2019 (5) TMI 295 - AT - Income Tax

Admission of additional legal ground raised by the assessee - HELD THAT - As 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 - Additional ground raised by the assessee is admitted. Penalty u/s 271(1)(c) - defective notice - Whether the notice issued by the AO is valid or not? - HLD THAT - From notice it is not clear whether Assessing Officer has initiated penalty proceedings for concealment of particulars of income or for furnished inaccurate particulars. Therefore, the notice issued by the Assessing Officer is a vague notice and is liable to be quashed in the light of the decision of the Hon'ble Jurisdictional High Court in the case of Smt. Baisetty Revathi 2017 (7) TMI 776 - ANDHRA PRADESH HIGH COURT and also case of SSA s Emerald Meadows 2016 (8) TMI 1145 - SUPREME COURT . Also see KONCHADA SREERAM VERSUS INCOME TAX OFFICER, WARD-1 (1) , VISAKHAPATNAM 2017 (11) TMI 1164 - ITAT VISAKHAPATNAM - Decided in favour of assessee.

Summary

Issues: Validity of penalty notice under section 271(1)(c) for Assessment Year 2010-11.

Issue 1: Admissibility of Additional Ground Raised Before Tribunal
The assessee raised an additional ground questioning the validity of the penalty notice issued by the Assessing Officer. The counsel argued that the notice was vague, impacting the root of the matter. The Departmental Representative objected to admitting the additional ground. The Tribunal referred to a Supreme Court judgment and allowed the additional ground, emphasizing the necessity to consider legal issues to assess tax liability correctly.

Issue 2: Validity of Penalty Notice
The primary issue was whether the penalty notice dated 30/03/2013, issued by the Assessing Officer, was valid. The assessee contended that the notice lacked clarity on whether it was for concealment of income or furnishing inaccurate particulars. The Departmental Representative argued that the notice was premature but valid. The Tribunal analyzed the notice and relevant case laws, including a decision by the Hon'ble Supreme Court, and held that the notice was vague. Referring to a similar case, the Tribunal concluded that the notice did not specify the grounds clearly, violating principles of natural justice, and hence, the penalty imposed was canceled.

Conclusion
The Tribunal allowed the appeal filed by the assessee, emphasizing the invalidity of the penalty notice under section 271(1)(c) for the Assessment Year 2010-11. The decision was based on the lack of clarity in the notice issued by the Assessing Officer, following precedents set by the Supreme Court and the High Court. The penalty imposed by the Assessing Officer was canceled, highlighting the importance of clear and specific grounds in penalty notices to ensure fairness and adherence to legal principles.

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