DCIT, Hyderabad V. M/s Agrigold Farm Estates (India) (P) Ltd., Hyderabad

ITA 910/HYD/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 3171 (ITAT-HYDERABAD)
• Duration Of Justice: 10 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-06-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 26-05-2010
• Assessment Year: 2003-2004
• Appeal Filed On: 05-08-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Search and seizure; Difference of opinion; Agreed addition; Revised return
• Section: 5(2); 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES 'A' : HYDERABAD BEFORE SHRI N.R. GANESAN, HON'BLE JUDICIAL MEMBER AND SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER ITA NO.910 TO 913/HYD/2009 ASSESSMENT YEARS: 2003-04 TO 2006-07 DY.COMMISSIONER OF INCOME TAX VS. M/S AGRIGOLD FARMS ESTA TES CIRCLE-1(1), HYDERABAD (INDIA) (P) LTD., HYDERABAD (APPELLANT) (PAN NO.AADCA 9678 C) (RESPONDENT) FOR APPLICANT : SHRI CHANDRA MOULESHWARA RAO FOR RESPONDENT : SHRI E.S. NAGENDRA PRASAD, DR ORDER PER N.R.S.GANESAN, J.M. 1. ALL THE FOUR APPEALS OF THE REVENUE ARE DIRECTED A GAINST THE COMMON ORDER PASSED BY THE CIT (A) III HYDERABAD DATED 25-05-2009 AND PERTAINS TO THE ASSESSMENT YEARS 2003-04, 2004-05, 20 05-06 AND 2006-07 CONFIRMING THE LEVY OF PENALTY U/S 271 (1) ( C) OF THE INCOME TAX ACT. SINCE COMMON ISSUE ARISES FOR CONSIDERATION IN ALL THE APPEALS, WE HEARD THE SAME TOGETHER AND DISPOSING OF T HE SAME BY THIS COMMON ORDER. 2. SHRI PHANI RAJU, LEARNED DEPARTMENTAL REPRESENTA TIVE SUBMITTED THAT THERE WAS A SEARCH IN THE PREMISES OF THE ASSESSEE AS WELL AS IN THE PREMISES OF M/S AGRIGOLD FARM LTD., A S ISTER CONCERN OF THE ASSESSEE. DURING THE COURSE OF SEARCH OPERATION INCRIMIN ATING MATERIALS WERE FOUND AND SEIZED. THE REVENUE AUTHORIT IES FOUND THAT THE ASSESSEE HAS NOT MAINTAINED PROPER VOUCHERS/BILLS FOR THE 2 EXPENDITURE INCURRED IN THE COURSE OF BUSINESS. REFERRING TO THE PENALTY ORDER THE LEARNED DEPARTMENTAL REPRESENTATI VE POINTED OUT THAT A SHOW CAUSE NOTICE DATED 12-12-2007 WAS ISSUED TO TH E ASSESSEE TO ESTIMATE THE INCOME OF THE ASSESSEE. IN RESPONSE TO SHO W CAUSE NOTICE THE ASSESSEE BY A LETTER DATED 27-12-2007 AGREED TO ESTIMATE THE INCOME AT 5% OF THE GROSS RECEIPTS. ACCORDINGLY THE A SSESSING OFFICER ESTIMATED THE INCOME AT 5% OF THE GROSS RECEIPTS. THE LEARNED DEPARTMENTAL REPRESENTATIVE FURTHER POINTED OUT THAT THE FINAL RESULTS DECLARED BY THE ASSESSEE WERE NOT TRUE AND CORRECT. THERE FORE, IT IS AGREED FOR ESTIMATION OF PROFIT AT 5% OF THE GROSS REC EIPTS. ACCORDING TO THE DEPARTMENTAL REPRESENTATIVE THIS IS A CLEAR CASE OF ASSESSEE FAILED TO FURNISH ACCURATE PARTICULARS OF THE INCOME AND RESORTED TO CONCEALMENT OF PARTICULARS OF INCOME. THEREFORE, THE ASSESSI NG OFFICER RIGHTLY LEVIED