S. Sagar Enterprise v. DCIT

Case snapshot

Sections / provisions: 69C

Questions before the Court / Tribunal

• Purchase addition; relied material and cross-examination: The reported order concerns an addition based on material not fully supplied to the taxpayer and an alleged denial of cross-examination. It is tagged as a natural-justice/evidence case pending primary verification.

Material facts and background

assessee claims to have inadvertently remitted fees of Rs.10,000/vide challan no. 01338 dated 03.07.2023 towards fees of this penalty appeal, whereas according to assessee, the correct fees was only Rs.500/-. Hence, assessee pleads for refund of the excess fees paid bonafide by the assessee and drew our attention to the decision of Tribunal (Amritsar) in the case Kiranjit Singh V ACIT (2006)(101 TTJ 424) reads as under: “2. At the outset, the learned counsel for the assessee, Sh. S.K. Bansal, submitted that this appeal relates to an order passed by the CIT, Patiala, under s. 263 of the Act and does not relate to income computed by the AO. Therefore, the case of the assessee is covered under the residuary cl. (b) of sub-s. (6) of s. 253 of the Act. He submitted that the assessee was required to pay only a fee of Rs. 500: As against the same, the assessee had paid a fee of Rs. 5,521. The assessee vide his counsel's application dt. 31st Jan., 2006 requested for refund of the excess fee paid of Rs. 5,021. At the time of hearing of the appeal, the learned counsel drew our attention to the booklet titled as "A Fine Balance : Law and Procedure before Income-tax Appellate Tribunal"...

4 ITA No.2895/Mum/2023 A.Y. 2010-11 S Sagar Enterprises by All India Federation of Tax Practitioners, where in reply to question No. 29, it has been mentioned that the assessee can make an application before the Tribunal for claiming the refund of the excess Tribunal fee paid for which directions can be issued by the Bench to the AO for granting a refund of the same. 3. The learned Departmental Representative did not make any specific submission in the matter on the ground that this relates to procedure for filing the appeal before the Tribunal. 4. We have heard both the parties. Admittedly, the appeal in this case relates to an order passed under s. 263. Therefore, the case of the assessee is covered under a residuary cl. (b) of sub-s. (6) of s. 253 of the Act. The assessee was required to pay only a fee of Rs. 500. In view of the above, the assessee is entitled to refund of excess fee paid of Rs. 5,021. The AO is directed to refund this amount either by way of adjusting the same against the outstanding demand, if any, or by way of grant of refund within a period of one month from (the date of receipt of this order. We order accordingly.”

According to assessee by mistake it has remitted appeal fees of

Rs.10,000/- while filing the captioned appeal; and according to assessee, the correct appeal fees as per law is only Rs.500/-. So, assessee prays for refund of excess fees remitted by it while filing the captioned penalty appeal. In this regard, it is noted that Section 253 of the Act, prescribes the appeal fees an assessee has to remit while filing an appeal before the Tribunal. The assessee’s submission is that since the captioned appeal is penalty appeal, fees need to be deposited as per sub-clause (d) of sub-section (6) of section 253 of the Act. As per sub-

5 ITA No.2895/Mum/2023 A.Y. 2010-11 S Sagar Enterprises

clause (d) of sub-section (6) of section 253 of the Act, while filing the penalty appeal before the Tribunal, the assessee need to have remitted Rs.500/- for an appeal. In the light of the aforesaid discussion, the AO is directed to refund this amount either by way of adjusting the same against the outstanding demand, if any, or by way of grant of refund within a reasonable period. We order accordingly. 6.

