Tangi Hari, Visakhapatnam V. THE DCIT, Visakhapatnam

ITA 642/VIZ/2014

• Counselvise Citation: [2016] 130 COUNSELVISE.COM (IT) 9856 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 9 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-09-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Next Hearing Date: 10-11-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 12-12-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Invalid notice; Rule of consistency; Reasonable cause
• Section: 143(3); 153A

Judgement Text

ITA NOS.640, 641 & 642/VIZAG/2014 TANGI HARI, VISAKHAPATNAM 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . , $ BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ./I.T.A.NOS.640,641 & 642/VIZAG/2014 ( / ASSESSMENT YEAR: 2003-04, 2004-05 & 2005-06) TANGI HARI, VISAKHAPATNAM VS. DCIT, CIRCLE - 3(1), VISAKHAPATNAM [PAN: ABJPT 5607J ] ( % / APPELLANT) ( &'% / RESPONDENT) / APPELLANT BY : SHRI I. KAMASASTRY, AR / RESPONDENT BY : SHRI ARAVINDAKSHAN, DR / DATE OF HEARING : 09.09.2016 / DATE OF PRONOUNCEMENT : 22.09.2016 / O R D E R PER G. MANJUNATHA, ACCOUNTANT MEMBER: THESE APPEALS FILED BY THE ASSESSEE ARE DIRECTED A GAINST THE COMMON ORDER OF THE CIT(A), VISAKHAPATNAM DATED 28. 10.2014 FOR THE ASSESSMENT YEAR 2003-04, 2004-05 & 2005-06. SINCE, THE FACTS ARE ITA NOS.640, 641 & 642/VIZAG/2014 TANGI HARI, VISAKHAPATNAM 2 IDENTICAL AND ISSUES ARE COMMON, THEY ARE CLUBBED, HEARD TOGETHER AND DISPOSED OFF, BY WAY OF THIS COMMON ORDER FOR THE S AKE OF CONVENIENCE. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTION WORKS IN THE NAME AND STYLE OF M/S. HNR CONSTRUCTIONS, FILED HIS RETURN O F INCOME FOR THE ASSESSMENT YEARS 2003-04, 2004-05 & 2005-06 ON 1.12 .2003, 1.11.2004 & 31.3.2006 RESPECTIVELY DECLARING A TOTAL INCOME O F RS.28,38,780/-, RS.25,49,300/- AND RS.8,52,510/- RESPECTIVELY. A S EARCH AND SEIZURE OPERATION WAS CONDUCTED ON 25.8.2005 IN THE ASSESSE ES OWN CASE DURING WHICH CERTAIN INCRIMINATING DOCUMENTS WERE S EIZED. SUBSEQUENTLY, THE CASE HAS BEEN CENTRALIZED AND ACC ORDINGLY, THE A.O. ISSUED NOTICES U/S 153A OF THE ACT IN RESPONSE TO W HICH THE ASSESSEE HAS FILED THE RETURN OF INCOME ADMITTING SAME INCOME AS IN THE ORIGINAL RETURN FILED. THE CASES HAVE BEEN TAKEN UP FOR SCR UTINY AND THE A.O. HAS COMPLETED ASSESSMENT U/S 143(3) R.W.S. 153A OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED AS THE ACT) AND DET ERMINED TOTAL INCOME MAKING CERTAIN ADDITIONS. 3. AGAINST THE ABOVE, THE ASSESSEE FILED APPEAL BEF ORE THE CIT(A), WHO HAS GRANTED CERTAIN RELIEF, BUT HAS CONFIRMED T HE ADDITION RELATING TO ESTIMATION OF GROSS PROFIT ON MIMS PROJECT. THE AS SESSEE HAS PREFERRED ITA NOS.640, 641 & 642/VIZAG/2014 TANGI HARI, VISAKHAPATNAM 3 FURTHER APPEALS BEFORE THE ITAT. THE ITAT, HAS UPH ELD CERTAIN ADDITIONS AND HAS ALLOWED RELIEF IN RESPECT OF CERTAIN ADDITI ONS AND HAS ALSO SET ASIDE THE ISSUE RELATING TO UNDISCLOSED INCOME IN R ESPECT OF MIMS PROJECT FOR ALL THE 3 YEARS TO THE A.O. TO RE-DO THE SAME A S PER CERTAIN WORKINGS GIVEN BY THE ITAT, AFTER VERIFICATION OF THE SAME W ITH REFERENCE TO DETAILS ON RECORD. THE A.O. COMPLETED ASSESSMENTS AS PER THE DIRECTIONS OF THE ITAT AND HAS DETERMINED TOTAL INC OME OF MIMS PROJECT AND MADE ADDITIONS OF RS.45,74,596/-, RS.49,22,326/ - & RS.45,57,876/- AND (-) RS.19,51,038/- FOR THE ASSESSMENT YEARS 200 3-04 TO 2006-07 TOWARDS ESTIMATION OF GROSS PROFIT ON TOTAL CONTRAC T RECEIPTS FROM MIMS PROJECT ON THE BASIS OF EQUALIZED GROSS PROFIT DIST RIBUTION METHOD. THE NET EFFECT OF TOTAL ADDITION MADE BY THE A.O., TOWA RDS DIFFERENCE IN GROSS PROFIT FROM MIMS PROJECT WORKS OUT TO RS.1,21,03,76 0/- FOR THE ASSESSMENT YEAR 2003-04 TO 2005-06. 