Facts of the Case:
The Assessee filed a writ petition under Article 226 of the Constitution of India challenging a notice dated 24.06.2025 issued under Section 143(2) of the Income Tax Act, 1961 (hereinafter referred to as “the Act”). By way of the said notice, the assessee was informed that his case had been selected for scrutiny assessment. The Assessee contended that the notice was defective as it did not specify the reasons for selecting the case for scrutiny nor clarify whether the scrutiny was limited or complete. During the course of proceedings, it was also noted that a subsequent notice dated 24.09.2025 under Section 142(1) of the Act was issued by the Assessing Officer (hereinafter referred to as “AO”), calling for specific information and documents from the petitioner.
Contention of Assessee:
The Assessee contended that as per CBDT Circulars dated 23.06.2017 and 13.10.2021, when a case is selected for scrutiny, the notice must indicate the reasons for such selection and must also specify whether the scrutiny is limited or complete. Failure to do so shall render the notice invalid in the eyes of law.
Contention of Revenue:
The Revenue contended that the circulars only regulate internal administrative procedures for selection of cases and do not create any right in favour of the assessee to demand disclosure of reasons at the stage of issuance of notice under section 143(2) of the Act.
Ruling:
The Hon’ble Tribunal dismissed the writ petition, holding that it is not mandatory for the Assessing Officer to disclose the reasons for selecting a case for scrutiny in a notice issued under section 143(2) of the Act. The Court observed that scrutiny selection guidelines contained in CBDT circulars are essentially inter-departmental in nature and meant to regulate internal functioning of the Department. An assessee cannot, as a matter of right, demand disclosure of reasons for scrutiny unless arbitrariness or vendetta is demonstrated. The Court further clarified that a notice under Section 143(2) of the Act is merely an intimation of selection for scrutiny, and during the course of assessment proceedings, the AO is required to issue specific notices seeking relevant details, which was duly done in the present case. Accordingly, the writ petition was dismissed and pending applications were disposed of.
Editor’s Note:
This ruling reiterates the limited scope of judicial interference at the stage of issuance of a notice under Section 143(2) of the Act. The Court clarified that the purpose of such notice is merely to intimate the assessee that the return has been selected for scrutiny assessment, and it is not legally mandatory for the Assessing Officer to disclose the reasons for such selection within the notice itself. While CBDT circulars prescribe internal procedures for identifying cases for limited or complete scrutiny, these guidelines are administrative in nature and do not confer an enforceable right upon the assessee to demand disclosure of the selection criteria.
Citation:- Bharat Bansal V/s National Faceless Assessment Centre, Delhi {W.O.(C) 2238/2026, CM APPL. 10798/2026 & CM APPL., 10799/2026} of Hon’ble Delhi High Court