A party cannot raise a technical plea regarding a notice's defect after participating in proceedings without objection; real prejudice must be demonstrated for claims of natural justice violations.

JUDGMENT :

G.S. KULKARNI, J.

1. A short but interesting question has arisen in the present proceedings though not raised as a question of law, however, in the context of the appellant’s contention that the proceedings would stand covered by a decision of this Court in the case of Ventura Textile Ltd. vs. Commissioner of Income Tax, Mumbai City-II, (2020) 117 taxmann.com 182 (Bom.). The question is as to whether an alleged defect in the notice issued to the appellant under Section 271(1)(c) read with Section 274 of the Act, in regard to which the appellant had never raised an objection from the very inception, that is since last 30 years (from 19 August, 1993), can now be permitted to be raised, in the absence of any prejudice being caused to the appellant - assessee.

2. This appeal under section 260A of the Income-tax Act, 1961 (for short “I.T. Act”) is filed by the appellant/assessee, being aggrieved by the judgment and order dated 30 October, 2001 passed by the Income-tax Appellate Tribunal (for short “ITAT”) whereby the respondent/Revenue’s appeal against the order passed by the Commissioner of Income-tax (Appeals) (for short “CIT(A)”) has been allowed. Earlier the CIT(A) by its order dated 05 February, 1996, as impugned before the Tribunal, had set aside the penalty of Rs.33,34,096/- imposed on the appellant/assessee under section 271(1)(c) of the I.T. Act.

3. At the outset, we may observe that by an order dated 14 September, 2004, the present appeal came to be admitted by a co-ordinate Bench of this Court on the following substantial question of law:

“Whether the Tribunal erred on the facts and in the circumstances of the case and in law in reversing the order of the CIT(A) and confirming the penalty of Rs.33,34,096/- (Rupees Thirty three lacs Thirty four thousand Ninety six only) levied by the Assessing Officer under section 271(1)(c) of the Act?

4. The appeal was pending hearing, when before us, an oral application on behalf of the appellant was made contending that the appeal stands covered by the decision rendered by a co-ordinate Bench of this Court in Ventura Textile Ltd. (supra) and for such reason the appeal needs to be allowed. This Court at such stage considered the rival contentions of the parties including the submissions as advanced by learned amicus curiae, who was earlier appointed by a co-ordinate Bench of this Court vide order dated 17 December, 2021, recording questions which would be required to be considered if the plea as urged on behalf of the appellant was to be accepted. The Court, accordingly, passed the following order on 13 July, 2023:-

“1. This appeal was circulated before us on behalf of the appellant contending that the issue in regard to the alleged defect in the notice issued under Section 271(1)(c) of the Income-tax Act, 1961 (for short, “the Act”) would stand covered by the decision of a co-ordinate Bench of this Court in Ventura Textiles Ltd. vs. Commissioner of Income Tax, Mumbai City-II, [2020] 117 taxmann.com 182 (Bombay).

2. We have perused the observations of the Court in such decision and more particularly in paragraphs 20.1 and 20.2, whereby the Division Bench has observed that even if a question was not raised before the tribunal, the same can be raised before the High Court in the proceedings under Section 260-A of the Act, when the issue is on jurisdiction. In our opinion, there cannot be any quarrel on such proposition.

3. The question, however, would be whether an assessee can be permitted to raise a technical plea of vagueness in the notice when the same was never the case of the assessee before the tribunal. The assessee never complained that the notice under Section 271(1)(c) of the Act was never understood by it or the same was in any manner vague or defective and had caused any prejudice to the assessee. In fact, now merely relying on the said decision, it is for the first t