4. THEREAFTER, THE A.O. INITIATED PENALTY PROCEEDIN GS U/S 271(1)(C) OF THE ACT, IN RELATION TO UNDISCLOSED INCOME FROM MIM S PROJECT AS DETERMINED IN THE ASSESSMENT ORDER AS PER THE DIREC TIONS OF ITAT. THE A.O. ISSUED PENALTY NOTICE U/S 271(1)(C) OF THE ACT AND ASKED TO EXPLAIN WHY PENALTY FOR CONCEALMENT OF PARTICULARS OF INCOM E OR FURNISHING INACCURATE PARTICULARS OF INCOME SHALL NOT BE LEVIE D IN VIEW OF THE FACT ITA NOS.640, 641 & 642/VIZAG/2014 TANGI HARI, VISAKHAPATNAM 4 THAT THE ITAT, HAS FINALLY DETERMINED UNDISCLOSED I NCOME FROM MIMS PROJECT WHICH RESULTED IN TOTAL UNDISCLOSED INCOME OF RS.1,21,03,760/- FOR THE ASSESSMENT YEARS 2003-04 & 2005-06. IN RES PONSE TO NOTICE, THE ASSESSEE VIDE HIS LETTER DATED 4.2.2013 SUBMITTED T HAT THE ADDITION MADE TOWARDS DIFFERENCE IN GROSS PROFIT FROM MIMS P ROJECT WAS ONLY ON ESTIMATED BASIS AND HENCE, NO PENALTY IS LEVIABLE U /S 271(1)(C) OF THE ACT, FOR CONCEALMENT OF PARTICULARS OF INCOME. IT WAS FURTHER CONTENDED THAT THE GROSS PROFIT DETERMINED BY THE ITAT WAS FO R A PERIOD OF 4 YEARS AND WHICH WAS ALLOWED AS DEDUCTION IN THE ASSESSMEN T YEAR 2008-09 AND 2010-11 WHICH HAD RESULTED IN THE ENTIRE EXERCI SE BECOMING REVENUE NEUTRAL AND AS SUCH PENALTY IS NOT LEVIABLE . THE ASSESSEE FURTHER SUBMITTED THAT THE ITAT, HAS RE-WORKED THE GROSS PROFIT BASED ON THE ASSESSEES OWN ADMISSION OF INCOME FROM MIMS PROJECT FOR THE ASSESSMENT YEAR 2008-09 & 2010-11 AND THE GROSS PRO FIT DETERMINED BY THE ITAT IS EQUAL TO THE AMOUNT DISCLOSED BY THE AS SESSEE IN THOSE TWO ASSESSMENT YEARS. EXCEPT THIS, THERE IS NO FACTUAL DIFFERENCE IN TOTAL CONTRACT RECEIPTS RECEIVED FROM MIMS PROJECT AND GR OSS PROFIT DECLARED BY THE ASSESSEE, HOWEVER, THE ONLY DIFFERENCE IS TH E ASSESSEE HAS DISCLOSED THE SAID RECEIPT ON ACTUAL RECEIPT BASIS IN THE YEAR OF RECEIPTS, BUT THE ITAT HAS PRE-PONED THE RECOGNITION OF REVEN UE FOR THE ASSESSMENT YEAR 2003-04 TO 2005-06 ON THE BASIS OF EQUALIZED GROSS ITA NOS.640, 641 & 642/VIZAG/2014 TANGI HARI, VISAKHAPATNAM 5 PROFIT DISTRIBUTION METHOD BY TAKING INTO ACCOUNT T HE TOTAL GROSS PROFIT EARNED FROM THE PROJECT AS A WHOLE. THE ASSESSEE F URTHER SUBMITTED THAT IT HAD SUBMITTED BILLS IN RESPECT OF THE PROJE CT TO THE CONTRACTEE, HOWEVER, THE CONTRACTEE HAS NOT ACCEPTED THE BILLS BECAUSE OF VARIATIONS IN QUALITY AND QUANTITY OF WORK EXECUTED. AS SUCH, THE CERTAINITY OF REALIZATION OF REVENUE FROM THE PROJECT IS NOT KNOW N AT THE TIME OF FINALIZATION OF ACCOUNTS FOR THE ASSESSMENT YEAR 20 05-06 AND ACCORDINGLY, THE ASSESSEE HAS NOT RECOGNIZED AN AMO UNT OF RS.1,21,03,760/- EITHER IN THE FORM OF WORK IN PROG RESS OR CONTRACT RECEIPTS. BUT, THE FACT IS THAT THE ASSESSEE ON IT S OWN DECLARED THE SAID RECEIPT FOR THE ASSESSMENT YEAR 2008-09 AND 2010-11 , THEREFORE, IT CANNOT BE CONSIDERED AS WILLFUL CONCEALMENT OF PART ICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME WHICH W ARRANTS LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. 5. THE A.O. AFTER CONSIDERING THE EXPLANATIONS FURN ISHED BY THE ASSESSEE, HELD THAT AS SEEN FROM THE QUANTIFICATION MADE BY THE ITAT, THERE IS AN INFALLIBLE FINDING BY IT THAT THE ASSES SEE HAD INCOME IN THE FORM OF RECEIPTS FROM MIMS PROJECT WHICH WERE NOT D ISCLOSED/ADMITTED AS REQUIRED UNDER THE NORMAL METHOD OF ACCOUNTING F OLLOWED BY THE ASSESSEE. IT IS ANOTHER MATTER THAT THE ITAT HAD R ESORTED TO ESTIMATION ITA NOS.640, 641 & 642/VIZAG/2014 TANGI HARI, VISAKHAPATNAM 6 OF GROSS PROFIT, BUT THE FACT IS THAT SUCH ESTIMATI ON IS MADE ON AN EQUITABLE FOOTING AND THE REASONABLE AMOUNT OF INCO ME ATTRIBUTABLE YEARWISE TO THE RECEIPTS FROM THE MIMS PROJECT BY T HE ASSESSEE ON THE BASIS ON HIS OWN BOOK RESULTS HAS BEEN ARRIVED AT I N VIEW OF THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE. THE ITAT HAS ANALYSED BOOK RESULTS OF THE ASSESSEE AND ALSO WORKING ADOPTED BY THE AO IN THE ASSESSMENT MADE EARLIER AND HAS ARRIVED AT AN EQUIT ABLE FORMULA TO EVEN OUT OF ABERRATIONS AND ACCORDINGLY, QUANTIFIED THE INCOME ATTRIBUTABLE TO THE RECEIPTS FROM THE MIMS PROJECT. THE METHODOLOGY ADOPTED BY THE ITAT, BASED ON THE ASSESSEES CONTRA CT WAS A LONG TERM CONSTRUCTION CONTRACT, SUCH EQUITABLE QUANTIFICATIO N HAS RESULTED IN UNEXPLAINED/UNDISCLOSED INCOME FROM MIMS PROJECT FO R THE