TMI Blog2021 (6) TMI 823X X X X Extracts X X X X X X X X Extracts X X X X ..... ge of communications inter se the parties. However, no show cause notice crystallizing the issues dealt with in the assessment orders have been crystallised as such and put to the petitioner for rebuttal, prior to completion of proceedings. CBDT has fairly concluded that principles of natural justice which are enshrined in the procedure for assessment mandate the issuance of a show cause notice prior to finalisation of an order of assessment. The Board refers to Instruction No.3 of 2018 dated 20.08.2018, specifically para 6(vi) thereof relating to AY 2016-17 and 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 impor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 as such and put to the petitioner for rebuttal, prior to completion of proceedings. 3. The petitioner had reli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ght 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. Before passing the final order against the proposed additions/disallowances due consideration shall be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 thereto, issue a show cause notice setting out the issues, solicit the response of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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