CMA Final · Direct Tax Laws and International Taxation · GAAR
Under GAAR provisions, the Assessing Officer who considers that an arrangement should be treated as impermissible avoidance arrangement must first do which of the following?
The Assessing Officer does not decide GAAR applicability alone. He refers the matter to the Principal Commissioner or Commissioner, who hears the assessee and, if still of the view GAAR applies, refers it to the Approving Panel, whose directions bind the officer.
- ARefer the matter to the Approving Panel without making the declaration himself
- BRefer the case to the Principal Commissioner or Commissioner for issue of a show-cause or directions as per the prescribed procedureCorrect
- CPass the final order of assessment immediately
- DSeek approval from the Supreme Court
Explanation
The Assessing Officer refers the matter to the Principal Commissioner or Commissioner, who, if not satisfied with the assessee's reply, refers it to the Approving Panel. The Assessing Officer cannot finalise the declaration himself, and the Supreme Court has no role at this stage. Direct reference to the panel by the Assessing Officer is not the procedure.
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