THE PENALTY U/S 271(1)(C) OF THE INCOM E TAX ACT. 3. REFERRING TO THE FIRST APPELLATE ORDER THE LEARN ED DEPARTMENTAL REPRESENTATIVE POINTED OUT THAT THE CIT (A) DELETED THE ADDITION MAINLY ON THE GROUND THAT THE INCOME WAS ESTIMATED, TH EREFORE NO PENALTY COULD BE LEVIED U/S 271 (1) (C) OF THE ACT. THE LEARNED DEPARTMENTAL REPRESENTATIVE POINTED OUT THAT EVEN IN CASES WHERE THE INCOME WAS ESTIMATED, PENALTY CAN BE LEVIED FOR CANCELLAT ION OF INCOME OR FURNISHING THE INACCURATE PARTICULARS. THEREFORE, ACCOR DING TO THE DEPARTMENTAL REPRESENTATIVE THE CIT (A) COMMITTED AN ERROR IN DELETING THE PENALTY IMPOSED BY THE ASSESSING OFFICER. TH E LEARNED DEPARTMENTAL REPRESENTATIVE PLACED HIS RELIANCE ON THE JUDGMENT OF THE GUJARAT HIGH COURT IN THE CASE OF CIT VS. CHANDRA V ILAS HOTEL 2007, (291) ITR 202 AND SUBMITTED THAT WHEN THE ASSESSEE HAS NOT CHALLENGED THE ADDITION OF INCOME ON ESTIMATION BASIS, PENALTY CAN BE LEVIED U/S 271 (1) (C) OF THE ACT FOR CONCEALMENT OF TH E INCOME. 3 LEARNED DEPARTMENTAL REPRESENTATIVE ALSO PLACED HIS RE LIANCE ON THE JUDGMENT OF THE MADRAS HIGH COURT IN THE CASE OF CIT VS . S. KRISHNA SWAMY AND SONS 1996, (219) ITR 157 AND SUBMITTED THAT WHEN THE ASSESSEE SUPPRESSED COLLECTION FOR A NUMBER OF DAYS AND FILED A REVISED RETURN ADMITTING THE SUPPRESSION; THE MADRAS HIGH COURT FOUND THAT EVEN ASSUMING THAT THE REVISED ASSESSMENT WAS BASED ON AN ESTIMATED BASIS PENALTY CAN BE LEVIED. THEREFORE, ACCORD ING TO THE LEARNED DEPARTMENTAL REPRESENTATIVE, CIT (A) HAS COMM ITTED AN ERROR IN DELETING THE PENALTY ON THE GROUND THAT TH E ADDITION WAS MADE ON THE ESTIMATE BASIS. 4. THE LEARNED DEPARTMENTAL REPRESENTATIVE ALSO PLAC ED HIS RELIANCE ON THE JUDGMENT OF THE PATNA HIGH COURT IN THE CASE OF CIT VS. VARASAT HUSSAIN 1988, (171) ITR 405 AND SUBMITTED THAT T HE ASSESSEE BEFORE THE PATNA HIGH COURT RETURNED PART OF THE AMO UNT RECEIVED ON ENHANCEMENT OF ANNUITY BOND. THE PATNA HIGH COURT FOU ND THAT PENALTY CAN BE LEVIED FOR CONCEALMENT OF PART OF THE A MOUNT. THE LEARNED DEPARTMENTAL REPRESENTATIVE AGAIN PLACED HIS RELIANCE ON THE JUDGMENT OF THE MADRAS HIGH COURT IN THE CASE OF RATHNA M AND CO. VS. INSPECTING ASSTT. COMMISSIONER 1980, (124) ITR 376 AND ON JUDGMENT OF THE ALLAHABAD HIGH COURT IN THE CASE OF AD. CIT VS. LAXMI INDUSTRIES AND COLD STORAGE COMPANY LTD., 1984, (146) ITR 492 AND IN THE CASE OF CITG VS. SWARUP COLD STORAGE AND GENERAL MILLIS 19 82, (136) ITR 435. 