A taxpayer has twin courses available to him under the Income tax Act to avoid scrutiny assessment and consequent penalty/prosecution procedures and associated long drawn litigation.
They are advance rulings mechanism and settlement commission route.
To seek benefit of advance ruling the assessee has to come before the assessing authorities before they frame up their mind to proceed. For the fact that in the notice issued to the assessee u/s 143(2) of the Act in Sage Publications Ltd. v Dy CIT (Int Tax) (2016) 387ITR437 the AO only stated that there were certain points in connection with the return of income submitted by the assessee without any address to any specific question the Delhi High Court held that it did not disclose application of mind to the returns. In other words the matter under application was not stated to be pending before the AO. Likewise it was so held in 382 ITR 371 and CIT v AAR, IT in Writ Petition (C) No. 5668/2020 dated 27 August 2020.
In the ordinary assessment course though a notice issued u/s 143(2) forming part of assessment order u/s 143(3) also should live up to the presumption of application of mind following reference to section 114(e) of the Indian Evidence Act,1872 by which there is a general presumption that judicial and official acts have been regularly performed.
For the other route to settlement commission however it is desirable that the assessment must be pending on the date of application. Vide M3M India Holdings Pvt. Ltd vs. ITSC (P&H High Court) in CWP No. 5307of 2019(O & M) dated 22.01.2019 it is held that application for settlement can be filed anytime till such time the assessment order is served upon the assessee.