Tribunal should have entertained plea taken for first time before Tribunal about invalid notice u.s. 271 r.w.s 271.1.c

[DEV KUMAR KOTHARI]

Penalty  omnibus and defective notice –  Tribunal could have entertained plea taken for first time before Tribunal  -  judgment of Tribunal in case of TVS Supply Chain  need a rectification and reconsideration because judgments applied  by Tribunal were on peculiar facts, which did not prevail in case before the Tribunal.

2021 (9) TMI 347 - ITAT CHENNAI

M/S. TVS SUPPLY CHAIN SOLUTIONS LIMITED, (FORMERLY KNOWN AS TVS LOGISTICS SERVICES LIMITED) VERSUS THE ASSISTANT COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 2, MADURAI

Citations: in 2021 (9) TMI 347 - ITAT CHENNAI

1. 2010 (3) TMI 19 - Supreme Court
2. 2007 (5) TMI 199 - Supreme Court
3. 2018 (5) TMI 259 - MADRAS HIGH COURT
4. 2018 (10) TMI 1451 - SC Order

Tribunal is final fact authority:

Tribunal is final fact authority. Facts found are generally considered final and binding, except when facts so found are challenged as grossly wrong and perverse. Unless facts are challenged, in a question of law raised before High Court, the same cannot be challenged before the concerned High Court and then before the Supreme Court.

Tribunal can consider a new issue raised for first time before it:

It is well settled that Tribunal can consider a new issue, an incidental issue, an alternate plea etc. raised for first time before it, even if it was not raised before lower authorities namely the Assessing Officer (AO and the CIT(A).

TVS SUPPLY CHAIN SOLUTIONS LIMITED (supra.)

In this case the assesse for the first time raised issue of incomplete/ defective / omnibus notice u/s 271, in which relevant part was not ticked and irrelevant part was not strike out. Before Tribunal assesse raised the issue, for the first time. It is likely that this plea was raised due to development of legal position by several judgments , including dismissal of SLP of revenue on the issue  that if notice u.s. 271  read with S. 271.1.c was not specific of charge then penalty cannot be imposed.

However, tribunal did not allow the same following judicial pronouncements of High Court and the Supreme Court relied on by Tribunal.

With due respect author feels that in this case  tribunal ought to have considered that  the assesse is a body corporate which has to rely on concerned people. Tax laws are very complex and clarity is gathered on judicial pronouncements.

If for any reason like complexity of law, mistake , ignorance of law assesse company  ( through  people on whim it relied)  could not raise issue of vague notice, Tribunal could have considered the same to find the factual position and to render justice.

With due respect author feels that the order of Tribunal is not correct, because what may be applicable to High Court and the Supreme Court is not applicable to Tribunal. In the matter of penalty Tribunal should have adopted an approach to follow binding precedence on this issue to render justice instead of denying justice merely by not allowing a new plea for first time before Tribunal.

Tribunal was duty bound to consider the notice served by AO and received by assesse in which exact charge was not specified. Although this was not pleaded before lower authorities, Tribunal could have and must have considered because whether penalty proceeding was properly initiated or not is primary fact to be considered by Tribunal as a final fact finding authority.

Furthermore the judgment of High Court and SLP dismissal by the Supreme Court was on peculiar facts that no such plea was raised  before AO, CIT(A), Tribunal and questions of law and grounds raised before High Court. It was raised ten years after filing of appeal in High Court.  Therefore, it was not fit for the Tribunal to follow these judgments which is mainly on technical issue.

Judgment of High Court and Supreme Court wrongly applied:

The Madras High Court in case reported on  2018 (5) TMI 259 in case of  M/S. SUNDARAM FINANCE LIMITED (FORMERLY M/S. SUNDARAM FINANCE SERVICES LTD.) VERSUS THE ASSISTANT COMMISSIONER OF INCOME TAX

Did not permit similar plea for the first time before High Court , the order is summarized below:

1. This was never the plea of the assessee either before the Assessing Officer or before the first Appellate Authority or before the Tribunal or before this Court when the Tax Case Appeals were filed .

2. It was only after 10 years, when the appeals were listed for final hearing, this issue is sought to be raised.

3.  Thus on facts, we could safely conclude that even assuming that there was defect in the notice, it had caused no prejudice to the assessee and the assessee clearly understood what was the purport and import of notice issued under Section 274 r/w.Section 271 of the Act.

4. Hence matter was decided against the assessee

Against the order of High Court, assesse preferred appeal before the Supreme Court and the Supreme Court held as follows:

Delay condoned.

The Special Leave Petitions are dismissed.

Therefore, with due respect author feels that the facts were peculiar in case of Sundaram Finance which were not applicable in case before Tribunal.

  Earlier article  of August 9, 2021 written by author:

In earlier article author had discussed Order of Tribunal in case of  in which penalty was deleted because the notice was not specific.  This plea was raised from AO and CIT(A) and then before tribunal in the case of VARUN FINANCE PVT. LTD. VERSUS INCOME-TAX OFFICER, WD-5 (4) , KOLKATA [2020 (9) TMI 1015 - ITAT KOLKATA] .

The Tribunal in case of Varun Finance has relied on judgments of the Hon’ble Karnataka High Court  and the supreme court in CIT Vs. SSA Emerald Medow.

    M/S SSA’S EMERALD MEADOWS [2015 (11) TMI 1620 - KARNATAKA HIGH COURT]  SLP of revenue was also dismissed in this case.

  M/S MANJUNATHA COTTON AND GINNING FACTORY & OTHS.,

   M/S. V.S. LAD & SONS, [2013 (7) TMI 620 - KARNATAKA HIGH COURT]

The article is titled “ Though penalty deleted but full justice not done by honorable Tribunal by ignoring some vital grounds, not awarding costs in case of Varun Finance P. Ltd.”