5. THE LEARNED REPRESENTATIVE FOR REVENUE HAS ALSO PL ACED HIS RELIANCE ON THE JUDGMENT OF THE KERALA HIGH COURT IN THE CASE OF ANAND LIQUORS VS. CIT 1998 (232) ITR 35 AND IN THE CASE OF CI T VS. D.K.B. & CO.2000 (243) ITR 618. THE LEARNED REPRESENTATIVE A LSO PLACED 4 RELIANCE ON THE JUDGMENT OF THE M.P. HIGH COURT IN TH E CASE OF CIT VS. SMT CHANDRA KANTHA AND OTHERS 1994, (205) ITR 607 AN D ON THE JUDGMENT OF THE GUJARAT HIGH COURT IN THE CASE OF AM S HAH & CO. VS. CIT 1999, (238) ITR 415. THE LEARNED REPRESENTATIVE ALSO PLACED HIS RELIANCE ON THE JUDGMENT OF THE ALLAHABAD( 232) ITR 588. THE LEARNED REPRESENTATIVE ALSO PLACED HIS RELIANCE ON THE DECISION OF THE AHMEDABAD BENCH OF ITAT IN THE CASE OF ACIT VS. KIRTI D AYABHAI PATEL 121 ITD 159 (THIRD MEMBER). 6. ON THE CONTRARY SHRI CHANDRA MOULESHWARA RAO THE L EARNED REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS NOT FURNISHED ANY INACCURATE PARTICULARS OF INCOME OR CONCEAL ED ANY PART OF THE INCOME SO AS TO ATTRACT THE PROVISIONS OF SEC.271 (C) OF THE ACT. ACCORDING TO THE LEARNED REPRESENTATIVE, THE ASSESSEE HAS FURNISHED ALL THE VOUCHERS AND BILLS FOR THE EXPENDITURE. SINCE T HE TRANSACTION WAS VOLUMINOUS IT IS PRACTICALLY NOT POSSIBLE TO VERIFY AL L THE VOUCHERS AND BILLS FOR PAYMENT OF COMMISSION AND DEVELOPMENT E XPENDITURE. THEREFORE, THE ASSESSING OFFICER DECIDED TO ESTIMATE THE I NCOME AT 8% OF THE GROSS RECEIPT. IN FACT THE ASSESSING OFFICER ISSUED A SH OW CAUSE NOTICE ON 12-12-2007 CALLING UPON THE ASSESSEE TO SHOW CAUSE WHY THE INCOME SHOULD NOT BE ESTIMATED AT 8% OF THE GROSS RE CEIPTS. REFERRING TO THE COPY OF THE SHOW CAUSE NOTICE DATED 12 -12-2007 LEARNED REPRESENTATIVE POINTED THAT THIS SHOW CAUSE NO TICE WAS ADDRESSED TO THE ASSESSEE AS WELL AS M/S AGRIGOLD FARM LTD. , WHICH IS ALSO A GROUP CONCERN OF THE ASSESSEE BASED IN VIJAYAWADA. I N BOTH THE CASES THE ASSESSEE EXPRESSED NO OBJECTION FOR ESTIMATING THE I NCOME AT 5% INSTEAD OF 8% AS PROPOSED BY THE ASSESSING OFFICER. A CCORDINGLY THE ASSESSING OFFICER ESTIMATED THE INCOME AT 5% IN THE CA SE OF THE ASSESSEE AS WELL AS AGRIGOLD FARM LTD., THE ASSESSING OFFICER PASSED 5 AN IDENTICAL ORDER IN BOTH THE CASES NAMELY THE ASSESSEE AN D IN THE CASE OF AGRIGOLD FARM LTD., AFTER ESTIMATION OF THE IN COME AT 5% FOR THE ASSESSMENT YEAR 2003-04 THE ASSESSEE'S INCOME GOES BE LOW THE RETURN INCOME. ACCORDING TO THE LEARNED REPRESENTATIVE , FOR THE ASSESSMENT YEAR 2003-04 THE ASSESSEE RETURNED AN INCOME OF RS.3,78,11,572/- HOWEVER THE ASSESSING OFFICER ASSESSED THE I NCOME AT RS.1,95,81,610/- AFTER ESTIMATING THE INCOME AT 5% ON THE GROSS RECEIPTS. THEREFORE, MERELY BECAUSE THE INCOME WAS ESTIMAT ED DUE TO VOLUMINOUS OF THE BILLS AND VOUCHERS, THERE CANNOT BE AN Y PRESUMPTION THAT THE ASSESSEE CONCEALED ANY PART OF THE INCOME OR FURN ISHED INACCURATE PARTICULARS OF INCOME. REFERRING TO THE PENAL TY ORDER THE LEARNED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THA T IT IS NOT THE CASE OF THE ASSESSING OFFICER THAT THE ASSESSEE HAS FURNISHED AN Y INACCURATE PARTICULARS OR CONCEDED ANY PART OF THE INCOME . THE ASSESSING