Can a Vagueness Claim in Income Tax Notice Be Raised on Appeal Without Prior Tribunal Challenge?

The HC addressed the issue of whether a technical plea of vagueness in a notice under Section 271(1)(c) of the Income-tax Act, 1961, can be raised in an appeal under Section 260-A without being previously raised before the tribunal. The Court emphasized the necessity for the appellant to demonstrate specific prejudice caused by the notice to justify raising this issue. The HC decided to continue deliberations on these matters, focusing on the permissibility of raising such technical pleas and the requirement to show factual prejudice, with further discussions scheduled for 27 July 2023.

---

---

Issues involved:
The alleged defect in the notice issued under Section 271(1)(c) of the Income-tax Act, 1961 and the permissibility of raising a technical plea of vagueness in the notice when it was not previously raised by the assessee before the tribunal.

Summary:

Alleged Defect in Notice under Section 271(1)(c):
The appellant contended that the issue regarding the defect in the notice under Section 271(1)(c) of the Act was covered by a decision of a co-ordinate Bench of the Court. The Court observed that even if a question was not raised before the tribunal, it can be raised before the High Court in proceedings under Section 260-A of the Act, especially when the issue concerns jurisdiction. However, the appellant needs to demonstrate whether the technical plea of vagueness in the notice can be raised in the appeal under Section 260-A without any such plea before the lower forums. The Court emphasized that the appellant must show specific prejudice caused by the notice to warrant framing an additional question in this regard.

Permissibility of Raising Technical Plea:
The Court questioned whether the assessee can raise a plea of vagueness in the notice when it was never raised before and no prejudice was claimed. The Court highlighted the importance of demonstrating factual prejudice before alleging breach of natural justice or prejudice. Although previous decisions were considered, the specific issue raised in this case was not addressed. The Court decided to hear further arguments on these issues on the adjourned date of hearing.

Conclusion:
The Court will continue to deliberate on the permissibility of raising technical pleas regarding defects in notices under Section 271(1)(c) and the requirement to establish specific prejudice before claiming illegality in penalty proceedings. The decision will be further discussed at the next hearing scheduled for 27 July 2023.

---