ASSESSMENT YEARS 2003-04 TO 2005-06. IN VIEW OF THE MATTER, T HE ASSESSEE HAS CLEARLY CONCEALED INCOME ATTRIBUTABLE TO THE RECEIP TS FROM THE MIMS PROJECT, AS SUCH IT IS A FIT CASE FOR LEVY OF PENAL TY UNDER THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT FOR CONCEALMENT OF PAR TICULARS OF INCOME AND ALSO FOR FURNISHING INACCURATE PARTICULARS OF I NCOME. THE A.O. FURTHER OBSERVED THAT AS REGARDS QUESTION OF ESTIMA TION OF INCOME AND LEVY OF PENALTY, IT IS STATED THAT PENALTY IS LEVIA BLE EVEN WHEN AN ADDITION IS MADE ON ESTIMATION BASIS. WITH THESE OBSERVATIO NS, LEVIED PENALTY OF AN AMOUNT EQUAL TO 100% OF TAX SOUGHT TO BE EVADED UNDER THE ITA NOS.640, 641 & 642/VIZAG/2014 TANGI HARI, VISAKHAPATNAM 7 PROVISIONS OF SECTION 271(1)(C) OF THE ACT FOR THE ASSESSMENT YEARS 2003-04 TO 2005-06. 6. AGGRIEVED BY THE PENALTY ORDERS, THE ASSESSEE PR EFERRED AN APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A), THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE A.O. THE ASSESSEE FURT HER SUBMITTED THAT THE ADDITIONS MADE BY THE A.O., TOWARDS DIFFERENCE IN GROSS PROFIT FROM MIMS PROJECT IS ON ESTIMATION BASIS AND THE ITAT HA S DETERMINED WORK IN PROGRESS FOR THE ASSESSMENT YEAR 2005-06, BASED ON ASSESSEES OWN DISCLOSURE OF CONTRACT RECEIPTS FOR THE ASSESSMENT YEAR 2008-09 & 2010- 11. THE ASSESSEE FURTHER SUBMITTED THAT THE ITAT H AS RE-WORKED GROSS PROFIT BY FOLLOWING THE METHOD OF EQUITABLE GROSS P ROFIT DISTRIBUTION BY TAKING INTO ACCOUNT THE GROSS PROFIT FROM THE PROJE CT AS A WHOLE AND DISTRIBUTED EQUALLY FOR THE ASSESSMENT YEARS 2003-0 4 TO 2005-06, BASED ON THE ASSESSEES OWN BOOK RESULTS WHICH RESULTED I N ADDITIONAL UNDISCLOSED INCOME OF RS.1,21,03,760/-. THE ASSESS EE FURTHER SUBMITTED THAT EXCEPT PREPONEMENT OF RECOGNITION OF INCOME, THERE IS NO FACTUAL DIFFERENCE BETWEEN GROSS RECEIPTS ADMITTED BY THE ASSESSEE AND INCOME DETERMINED BY THE A.O., THEREFORE, THE A.O. WAS ERRED IN HOLDING THAT THE ASSESSEE HAS CONCEALED PARTICULARS OF INCO ME WHICH WARRANTS LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. TO SUPPO RT HIS ARGUMENTS, ITA NOS.640, 641 & 642/VIZAG/2014 TANGI HARI, VISAKHAPATNAM 8 RELIED UPON THE DECISION OF HONBLE SUPREME COURT, IN THE CASE OF CIT VS. REALEST BUILDERS AND SERVICES LTD. (2008) 307 I TR 202 AND ITAT, DECISION IN THE CASE OF ACIT VS. MILAP TEXTILES LTD . (1994) 46 ITD 449. 7. THE CIT(A) CONFIRMED THE LEVY OF PENALTY U/S 271 (1)(C) OF THE ACT, BY HOLDING THAT THE ASSESSEE HAS FAILED TO OFFER AN Y EXPLANATIONS WITH REGARD TO THE ADDITIONAL UNDISCLOSED INCOME QUANTIF IED BY THE A.O., CONSEQUENT TO THE DIRECTIONS OF ITAT. THE CIT(A) F URTHER HELD THAT THERE IS NO MERIT IN THE CONTENTION OF THE ASSESSEE THAT THE ADDITIONS MADE BY THE A.O. IS ON ESTIMATION BASIS, AS THE A.O. HAS ES TIMATED THE ADDITIONS AS PER THE DIRECTIONS OF THE ITAT, IN TURN THE HON BLE ITAT HAS FOLLOWED A METHODOLOGY WHEREIN IT HAS ARRIVED WORK IN PROGRE SS OF MIMS PROJECT FOR THE ASSESSMENT YEAR 2005-06 ON EQUITABLE GROSS PROFIT DISTRIBUTION METHOD WHICH RESULTED IN ADDITIONAL UNDISCLOSED INC OME OF RS.1,21,03,760/-. THOUGH, THE ASSESSEE CLAIMS THAT THE BASIS FOR DETERMINATION OF WORK IN PROGRESS FOR THE ASSESSMEN T YEAR 2005-06 IS THE DISCLOSURE MADE BY THE ASSESSEE TOWARDS RECEIPT S FROM MIMS PROJECT FOR THE ASSESSMENT YEAR 2008-09 AND 2010-11, THE AS SESSEE FAILED TO OFFER PROPER EXPLANATIONS FOR NOT OFFERING THE SAID RECEIPTS FOR THE RELEVANT ASSESSMENT YEARS 2003-04 TO 2005-06, THERE FORE, THE CONTENTION OF THE ASSESSEE THAT THE ENTIRE EXERCISE BECOMES REVENUE ITA NOS.640, 641 & 642/VIZAG/2014 TANGI HARI, VISAKHAPATNAM 9 NEUTRAL BECAUSE OF DEDUCTION ALLOWED TOWARDS INCOME ADMITTED BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2008-09 AND 2010-1 1 CANNOT BE ACCEPTED. IN THE INSTANT CASE, THERE IS NO DOUBT T HAT THE ASSESSEE ADOPTED MERCANTILE SYSTEM OF ACCOUNTING AND AS PER THE MERCANTILE SYSTEM OF ACCOUNTING AND ALSO AS PER THE ACCOUNTING STANDARD 7, THE ASSESSEE NEEDS