Appellant / assessee submissions

assessee claims to have inadvertently remitted fees of Rs.10,000/vide challan no. 01338 dated 03.07.2023 towards fees of this penalty appeal, whereas according to assessee, the correct fees was only Rs.500/-. Hence, assessee pleads for refund of the excess fees paid bonafide by the assessee and drew our attention to the decision of Tribunal (Amritsar) in the case Kiranjit Singh V ACIT (2006)(101 TTJ 424) reads as under: “2. At the outset, the learned counsel for the assessee, Sh. S.K. Bansal, submitted that this appeal relates to an order passed by the CIT, Patiala, under s. 263 of the Act and does not relate to income computed by the AO. Therefore, the case of the assessee is covered under the residuary cl. (b) of sub-s. (6) of s. 253 of the Act. He submitted that the assessee was required to pay only a fee of Rs. 500: As against the same, the assessee had paid a fee of Rs. 5,521. The assessee vide his counsel's application dt. 31st Jan., 2006 requested for refund of the excess fee paid of Rs. 5,021. At the time of hearing of the appeal, the learned counsel drew our attention to the booklet titled as "A Fine Balance : Law and Procedure before Income-tax Appellate Tribunal"...

Revenue / respondent submissions

4 ITA No.2895/Mum/2023 A.Y. 2010-11 S Sagar Enterprises by All India Federation of Tax Practitioners, where in reply to question No. 29, it has been mentioned that the assessee can make an application before the Tribunal for claiming the refund of the excess Tribunal fee paid for which directions can be issued by the Bench to the AO for granting a refund of the same. 3. The learned Departmental Representative did not make any specific submission in the matter on the ground that this relates to procedure for filing the appeal before the Tribunal. 4. We have heard both the parties. Admittedly, the appeal in this case relates to an order passed under s. 263. Therefore, the case of the assessee is covered under a residuary cl. (b) of sub-s. (6) of s. 253 of the Act. The assessee was required to pay only a fee of Rs. 500. In view of the above, the assessee is entitled to refund of excess fee paid of Rs. 5,021. The AO is directed to refund this amount either by way of adjusting the same against the outstanding demand, if any, or by way of grant of refund within a period of one month from (the date of receipt of this order. We order accordingly.”

Court / Tribunal analysis and reasoning

page no. 35 of PB. On perusal of the same it reveals that the notice are in the nature of an omnibus show cause notice issued without deleting or sticking down the in-applicable part. And same is the case with the penalty order dated 07.02.2022 passed u/s 271(1)(c) of the Act, which also does not spell out as to which limb of section 271(1)(c) of the Act has been found to have been committed by assessee for levy of penalty. Thus, we find that assessee was in the dark [at the stage of notice] as to what fault it is being proceeded against for levy of penalty. In other words, the assessee after reading the notice was guessing as to what fault it has committed for which the AO proposed to levy penalty; and since both faults figured in the notice, as such the assessee was handicapped in defending/explaining against the proposed penalty. Therefore, since show-cause notice itself does not spell out clearly as to what fault assessee is being proceeded against for levy of penalty, the notice itself is bad in law, and consequently the penalty levied is vitiated. In this context, we find that same issue has come up for consideration before the Full bench of the Hon’ble Jurisdictional High...

216 ITR 660 (Bom) does not lay down the correct proposition of law. Moreover, we find that in the quantum assessment estimated addition of 100% of purchases was made by AO, which was reduced to 30% of purchase by the Ld. CIT(A). In such a scenario, penalty u/s 271(1)(c) of the Act was not warranted because estimated addition has inherent subjectivity involved. Therefore, no penalty is warranted. Therefore, we direct the deletion of penalty. 4.

assessee claims to have inadvertently remitted fees of Rs.10,000/vide challan no. 01338 dated 03.07.2023 towards fees of this penalty appeal, whereas according to assessee, the correct fees was only Rs.500/-. Hence, assessee pleads for refund of the excess fees paid bonafide by the assessee and drew our attention to the decision of Tribunal (Amritsar) in the case Kiranjit Singh V ACIT (2006)(101 TTJ 424) reads as under: “2. At the outset, the learned counsel for the assessee, Sh. S.K. Bansal, submitted that this appeal relates to an order passed by the CIT, Patiala, under s. 263 of the Act and does not relate to income computed by the AO. Therefore, the case of the assessee is covered under the residuary cl. (b) of sub-s. (6) of s. 253 of the Act. He submitted that the assessee was required to pay only a fee of Rs. 500: As against the same, the assessee had paid a fee of Rs. 5,521. The assessee vide his counsel's application dt. 31st Jan., 2006 requested for refund of the excess fee paid of Rs. 5,021. At the time of hearing of the appeal, the learned counsel drew our attention to the booklet titled as "A Fine Balance : Law and Procedure before Income-tax Appellate Tribunal"...

