2019 (8) TMI 454 - AT - Income Tax

Condonation of delay - delay of 419 days - HELD THAT - Wife of Sri P.B. Srinivas, who is the Managing Partner of the firm is suffered with cancer, not only that another partner Smt. P. Satya Shanti, who is the sister of Sri P.B. Srinivas was also found suffering from breast cancer. She was already a heart patient. As her condition was serious, taken to Apollo hospitals in Ahmedabad and Sri P.B. Srinivas being the only brother, had to attend her treatment. Ultimately she died on 04/06/2017. Under these facts and circumstances of the case, the assessee has not drawn attention on the order passed by the ld. CIT(A). When the Income-tax Department pursued the matter in respect of collection of tax, it came to the notice of the assessee and immediately filed appeal against the order of the ld. CIT(A). By considering the affidavit filed by the assessee and also the details explained by the assessee, we find that there is a sufficient cause for the assessee in non-filing the appeal in time. In our opinion, it is a fit case to condone the delay. Admission of additional ground - penalty u/s 271(1)(c) levied - HELD THAT - We find that the issue raised by the assessee is a legal issue and all the facts are available on record. In this context, the Hon'ble Supreme Court in the case of National Thermal Power Co. Ltd. Vs. CIT 1996 (12) TMI 7 - SUPREME COURT has considered the issue and held that where the tribunal is only required to consider a question of law arising from the facts which are on record in the assessment proceedings we fail to see why such a question should not be allowed to be raised when it is necessary to consider that question in order to correctly assess the tax liability of an assessee‟. From the above, it is very clear that there is no fresh investigation on facts is required, the additional ground raised by the assessee has to be adjudicated, hence, the same has to be admitted by following the judgment of the Hon'ble Supreme Court in the case of National Thermal Power Co. Ltd., (supra), the additional ground raised by the assessee is admitted. Penalty u/s 271(1)(c) - non-striking of the irrelevant portion of the notice issued u/sec. 274 - whether the notice issued by AO is valid or not? - HELD THAT - The decision of Hon'ble High Court of Telangana A.P. in the case of Smt. Baisetty Revathi 2017 (7) TMI 776 - ANDHRA PRADESH HIGH COURT has considered the very same issue and held that non-striking of the irrelevant portion of the notice issued u/sec. 274 is invalid. The very same judgment has been followed by the coordinate bench of this tribunal in the case of Konchada Sreeram 2017 (11) TMI 1164 - ITAT VISAKHAPATNAM . Therefore, respectfully following above referred to judicial precedents, we hold that the notice issued under section 274 read with section 271, dated 30/03/2014 is invalid and, therefore penalty order passed by the Assessing Officer, dated 26/09/2014 is hereby cancelled.

Summary

Issues Involved:
1. Delay in filing the appeal.
2. Validity of the penalty notice under section 271(1)(c) of the Income Tax Act, 1961.

Detailed Analysis:

1. Delay in Filing the Appeal:

The assessee's appeal was delayed by 419 days. The primary reason for the delay, as explained by the assessee through an affidavit, was the critical illness of the managing partner's spouse and sister, both diagnosed with cancer. The managing partner had to frequently travel for their treatment, which diverted his attention from the firm's affairs. The partner's sister eventually passed away, further exacerbating the situation. The appeal was filed only after a follow-up call from the income tax department regarding tax dues. Given these circumstances, the Tribunal found sufficient cause for the delay and decided to condone it, stating, "In our opinion, it is a fit case to condone the delay. Accordingly, delay is condoned."

2. Validity of the Penalty Notice under Section 271(1)(c):

The case involved the issuance of a penalty notice under section 271(1)(c) for either concealment of income or furnishing inaccurate particulars of income. The assessee argued that the notice was vague as it did not specify the exact charge. The Tribunal admitted this additional ground for consideration, noting that it was a legal issue that did not require fresh investigation of facts.

The Tribunal examined the notice issued by the Assessing Officer, which stated, "have concealed the particulars of your income or furnished inaccurate particulars of such income." This ambiguity was critical since the notice did not clarify whether the penalty was for concealment or for furnishing inaccurate particulars. The Tribunal referenced the Supreme Court's decision in CIT Vs. SSA's Emerald Meadows and the High Court of Telangana & A.P.'s decision in Pr.CIT Vs. Smt. Baisetty Revathi, which held that such vague notices are invalid.

The Tribunal concluded that the notice was indeed vague and invalid, stating, "Therefore, the notice issued by the Assessing Officer is a vague notice and is liable to be quashed." Consequently, the penalty order based on this notice was also quashed. The Tribunal's decision was further supported by similar judgments, including the case of Konchada Sreeram Vs. ITO, where it was held that non-striking of the irrelevant portion in the notice renders it invalid.

Conclusion:

The Tribunal allowed the appeal filed by the assessee, condoning the delay and cancelling the penalty order due to the invalidity of the penalty notice. The judgment emphasized the necessity for clear and specific charges in penalty notices to ensure compliance with the principles of natural justice. The order was pronounced on the 7th day of August, 2019.