TO RECOGNIZE THE REVENUE ON PERCENTA GE COMPLETION METHOD, HOWEVER, THE ASSESSEE HAS FAILED TO RECOGNI ZE REVENUE IN THE RESPECTIVE ASSESSMENT YEARS, EVEN THOUGH HE HAD FOL LOWED MERCANTILE SYSTEM OF ACCOUNTING WHICH CLEARLY SHOWS THAT THE A SSESSEE HAS NOT DISCLOSED TRUE AND CORRECT PARTICULARS OF HIS INCOM E, THEREFORE, THE A.O. WAS RIGHT IN HOLDING THAT THE ASSESSEE HAS CONCEALE D PARTICULARS OF INCOME AND FURNISHED INACCURATE PARTICULARS OF HIS INCOME. WITH THESE OBSERVATIONS, CONFIRMED THE LEVY OF PENALTY U/S 271 (1)(C) OF THE ACT. AGGRIEVED BY THE CIT(A) ORDER THE ASSESSEE IS IN AP PEAL BEFORE US. 8. THE ASSESSEE HAS RAISED COMMON GROUNDS FOR 3 ASS ESSMENT YEARS. FROM THESE GROUNDS OF APPEAL, THE ASSESSEE HAS CHAL LENGED THE VALIDITY OF PENALTY PROCEEDINGS, BY STATING THAT THE INITIAT ION OF PENALTY PROCEEDINGS IS NOT AS PER LAW, THEREFORE, THE ENTIR E PENALTY PROCEEDINGS ARE VITIATED AND BAD IN LAW, AS THE A.O. HAS NOT AR RIVED AT A SATISFACTION TO ALLEGE THAT WHETHER THE ASSESSEE HAS CONCEALED P ARTICULARS OF HIS ITA NOS.640, 641 & 642/VIZAG/2014 TANGI HARI, VISAKHAPATNAM 10 INCOME OR FURNISHED INACCURATE PARTICULARS OF HIS I NCOME. IN ADDITION TO LEGALITY OF THE ISSUE, THE ASSESSEE HAS CONTENDED T HE ISSUES ON MERIT. THE A.R. FOR THE ASSESSEE SUBMITTED THAT THE CIT(A) WAS ERRED IN CONFIRMED THE LEVY OF PENALTY U/S 271(1)(C) OF THE ACT, AS THE ADDITIONS MADE BY THE A.O. TOWARDS DIFFERENCE IN GROSS PROFIT FROM MIMS PROJECT IS ON ESTIMATION BASIS WHICH CANNOT BE CONSIDERED AS W ILLFUL CONCEALMENT OF PARTICULARS OF INCOME SO AS TO LEVY PENALTY U/S 271(1)(C) OF THE ACT. THE A.R. FURTHER SUBMITTED THAT THE ITAT, HAS RE-WO RKED WORK IN PROGRESS IN THE ASSESSMENT YEAR 2005-06, BASED ON T HE ASSESSEES OWN ADMISSION OF CONTRACT RECEIPTS FROM MIMS PROJECT FO R THE ASSESSMENT YEAR 2008-09 TO 2010-11. THE ASSESSEE HAS ADMITTED CONTRACT RECEIPTS ON ACTUAL RECEIPT BASIS, HOWEVER, ITAT HAS WORKED O UT WORK IN PROGRESS ON EQUITABLE GROSS PROFIT DISTRIBUTION METHOD BY TA KING INTO ACCOUNT, THE PROJECT AS A WHOLE WHICH RESULTS IN PREPONEMENT OF RECOGNITION OF REVENUE FOR THE ASSESSMENT YEAR 2003-04 TO 2005-06, EXCEPT THIS THERE IS NO FACTUAL DIFFERENCE IN TOTAL CONTRACT RECEIPTS ADMITTED BY THE ASSESSEE AND DETERMINED BY THE A.O. THE ADDITIONS MADE BY THE A.O. IS REVENUE NEUTRAL, BECAUSE THE A.O. HIMSELF HAS ALLOW ED DEDUCTIONS TOWARDS INCOME ADMITTED BY THE ASSESSEE FOR THE ASS ESSMENT YEAR 2008- 09 AND 2010-11. THIS RESULTS IN PREPONEMENT OF REC OGNITION OF INCOME FOR THE EARLIER PERIOD, HOWEVER, THERE IS NO ADDITI ONAL REVENUE DECLARED, ITA NOS.640, 641 & 642/VIZAG/2014 TANGI HARI, VISAKHAPATNAM 11 AS SUCH THE A.O. WAS NOT CORRECT IN HOLDING THAT TH E ASSESSEE HAS WILLFULLY CONCEALED PARTICULARS OF INCOME OR FURNIS HED INACCURATE PARTICULARS OF INCOME. TO SUPPORT HIS ARGUMENTS, R ELIED UPON THE DECISION OF SUPREME COURT, IN THE CASE OF CIT VS. R EALEST BUILDERS SERVICES LTD. (2008) 301 ITR 202 AND SUBMITTED THAT THE WHOLE EXERCISE IS REVENUE NEUTRAL, THEREFORE, PENALTY CANNOT BE LE VIED. THE A.R. ALSO RELIED UPON THE DECISION OF ITAT, IN THE CASE OF AC IT VS. MILAP TEXTILES LTD. (1994) 46 ITD 449 AND SUBMITTED THAT THE ADDIT ION IS MADE ON AN ESTIMATION BASIS, IT CANNOT BE SAID THAT CONCEALMEN T OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME. 9. ON THE OTHER HAND, THE LD. D.R. STRONGLY SUPPORT ED THE ORDER OF CIT(A). THE D.R. FURTHER SUBMITTED THAT THE ASSESS EE HAS CONCEALED PARTICULARS OF HIS INCOME AND ALSO FURNISHED INACCU RATE PARTICULARS OF INCOME WHICH IS EVIDENT FROM THE FACT THAT THE ITAT HAS FINALLY DETERMINED UNDISCLOSED INCOME OF RS.1,21,03,760/- O VER AND ABOVE THE INCOME DISCLOSED BY THE ASSESSEE, THEREFORE, THE A. O. WAS RIGHTLY LEVIED PENALTY U/S 271(1)(C) OF THE ACT AND HIS ORDER SHOU LD BE UPHELD. 10. