In Tvl. Sun Powers v. CTO, the Madras High Court held that the Assessing Officer must confirm his proposals based on substantial materials and the failure on the part of the assessee to submit objection cannot be a ground for passing Order
The assessee filed return claiming Input Tax Credit. The Assessing Officer observed that the end dealers had not reported the transactions effected with the petitioner and came to a conclusion that the purchases were bogus and therefore, proposed to reject the claim. The assessee failed to file objection to the above notice. Accordingly, the AO confirmed the proposals and passed the impugned order.
Quashing the order, the AO said “Assessing Officer, in my view, could have only come to a conclusion that the subject transactions were bogus, based on substantive material, and not that because objections werenot filed by the petitioner, the assertions made in the pre-assessment notice would have to be deemed to be correct. Furthermore, if, material was available with respondent to come to the conclusion that the transactions were bogus, adequate opportunity had to be given to the petitioner to meet the charge. The impugned order shows that there is no discussion on this aspect of the matter. The respondent i.e., Assessing Officer has merely proceeded to confirm the proposal on the ground that no objections were filed by the petitioner i.e., assessee. This approach cannot be countenanced in law.”
Read the full text of the order below.
