2018 (10) TMI 1707 - HC - Income Tax

Court upholds notice validity despite typographical error under Income Tax Act, assessee's defense opportunity preserved

The High Court dismissed the argument that no valid notice was issued under section 271AAB of the Income Tax Act, 1961, despite a typographical error in ... Penalty u/s 271AAB or 271AAA - notice under section 271AAB was issued by the Assessing Officer though after the assessment was completed - corrigendum issued stating that Section 271AAA should be read as Section 271AAB - HELD THAT:- Even if the Tribunal has provided on the wrong basis assuming incorrectly that a separate notice under section 271AAB was issued, the petitioner cannot argue, in facts of the present case, that the entire proceedings were vitiated. This is so for the reason that admittedly the Assessing Officer, after having initially issued notice under section 271AAA, shortly issued corrigendum correcting the reference to the statutory provision as 271AAB. This was thus a case of pure correction of typographical error. The petitioner cannot argue that no valid notice under the law was issued. Concededly such correction also took-place long before the penalty proceedings proceeded further and culminated into the order of penalty imposed by the Assessing Officer after giving full opportunity of defending to the assessee. We are however inclined to examine the assessee's second contention regarding prior sanction. In this respect also, our inquiry would be whether initial notice though erroneously titled as one under section 271AAA of the Act was proceeded by sanction - Notice for final disposal returnable on 26.11.2018. Issues involved: Challenge to penalty imposed under section 271AAB of the Income Tax Act, 1961 - Incorrect factual assertion by the Tribunal regarding notice issuance under section 271AAB - Lack of sanction for initiation of penalty proceedings.Analysis:1. The appellant-assessee challenged the penalty imposed by the Assessing Officer under section 271AAB of the Income Tax Act, 1961. The first contention raised was that the Tribunal incorrectly assumed a separate notice under section 271AAB was issued, whereas the Assessing Officer had initially issued a notice under section 271AAA, later corrected to 271AAB through a corrigendum. The High Court opined that the correction of the statutory provision was merely a typographical error and did not vitiate the proceedings as the correction occurred before the penalty proceedings advanced, and the assessee was given a full opportunity to defend. Therefore, the argument that no valid notice was issued was dismissed by the Court.2. The second contention raised by the appellant was regarding the lack of sanction for initiating penalty proceedings as required by law. The High Court expressed inclination to examine this aspect, focusing on whether the initial notice, albeit erroneously labeled under section 271AAA, was preceded by the necessary sanction. This issue was deemed crucial for further inquiry by the Court.3. The High Court scheduled the matter for final disposal on 26.11.2018, indicating that a detailed examination of the sanction for initiating penalty proceedings would be undertaken. This step underscored the Court's intent to delve deeper into the aspect of prior sanction, signaling a thorough analysis of this critical issue in the upcoming proceedings.