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIALS AVAILABLE ON RECORD. THE A.O. LEVIED PENALTY U/S 2 71(1)(C) OF THE ACT, FOR THE REASON THAT THE ASSESSEE HAS CONCEALED PARTICUL ARS OF HIS INCOME ITA NOS.640, 641 & 642/VIZAG/2014 TANGI HARI, VISAKHAPATNAM 12 AND FURNISHED INACCURATE PARTICULARS OF INCOME. TH E A.O. WAS OF THE OPINION THAT THE ASSESSEE HAS NOT DISCLOSED TRUE AN D CORRECT INCOME FROM THE MIMS PROJECT ON ACCRUAL BASIS, EVEN THOUGH HE HAD FOLLOWED MERCANTILE SYSTEM OF ACCOUNTING. THE A.O. FURTHER WAS OF THE OPINION THAT THE ITAT HAS DETERMINED UNDISCLOSED INCOME BAS ED ON EQUITABLE GROSS PROFIT DISTRIBUTION METHOD WHICH RESULTED IN ADDITIONAL UNDISCLOSED INCOME OVER AND ABOVE INCOME DISCLOSED BY THE ASSES SEE FROM THE MIMS PROJECT. THOUGH THE ITAT HAS DETERMINED GROSS PROFIT ON ESTIMATION BASIS, THE METHODOLOGY FOLLOWED BY THE I TAT TO DISTRIBUTE THE GROSS PROFIT EVENLY FOR THE ASSESSMENT YEARS 2003-0 4 TO 2005-06 IS BASED ON A METHOD SUGGESTED BY THE ACCOUNTING STAND ARD 7 ISSUED BY THE ICAI. AS PER THE ACCOUNTING STANDARD 7, THE AS SESSEE HAS TO RECOGNIZE THE REVENUE ON PERCENTAGE COMPLETION METH OD, WHETHER OR NOT THE BILLS ARE RAISED FOR THE PARTICULAR PERIOD. IN THE PRESENT CASE ON HAND, THE ASSESSEE DELIBERATELY POSTPONED RECOGNITI ON OF REVENUE, THEREFORE OPINED THAT IT IS A FIT CASE FOR LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. 11. IT IS THE CONTENTION OF THE ASSESSEE THAT IT HA S NOT RECOGNIZED THE CORRECT WORK IN PROGRESS FOR THE ASSESSMENT YEAR 20 05-06, BECAUSE THERE WAS AN UNCERTAINTY IN REALIZATION OF REVENUE BECAUSE OF DISPUTE ITA NOS.640, 641 & 642/VIZAG/2014 TANGI HARI, VISAKHAPATNAM 13 BETWEEN THE ASSESSEE AND THE CONTRACTEE IN RESPECT OF QUALITY AND QUANTITY OF WORK EXECUTED. THE ASSESSEE FURTHER SU BMITTED THAT THE CONTRACTEE HAS NOT ACCEPTED THE BILL RAISED BY THE ASSESSEE, BECAUSE OF SOME DISPUTES WHICH WERE RESOLVED IN THE SUBSEQUENT YEARS AND ACCORDINGLY THE ASSESSEE HAS RECOGNIZED THE REVENUE IN THE ASSESSMENT YEAR 2008-09 AND 2010-11 ON ACTUAL RECEIPT BASIS. THE ITAT HAS RE- WORKED WORK IN PROGRESS BASED ON THE ASSESSEES OWN ADMISSION OF REVENUE FROM THE MIMS PROJECT FOR THE ASSESSMENT YE AR 2008-09 AND 2010-11, WHICH RESULTED IN PREPONEMENT OF RECOGNITI ON OF REVENUE FOR THE EARLIER PERIOD. EXCEPT THIS, THERE IS NO FACTU AL DIFFERENCE BETWEEN TOTAL CONTRACT RECEIPT FROM THE PROJECT AND GROSS P ROFIT DETERMINED BY THE A.O. THE ASSESSEE FURTHER CONTENDED THAT THE A .O. HAS ALLOWED DEDUCTION TOWARDS INCOME ADMITTED BY THE ASSESSEE F OR THE ASSESSMENT YEAR 2008-09 AND 2010-11, BECAUSE OF WHICH THE ENTI RE EXERCISE BECOMES REVENUE NEUTRAL AS THERE IS NO DIFFERENCE B ETWEEN THE INCOME FINALLY ASSESSED BY THE A.O. BASED ON THE DIRECTION S OF THE ITAT AND THE INCOME ADMITTED BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2008-09 & 2010-11. 12. THE A.O. LEVIED PENALTY ON THE SOLE GROUND THAT THE ASSESSEE HAS FAILED TO RECOGNIZE CORRECT WORK IN PROGRESS FOR TH E ASSESSMENT YEAR ITA NOS.640, 641 & 642/VIZAG/2014 TANGI HARI, VISAKHAPATNAM 14 2005-06, WHICH RESULTED IN UNDISCLOSED INCOME OF RS .1,21,03,760/-. THE A.O. WAS OF THE OPINION THAT THE ASSESSEE HAS DELIB ERATELY POSTPONED RECOGNITION OF REVENUE. WE DO NOT FIND ANY MERITS I N THE FINDINGS OF THE A.O., FOR THE REASON THAT THE INCOME FINALLY ASSESS ED BY THE A.O., BASED ON THE FINDINGS OF THE ITAT IS ON ESTIMATION BASIS. THOUGH THE ITAT HAS RE-WORKED WORK IN PROGRESS WHICH RESULTED IN ADDITI ONAL INCOME OF RS.1,21,03,760/- WHICH IS BASED ON THE ASSESSEES O WN ADMISSION OF INCOME FOR THE ASSESSMENT YEAR 2008-09 AND 2010-11 FROM THE MIMS PROJECT. THE ITAT HAS RE-WORKED THE WORK IN PROGRE SS BASED ON THE METHODOLOGY OF EQUAL DISTRIBUTION OF GROSS PROFIT B Y TAKING INTO ACCOUNT THE PROJECT AS A WHOLE. IN OTHER WORDS, THE ITAT H AS RE-WORKED THE REVENUE FROM THE PROJECT BASED ON THE PERCENTAGE CO MPLETION METHOD, SUGGESTED BY THE ACCOUNTING STANDARDS 7 ISSUED BY T HE ICAI, AS PER WHICH THE ASSESSEE HAS TO RECOGNIZE THE REVENUE ON PERCENTAGE COMPLETION METHOD, WHETHER OR NOT, THE REVENUE IS R ECEIVED FROM THE PROJECT. THOUGH THERE IS A DIFFERENCE IN INCOME