAY & SUN for addition thus bringing in the Nahar Spinning validation part also.

[CA ombir Singh Panwar]

if audit is completed of each year then limitation period for issue SCN will be 18 month from the relevant date as it will not be case of suppression of fact or fraud or miss statement.

[DR.MARIAPPAN GOVINDARAJAN]

Yes, correct observation.

AI Summary

Limitation for show-cause notices: annual audits and prior disclosure can bar invoking extended limitation periods.
Issuance of a show-cause notice for an extended past period depends on whether there was suppression, misrepresentation or fraud; if annual audits or prior written disclosure put the department on notice of the activity, the extended limitation cannot be invoked and the department is restricted to the ordinary limitation period measured from the relevant date.