In a recent ruling in the matter of income tax assessment order, the Madras High Court has ruled that when a show cause notice ( SCN ) is issued on specific allegations, it is the recipient’s responsibility to produce relevant and necessary documents to substantiate their claims, without expecting the department to seek further evidence.
In the case, the petitioner, a charitable trust running a medical college and hospital, contested the assessment order that added ₹59.03 crores and ₹77 lakhs related to loans taken and repaid, respectively, to its total income. The writ petition challenged income tax assessment order under Section 143 (3) r/w Section 144B of the Income Tax Act, 1961.
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The petitioner argued that the order violated principles of natural justice, claiming that the video conferencing hearing was ineffective and the department failed to request additional documents.
The income tax department countered that all due processes, including issuing an SCN, receiving the petitioner’s reply, and conducting a video conference, had been followed. It asserted that the petitioner had already explained its position during the hearing, negating the claim of procedural unfairness.
Justice Kumaresh Babu noted that the petitioner had participated in the video conferencing and explained the transactions but had not submitted sufficient evidence to substantiate its claims.
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It was ruled that the onus to provide supporting documents lies with the SCN recipient and cannot be shifted to the assessing authority. The court found no violation of natural justice and dismissed the writ petition, directing the petitioner to approach the appellate authority if it sought further relief.
The bench observed that “Applying the principles laid down by the Hon’ble Apex Court in the case of Assistant Commissioner of State Tax and others Vs. Commercial Steel Limited reported in 2021 SCC Online SC 884, I do not find any of the criteria in the present case for this Court to entertain the writ petition.”
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