AD MITTED BY THE ASSESSEE FROM THE MIMS PROJECT FOR THE ASSESSMENT Y EARS 2003-04 TO 2005-06, THE NET EFFECT OF ADDITIONS MADE BY THE A. O. TOWARDS DIFFERENCE IN GROSS PROFIT IS REVENUE NEUTRALIZED, BECAUSE THE ASSESSEE HAS ADMITTED SAME AMOUNT OF INCOME OF RS.1,21,03,76 0/- FOR THE ASSESSMENT YEARS 2008-09 AND 2010-11. THEREFORE, W E ARE OF THE VIEW ITA NOS.640, 641 & 642/VIZAG/2014 TANGI HARI, VISAKHAPATNAM 15 THAT THE A.O. WAS NOT CORRECT IN HOLDING THAT ASSES SEE HAS WILLFULLY CONCEALED PARTICULARS OF HIS INCOME OR FURNISHED IN ACCURATE PARTICULARS OF INCOME. WE FURTHER NOTICED THAT THERE IS NO FACTUAL DIFFERENCE IN GROSS RECEIPTS AND INCOME DETERMINED BY THE A.O., WHEN CO MPARED TO THE BOOKS OF ACCOUNTS OF THE ASSESSEE. THE ONLY DIFFER ENCE IS THAT THE ASSESSEE HAS RECOGNIZED REVENUE ON ACTUAL RECEIPT B ASIS, WHEREAS THE A.O. HAS WORKED OUT REVENUE ON PERCENTAGE COMPLETIO N METHOD WHICH RESULTED IN PREPONEMENT OF REVENUE FOR THESE ASSESS MENT YEARS. SINCE THERE IS NO DIFFERENCE IN THE CONTRACTUAL WORK RECE IPTS RECOGNIZED BY THE ASSESSEE AND THE CONTRACTUAL WORK RECEIPTS WORKED O UT BY THE A.O. AS WELL AS THE ITAT, THE A.O. WAS NOT CORRECT IN COMIN G TO THE CONCLUSION THAT THE ASSESSEE HAS CONCEALED PARTICULARS OF HIS INCOME WHICH WARRANTS LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. 13. THE QUESTION WHETHER THERE WAS A REASONABLE CAU SE FOR WHICH THE REQUIREMENT OF CONCERNED PROVISIONS OF SECTION COUL D NOT BE COMPLIED WITH IS PRIMARILY AN ESSENTIAL QUESTION OF FACT AND IT HAS TO BE DECIDED IN EACH CASE ON CONSIDERATION OF MATERIALS PLACED BEFO RE THE CONCERNED AUTHORITY. THE LEVY OF PENALTY U/S 271(1)(C) OF TH E ACT IS NOT AUTOMATIC. BEFORE LEVY OF PENALTY, THE CONCERNED AUTHORITY IS REQUIRED TO FIND OUT THAT ANY VALUATION REFERRED TO IN THE SAID PROVISIO NS IS WITHOUT A ITA NOS.640, 641 & 642/VIZAG/2014 TANGI HARI, VISAKHAPATNAM 16 REASONABLE CAUSE. THE INITIAL BURDEN IS ON THE ASSE SSEE TO SHOW THAT THERE EXIST A REASONABLE CAUSE WHICH WAS THE REASON FOR THE FAILURE REFERRED TO IN THE CONCERNED PROVISIONS OF THE ACT, THEREFORE, THE A.O. DEALING WITH THE MATTER IS TO CONSIDER WHETHER THE EXPLANATIONS OFFERED BY THE ASSESSEE OR THE PERSON AS THE CASE MAY BE IS REASONABLE AND AS REGARDS THE REASON WAS ON ACCOUNT OF REASONABLE CAU SE. IN THE PRESENT CASE ON HAND, ON PERUSAL OF THE FACTS AVAILABLE ON RECORD, WE FIND THAT THE ASSESSEE HAS NOT RECOGNIZED THE WORK IN PROGRES S FOR THE ASSESSMENT YEAR 2005-06, AS THERE WAS A DISPUTE BET WEEN THE ASSESSEE AND THE CONTRACTEE IN RESPECT OF WORK BILLS. THE A SSESSEE HAS SUBMITTED THE BILLS WHICH WAS NOT ACCEPTED BY THE CONTRACTEE, THIS FACT WAS NOT DISPUTED BY THE A.O. THE ASSESSEE HAS FILED A LETT ER FROM THE CONTRACTEE, WHEREIN THE CONTRACTEE HAS CATEGORICALL Y STATED THAT THERE WAS A DISPUTE BETWEEN THE CONTRACTOR AND THE CONTRA CTEE REGARDING WORK EXECUTION AND WHICH WAS RESOLVED IN SUBSEQUENT YEARS. THE ASSESSEE HAS PROVED WITH NECESSARY EVIDENCES THAT H E HAD ADMITTED REVENUE FROM THE MIMS PROJECT ON RECEIPT BASIS FOR THE ASSESSMENT YEAR 2008-09 AND 2010-11. WE FURTHER NOTICED THAT THE IT AT HAS RE-WORKED WORK IN PROGRESS FOR THE ASSESSMENT YEAR 2005-06 BA SED ON ASSESSEES OWN ADMISSION OF CONTRACT RECEIPTS FOR ASSESSMENT Y EARS 2008-09 AND 2010-11. THERE IS NO FACTUAL DIFFERENCE IN WORK IN PROGRESS DETERMINED ITA NOS.640, 641 & 642/VIZAG/2014 TANGI HARI, VISAKHAPATNAM 17 BY THE ITAT AND INCOME ADMITTED BY THE ASSESSEE. T HE WHOLE EXERCISE OF RE-WORKING OF WORK IN PROGRESS RESULTED IN PRE-P ONEMENT OF RECOGNITION OF REVENUE FOR THE ASSESSMENT YEAR 2003 -04 TO 2005-06, BUT NOT GENERATED UNDISCLOSED INCOME. THEREFORE, WE AR E OF THE CONSIDERED VIEW THAT THE A.O. WAS ERRED IN COMING TO THE CONCL USION THAT THE ASSESSEE HAS CONCEALED PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME INSPITE OF THE FACT THAT THE ASSESSEE HAS EXPLAINED THE REASONS FOR NOT DISCLOSING THE WORK IN PROGRESS FOR THE ASSESSMENT YEAR 2005-06. 