4 ITA No.2895/Mum/2023 A.Y. 2010-11 S Sagar Enterprises by All India Federation of Tax Practitioners, where in reply to question No. 29, it has been mentioned that the assessee can make an application before the Tribunal for claiming the refund of the excess Tribunal fee paid for which directions can be issued by the Bench to the AO for granting a refund of the same. 3. The learned Departmental Representative did not make any specific submission in the matter on the ground that this relates to procedure for filing the appeal before the Tribunal. 4. We have heard both the parties. Admittedly, the appeal in this case relates to an order passed under s. 263. Therefore, the case of the assessee is covered under a residuary cl. (b) of sub-s. (6) of s. 253 of the Act. The assessee was required to pay only a fee of Rs. 500. In view of the above, the assessee is entitled to refund of excess fee paid of Rs. 5,021. The AO is directed to refund this amount either by way of adjusting the same against the outstanding demand, if any, or by way of grant of refund within a period of one month from (the date of receipt of this order. We order accordingly.”

Operative decision and relief

clause (d) of sub-section (6) of section 253 of the Act, while filing the penalty appeal before the Tribunal, the assessee need to have remitted Rs.500/- for an appeal. In the light of the aforesaid discussion, the AO is directed to refund this amount either by way of adjusting the same against the outstanding demand, if any, or by way of grant of refund within a reasonable period. We order accordingly. 6.

In the result, appeal of the assessee is allowed. Order pronounced in the open court on this 13/02/2024. Sd/-

Mumbai; Dated 13/02/2024. Vijay Pal Singh, (Sr. PS) आदे श की प्रनिनलनि अग्रेनर्ि/Copy of the Order forwarded to : 1. अपीलार्थी / The Appellant 2. प्रत्यर्थी / The Respondent. 3.

ववभागीय प्रवतवनवि, आयकर अपीलीय अविकरण, मुंबई / DR, ITAT, Mumbai गार्ड फाईल / Guard file.

आदे शधिुसधर/ BY ORDER, सत्यावपत प्रवत //True Copy// उि/सहधयक िंजीकधर /(Dy./Asstt. Registrar) आयकर अिीलीय अनर्करण, मुंबई / ITAT, Mumbai

Authorities and precedents appearing in the judgment

• No reliable precedent list was extracted automatically; use the full judgment for the citation chain.

This list is machine-assisted from the judgment text and is not a substitute for checking the full citation chain in the PDF.

Ratio and legal principle

The decision turns on Purchase addition; relied material and cross-examination. The operative result is classified as Remanded Or Restored. Read the rule only with the statutory version, factual findings and precedent chain recorded in the full judgment.

Why this judgment matters

The case is relevant to taxpayers, advisers and litigators dealing with Purchase addition; relied material and cross-examination. Its practical value lies in the interaction between the statutory text, the evidentiary record and the procedural route followed in this case.

Practitioner action points

• Build a transaction-level evidence file: confirmations, bank trail, invoices, ledger, tax/GST records and counter-party material rather than relying on a generic explanation.
• Where the addition depends on a third-party statement or investigation report, record the request for the relied material and cross-examination at the earliest stage.
• For litigation, attach the full judgment/order to the working paper and cite the paragraph/page supporting the proposition rather than relying on a headnote alone.

Full judgment and source trail

Read / download the clean local judgment copy

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