2021 (6) TMI 823

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.... by the Assistant Commissioner of Income Tax, Corporate Circle/first respondent in terms of the provisions of the Income Tax Act, 1961 (in short 'Act'). Though the assessments are assailed on several grounds, after hearing Mr. R. Sivaraman, learned counsel for the petitioner and Mrs. Hema Muralikrishnan, learned Senior Standing Counsel for the respondents, the legal issue that emerge is whether a show cause notice has to be issued prior to finalisation of assessments under the Act. 2. In this case, admittedly, two pre-assessment notices have been issued leading to some exchange of communications inter se the parties. However, no show cause notice crystallizing the issues dealt with in the assessment orders have been crystallised ....

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....herein, which are selected for scrutiny through CASS. Further clarifications have been sought regarding the scope and applicability of the aforesaid Instruction to cases being scrutinized. .............. 4. The Board further desires that in all cases under scrutiny, where the Assessing Officer proposes to make additions or disallowances, the assessee would be given a fair opportunity to explain his position on the proposed additions/disallowances in accordance with the principle of natural justice. In this regard, the Assessing Officer shall issue an appropriate show-cause notice duly indicating the reasons for the proposed additions/disallowances along with necessary evidences/ reasons forming the basis of the same. Befor....

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.... the 'E-proceeding' facility available during 2018-19, specifically para (iv)d thereof as well as Circular Number 27 of 2019 dated 26.09.2019 that also reiterate the importance of adherence to the principles of natural justice in the finalisation of proceedings. 10. Thus and in view of the confirmation by the CBDT, an important issue stands settled. Though the Income Tax Act does not anywhere contemplate issuance of a show cause notice prior to finalisation of scrutiny assessments, as a matter of procedure and good office, the Assessing Authority is expected to crystalise the issues arising from the return of income filed by an assessee, the questionnaires issued under Section 142(1) and notices under Section 143(2) and responses....