14. IT IS PERTINENT TO DISCUSS THE CASE LAWS RELIED UPON BY THE ASSESSEE. THE ASSESSEE RELIED UPON THE DECISION OF HONBLE SUPREME COURT, IN THE CASE OF REALEST BUILDERS AND SERVICES LTD. (2008) 307 ITR 202. THE HONBLE SUPREME COURT, UNDER SIMILAR CIRC UMSTANCES HELD THAT WHEN THE WHOLE EXERCISE IS REVENUE NEUTRAL, THE ADD ITION ITSELF CANNOT BE SUSTAINED, HENCE LEVY OF PENALTY ON ADDITIONS MADE ON ESTIMATION BASIS CANNOT SUSTAIN IN THE EYES OF LAW. THE RELEVANT PO RTION OF THE ORDER IS EXTRACTED BELOW: UNDER S. 145, IT IS ALWAYS OPEN TO THE DEPARTMENT TO INSIST ON THE CHANGE IN THE METHOD OF ACCOUNTING FOLLOWED BY THE ASSESSE E OVER THE YEARS (WHICH IS THE CASE HERE/N) IF THE IMPUGNED METHOD O F ACCOUNTING RESULTS IN UNDER-ESTIMATION OF PROFITS/NET INCOME. IN THIS C ASE, NO ALLEGATION OF THAT NATURE WAS EVER MADE BY THE DEPARTMENT. IN FAC T, THE ASSESSMENT ORDER ALSO DOES NOT INDICATE WHETHER THE IMPUGNED M ETHOD OF ACCOUNTING ITA NOS.640, 641 & 642/VIZAG/2014 TANGI HARI, VISAKHAPATNAM 18 FOLLOWED BY THE ASSESSEE RESULTS IN UNDER-ESTIMATIO N OF THE PROFITS/NET INCOME. THOUGH REASONING OF THE HIGH COURT WAS NOT VALID, SINCE THE DEPARTMENT HAS NOT GONE INTO THE ABOVE VITAL ASPECT REGARDING METHOD OF ACCOUNTING UNDER S. 145, THERE IS NO REASON TO INTE RFERE WITH THE IMPUGNED JUDGMENT. THE HIGH COURT HAS PROCEEDED ON THE BASIS OF 'RULE OF CONSISTENCY'. THE VIEW TAKEN BY THE HIGH COURT O N THAT COUNT IS NOT ACCEPTABLE. IN CASES WHERE THE DEPARTMENT WANTS TO T AX AN ASSESSEE ON THE GROUND OF THE LIABILITY ARISING IN A PARTICULAR YEAR, IT SHOULD ALWAYS ASCERTAIN THE METHOD OF ACCOUNTING FOLLOWED BY THE ASSESSEE IN THE PAST AND WHETHER CHANGE IN METHOD OF ACCOUNTING WAS WARR ANTED ON THE GROUND THAT PROFIT IS BEING UNDER-ESTIMATED UNDER T HE IMPUGNED METHOD OF ACCOUNTING. IF THE AO COMES TO THE CONCLUSION THA T THERE IS UNDER- ESTIMATION OF PROFITS, HE MUST GIVE FACTS AND FIGUR ES IN THAT REGARD AND DEMONSTRATE TO THE COURT THAT THE IMPUGNED METHOD O F ACCOUNTING ADOPTED BY THE ASSESSEE RESULTS IN UNDERESTIMATION OF PROFITS AND IS THEREFORE REJECTED. OTHERWISE, THE PRESUMPTION WOUL D BE THAT THE ENTIRE EXERCISE IS REVENUE NEUTRAL. IN THIS CASE, THAT EXER CISE HAS NEVER BEEN UNDERTAKEN. THE AO WAS REQUIRED TO DEMONSTRATE BOTH THE METHODS, ONE ADOPTED BY THE ASSESSEE AND THE OTHER BY THE DEPART MENT. IN THE CIRCUMSTANCES, THERE IS NO REASON TO INTERFERE WITH THE CONCLUSION GIVEN BY THE HIGH COURT AND THE TRIBUNAL. JUDGMENT OF THE D ELHI HIGH COURT IN IT APPEAL NO. 708 OF 2006, DT. 17TH JAN., 2007 AFFIRME D SANS REASONING. 15. THE ASSESSEE RELIED UPON THE DECISION OF ITAT J AIPUR BENCH IN THE CASE OF ACIT VS. MILAP TEXTILE MILLS (1993) 46 ITD 449. THE COORDINATE BENCH OF THIS TRIBUNAL, UNDER SIMILAR CIRCUMSTANCES HELD AS UNDER: ALTHOUGH THE TRIBUNAL HAS GIVEN VARIOUS REASONS FO R RESTORING PART OF THE ADDITIONS WHICH HAS BEEN TOTALLY DELETED BY THE CIT (A), THE TRIBUNAL HAS NOT GIVEN A SPECIFIC FINDING ANYWHERE TO THE EFFECT THAT IT WAS A CONCEALED INCOME OF THE ASSESSEE. IN FACT, FROM THE FACTS AND CIRCUMSTANCES IT IS ALSO CLEAR THAT IT IS NOT A CASE WHERE THE ASSESSEE HAS EITHER GIVEN NO EXPLANATION FOR THE ADDITIONS WHICH HAD BEEN MADE T O ITS INCOME OR IT HAS NOT BEEN ABLE TO SUBSTANTIATE IT. EXPLANATION. THE COMPARATIVE CHART GIVEN IN THE PAPER BOOK DOES SHOW THAT THE DIFFERENCE BET WEEN THE G. P. RATE OF LAST YEAR AND THIS YEAR IS ONLY .07% AND THAT TOO A FTER THE LOSS SUFFERED BY THE ASSESSEE IN THE FLOODS. THUS WHILE THE TRIBUNAL HAS HELD IN THE QUANTUM APPEAL THAT THE ASSESSEE HAS NOT BEEN ABLE TO FULLY PROVE THE EXTENT OF LOSS IN THE FLOODS, IT CANNOT BE SAID THA T THE TRIBUNAL HAS HELD THAT THE CLAIM OF LOSS IN FLOODS WAS FALSE. IN FACT , THE TRIBUNAL HAS ACCOUNTED THAT SINCE THE FACTORY OF THE ASSESSEE WA S LOCATED NEAR THE BED OF THE RIVER, IT DID SUFFER A LOSS ON ACCOUNT OF SU DDEN AND UNEXPECTED FLOODS, BUT HOW MUCH WAS THE LOSS IS QUESTION OF ES TIMATE. TAKING ALL THESE FACTS INTO ACCOUNT, IN THIS