Bharat Bansal Vs National Faceless Assessment Centre (Delhi High Court)
The Delhi High Court dismissed a writ petition filed under Article 226 of the Constitution challenging a notice dated 24.06.2025 issued under Section 143(2) of the Income Tax Act, 1961, by which the petitioner’s case was selected for scrutiny assessment.
The petitioner contended that CBDT circulars dated 23.06.2017 and 13.10.2021 required the Revenue to specify in the scrutiny notice the reasons for selecting the case and to indicate whether the scrutiny was limited or complete. It was argued that the impugned notice did not satisfy these requirements and was therefore invalid.
The respondent submitted that the circulars did not require the reasons for selection of a case for scrutiny to be stated in a notice under Section 143(2). It was further submitted that while the notice dated 24.06.2025 was a general notice informing the petitioner that the case had been selected for scrutiny, a subsequent notice dated 24.09.2025 under Section 142(1) of the Act sought the relevant information and documents required for the assessment.
After considering the submissions and the circulars relied upon by the petitioner, the High Court held that an Assessing Officer is not required to disclose why an assessee’s case has been selected for scrutiny. The Court observed that scrutiny assessment is intended to address the difficulties and harassment faced by assessees by confining detailed assessment proceedings to a limited number of cases.
The Court further observed that the CBDT and departmental circulars are meant to determine which cases or categories of cases should be selected for scrutiny and the nature of such scrutiny. According to the Court, these are inter-departmental matters.
The High Court held that an assessee cannot, as a matter of right, require the Revenue to disclose the reasons for selecting the case for scrutiny. It observed that even before the Court, such a request cannot be made unless the assessee demonstrates arbitrariness or vendetta in the selection for scrutiny.
The Court also held that a notice under Section 143(2) merely informs the assessee that the case has been selected for scrutiny. During the assessment proceedings, the Assessing Officer is required to issue a specific notice seeking the necessary information and documents. In the present case, the Assessing Officer had issued a notice under Section 142(1) calling for the relevant information and documents, thereby following the expected procedure.
Accordingly, the High Court dismissed the writ petition and disposed of the pending applications.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. The petitioner has preferred the present writ petition under Article 226 of the Constitution of India, impugning the notice dated 24.06.2025 issued under Section 143(2) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act of 1961’), whereby petitioner’s case has been informed to be selected for the scrutiny.
2. Learned counsel for the petitioner relied upon the circulars dated 23.06.2017 and 13.10.2021 and contended that if an assesse’s case has been selected for scrutiny, the respondents are required to indicate in the notice that why his/her/its case has been taken up for scrutiny so also the fact that whether the scrutiny is limited or complete (circular dated 23.06.2017).
3. Learned counsel for the petitioner argued that since the impugned notice does not fulfil such requirements, the same is fundamentally barred in the eyes of law.
4. Ms. Monica Benjamin, learned Junior Standing Counsel for the respondent on the other hand argued that the circulars so issued nowhere provide that while issuing the notice under Section 143(2) of the Act of 1961, the reason for taking a case for scrutiny is to be given. She submitted that maybe the first notice dated 24.06.2025 was a general notice but thereafter, a specific notice dated 24.09.2025 under Section 142(1) of the Act of 1961 was issued whereby relevant information so also documents were demanded.
5. Having heard learned counsel for the parties and upon consideration of the material available on record, including the circulars that were relied upon by the learned counsel for the petitioner, we are of the firm opinion that it is not necessary for the Assessing Officer (AO) to indicate as to why an assesse’s case has been selected for scrutiny.
6. The scrutiny assessment has been provided in order to address the rigmarole and harassment being faced by the assessee in general and to confine the detailed assessment proceedings to a limited number of assessee.
7. The circulars issued by the CBDT and the Department are only with a view to determine as to which case or category of cases shall be taken up for scrutiny assessment and what shall be the nature of the scrutiny, which in our opinion is totally an inter-Departmental matter.
8. No assessee can as a matter of right ask as to why his case has been taken up for scrutiny. Even before the Court, an assessee cannot make such prayer, unless he is able to demonstrate that there is arbitrariness or vendetta, behind taking up his case for scrutiny.
9. According to us, the first notice under Section 143(2) of the Act of 1961 is only an intimation to the assessee that his/her case has been selected for scrutiny assessment and during the course of assessment proceedings, the AO is definitely required to issue a specific notice eliciting the necessary information and documents. In the instant case, the AO has exactly done what is expected of him.
10. For the reasons aforesaid, the writ petition is hereby dismissed.
11. Pending applications stand disposed of.
