Show Cause Notice - Proposed addition in assessment
Facing proposed additions in your income tax assessment? Don’t ignore the notice.
Get professional guidance to respond correctly and protect your interests.
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Overview
Show Cause Notice - Proposed addition in assessment
Where the Income tax officer is proposing any addition of income in the case of any person in
assessment / reassessment under different provisions of the Income tax Act, 1961 on which tax
liability will arise, then before making such addition the Income tax Officer gives an opportunity
to the person to show the reason why such addition should not be made to income of the person. It is
to be noted that it is the last opportunity where the person can defend himself at lower levels,
preferably through Authorized representative / Chartered Accountant on the date & time specified in
the notice.
If this notice is not complied with then the Income tax Officer determines the Income of the person
on the basis of documents available , then we need to go to the higher authorities which double the
burden of the person. Sometimes, the initial notices / preliminary notices may get neglected /
ignored / unattended, then also before making addition the Income tax Officer compulsorily issue
show cause notice to the person. Thus this notice, must be attended by the person preferably through
Authorized representative / Chartered Accountant otherwise it may escort to adverse consequences
along with imposition / levy of harsh fines and penalties
FAQ
Frequently Asked Questions
What is a Show Cause Notice for Proposed Addition
in Income Tax Assessment?
A Show Cause Notice is issued by the Income Tax Officer when he proposes to
make addition to returned income during assessment or reassessment. It gives the taxpayer a
final opportunity to explain why such addition should not be made.
Is it mandatory to reply to a Show Cause
Notice?
Yes. It is very important to reply within the specified date and time
mentioned in the notice. If no reply is filed, the officer may complete the assessment based
on available records, which may result in higher tax liability.
What happens if I ignore a Show Cause Notice?
online?
If ignored, the Income Tax Officer may pass an adverse assessment order and
add the proposed income. This can lead to additional tax demand, penalties, interest, and
further legal proceedings.
Can I respond to a Show Cause Notice through a
Chartered Accountant?
Yes. You can respond through an Authorized Representative or Chartered
Accountant who can properly draft and submit a legal and factual reply on your behalf.
Is Show Cause Notice the last opportunity before
final assessment?
In most cases, yes. It is generally the last opportunity at the assessment
level to defend your case before the officer passes the final order. If not handled
properly, you may need to file an appeal before higher authorities like CIT(A) or ITAT.
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