Supreme Court: It is Mandatory for Taxpayers to Respond to Notices

The Supreme Court has clarified that any taxpayer (assessee) must compulsorily comply with and respond to summons and show-cause notices issued by central or state tax authorities.

Under the Income Tax Act, 1961, an assessee is any individual or entity legally responsible for paying taxes or fulfilling other financial obligations.

 

Key Highlights of the Judgment

• A bench of Justice J.B. Pardiwala and Justice A. Mahadevan observed that the issuance of a summons itself indicates the initiation of proceedings.
• The Court held: “If a taxpayer is aware of an investigation, they are duty-bound to immediately provide a written response to the authority concerned.”
• The Court directed that when different authorities are investigating the same assessee, they should exchange information with each other to avoid duplication and verify the authenticity of taxpayer claims.
• If a claim is found invalid, the authority must clearly inform the assessee in writing with reasons.

 

Court’s Observations

• A summons or notice is not a mere formality—it signifies that proceedings have already begun.
• Non-response or delay in response by taxpayers is not acceptable.
• Authorities must ensure transparency and proper communication so that there is no conflict in overlapping investigations by different agencies.