CASE THE ASSESSEE HAS BEEN ABLE TO GIVE A ITA NOS.640, 641 & 642/VIZAG/2014 TANGI HARI, VISAKHAPATNAM 19 REASONABLE EXPLANATION FOR FALL IN ITS PROFITS AS C OMPARED TO LAST YEAR AND ALTHOUGH THA EXPLANATION WAS NOT FULLY ACCEPTED BY THE TRIBUNAL, THE VERY FACT THAT THE CIT(A) HAD ACCEPTED I AND EVEN THE TRI BUNAL HAS RESTORED ONLY PARTIAL ADDITIONS WOULD MEAN THAT THE EXPLANAT ION GIVER BY THE ASSESSEE WAS A PLAUSIBLE AND BONA FIDE EXPLANATION AND, HENCE, THE CIT(A) WAS JUSTIFIED IN TAKING THE VIEW THAT WHERE AN ADDITION HAS BEEN RESTORED EVEN BY THE TRIBUNAL ON AN ESTIMATED BASIS AND THE ASSESSEE HAS GIVEN A PLAUSIBLE AND BONA FIDE EXPLANATION FOR ITS HAVING FILED A RETURN OF INCOME ON THE BASIS OF ITS BOOKS OF ACCOUNTS IN WHI CH NO SPECIFIC DEFECTS COULD BE POINTED OUT, THE IMPOSITION OF PENALTY UND ER S. 271(1)(C) WAS NOT JUSTIFIED. PENALTY U/S 271(1)(C) R/W EXPLN. 1(B) W AS NOT JUSTIFIED WHERE TRIBUNAL RESTORED A PART OF ADDITION ON ESTIMATE BA SIS. 16. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE AND ALSO FOLLOWING THE RATIOS OF THE CASE LAWS DISCUSSED ABO VE, WE ARE OF THE VIEW THAT THE A.O. WAS NOT CORRECT IN COMING TO THE CONC LUSION THAT THE ASSESSEE HAS CONCEALED PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME, AS THE UNDISCLOSED INCOME DE TERMINED BY THE A.O. BASED ON THE DIRECTIONS OF THE ITAT IS ON ESTIMATIO N BASIS. THE ITAT HAS ESTIMATED THE WORK IN PROGRESS FOR THE ASSESSME NT YEAR 2005-06 AND RE-APPORTIONED THE GROSS PROFIT ON EQUITABLE GR OSS PROFIT DISTRIBUTION METHOD BASED ON THE ASSESSEES OWN BOOK RESULTS. T HERE IS NO FACTUAL DIFFERENCE IN CONTRACT RECEIPT ADMITTED BY THE ASSE SSEE AND CONTRACT RECEIPT DETERMINED BY THE A.O. FROM THE MIMS PROJEC T. EXCEPT PRE- PONEMENT OF RECOGNITION OF REVENUE, THERE IS NO DIFFERENCE IN INCOME ADMITTED BY THE ASSESSEE FROM THE MIMS PROJECT, THE REFORE, WE ARE OF THE VIEW THAT THE A.O. WAS ERRED IN LEVYING PENALTY FOR CONCEALMENT OF ITA NOS.640, 641 & 642/VIZAG/2014 TANGI HARI, VISAKHAPATNAM 20 PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTI CULARS OF INCOME UNDER THE PROVISIONS OF SECTION 271(1) OF THE ACT, HENCE , WE DIRECT THE A.O. TO DELETE THE PENALTY LEVIED U/S 271(1)(C) OF THE A CT FOR THE ASSESSMENT YEAR 2003-04 TO 2005-06. 17. THE ASSESSEE HAS CHALLENGED THE VALIDITY OF PEN ALTY PROCEEDINGS. THE ASSESSEE SUBMITTED THAT THE NOTICE ISSUED U/S 2 74 R.W.S. 271 OF THE ACT DATED 18.12.2012 IS VOGUE AND INVALID, HENCE, N O PENALTY CAN BE LEVIED IN PURSUANCE OF SUCH AN INVALID NOTICE. THE ASSESSEE FURTHER CONTENDED THAT THE A.O. HAS FAILED TO ALLEGE THE AP PROPRIATE VIOLATION REFERRED TO IN SECTION 271(1)(C) OF THE ACT, WHETHE R PENALTY IS PROPOSED TO BE LEVIED FOR CONCEALMENT OF PARTICULARS OF INCO ME OR FURNISHED INACCURATE PARTICULARS OF INCOME. IN THE ABSENCE O F A SPECIFIC ALLEGATION FROM THE A.O., THE NOTICE ISSUED U/S 274 R.W.S. 271 IS VOGUE AND INVALID AND HENCE, NO PENALTY CAN BE LEVIED IN PURSUANCE OF SUCH AN INVALID NOTICE. SINCE, THE ASSESSEE HAS SUCCEEDED ON MER ITS, AT THIS STAGE, WE DO NOT ADJUDICATE THE LEGAL ISSUE RAISED BY THE ASS ESSEE, AS IT IS ACADEMIC IN NATURE. ITA NOS.640, 641 & 642/VIZAG/2014 TANGI HARI, VISAKHAPATNAM 21 18. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IN ITA NOS.640, 641 & 642/VIZAG/2014 FOR THE ASSESSMENT YEARS 2003-04 T O 2005-06 RESPECTIVELY ARE PARTLY ALLOWED . THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 22 ND SEPT16. SD/- SD/- ( . ) ( . ) (V. DURGA RAO) (G. MANJUNATHA) /JUDICIAL MEMBER /ACCOUNTANT MEMBER # /VISAKHAPATNAM: ' /DATED : 22.09.2016 VG/SPS )# *# /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT SHRI TANGI HARI, 9-13-93, NEW RE SAPUVANIPALEM, CBM COMPOUND, VISAKHAPATNAM-530 003. 2. / THE RESPONDENT THE DCIT, CIRCLE-3(1), VISAKHAP ATNAM 3. + / THE CIT(CENTRAL), HYDERABAD 4. + ( ) / THE CIT (A), VISAKHAPATNAM 5. # . , . , # / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // 12 . (SR.PRIVATE SECRETARY) . , # / ITAT, VISAKHAPATNAM