OFFICER MERELY OBSERVED THAT THE ASSESSEE FAILED TO FURNISH ACCURATE PARTICULARS OF INCOME. HOWEVER, THE ASSESSING OFFICER FAILED TO POINT OUT WHICH PART OF THE PARTICULARS WAS NOT ACCURATE . IN FACT FOR THE ASSESSMENT YEAR 2003-04 THE ASSESSEE DECLARED MORE INCOME THAN THE ASSESSED INCOME. THEREFORE, MERELY BECAUSE THE ASSESSING OFFICER ESTIMATED INCOME LITTLE OVER THAN THE RETURN INCOME FO R OTHER YEARS, CANNOT BE SAID THAT THE ASSESSEE CONCEALED ANY PART OF THE INCOME SO AS TO ATTRACT THE PROVISIONS OF SEC. 271(1) ( C) OF THE ACT. 7. SHRI CHANDRA MOULESHWARA RAO, LEARNED REPRESENTATI VE FOR THE ASSESSEE FURTHER POINTED OUT THAT THE IMPUGNED ORDER OF THE CIT (A) WAS FOLLOWED IN THE CASE OF SHRI AGRIGOLD FARMS LTD. BY THE CIT (A) AND DELETED THE SIMILAR PENALTY LEVIED BY THE ASSESSING OFFI CER ON IDENTICAL FACTS. M/S AGRIGOLD FARMS LTD FILED APPEALS BEFORE THE V ISAKHAPATNAM BENCH OF ITAT IN ITA NOS. 414 TO 420/VIZ/2009.THE VISA KHAPATNAM 6 BENCH OF THE TRIBUNAL EXAMINED THE VERY SAME IMPUGNED ORDER OF THE CIT (A) AND FOUND THAT THERE WAS NO CONCEALMENT OF INC OME ON THE PART OF THE ASSESSEE. IT WAS ALSO FOUND THAT THE ASSESSEE HAS NOT FURNISHED ANY INACCURATE PARTICULARS. THE VISAKHAPATNAM BENCH OF ITAT AFTER CONSIDERING THE CASE LAWS ON THE SUBJECT CONFIRM ED THE IDENTICAL ORDER OF THE CIT (A). THE ASSESSEE HAS ALSO FILE D THE COPY OF THE ORDER OF THE VISAKHAPATNAM BENCH OF THE TRIBUNAL . THE LEARNED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT THE SHOW CAU SE NOTICE AND REPLY ARE ONE AND THE SAME FOR BOTH COMPANIES. THE ASSESSING OFFICER LEVIED PENALTY ON BOTH THE COMPANIES ON VERY S AME REASONS. THE CIT (A) DELETED THE PENALTY IN BOTH THE CASES. IN THE CASE OF SHRI AGRI GOLD FARMS LTD.,THE VISAKHAPATNAM BENCH OF THE T RIBUNAL CONFIRMED IDENTICAL ORDER OF CIT (A). THEREFORE THE LEARNED REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE CONCLUS ION REACHED BY THE VISAKHAPATNAM BENCH OF ITAT IS BINDING ON THIS B ENCH. THE LEARNED REPRESENTATIVE HAS ALSO PLACED RELIANCE ON VAR IOUS CASE LAWS INCLUDING THE JUDGEMENT OF THE APEX COURT IN SUDARSHA N SILKS AND SAREES 2008 (300) ITR 205. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SI DE AND ALSO PERUSED THE MATERIALS ON RECORD. ADMITTEDLY THERE WAS A SEARCH AND SEIZURE OPERATION IN THE PREMISES OF THE ASSESSEE AS WELL A S M/S AGRIGOLD FARMS LTD., WHICH IS ALSO A GROUP COMPANY. SEA RCH AND SEIZURE OPERATION WERE ALSO CARRIED OUT IN THE RESIDENCE OF THE DIRECTOR AND OTHER PERSONS CONNECTED WITH THE GROUP COMPANY. DUR ING THE COURSE OF SEARCH OPERATION THE REVENUE AUTHORITIES CLAIM ED THAT THEY HAVE UNEARTHED CERTAIN INCRIMINATING DOCUMENTS. DURING THE COURSE OF THE ASSESSMENT PROCEEDING THE ASSESSING OFFICER EXAMINED THE BILLS AND VOUCHERS PRODUCED BY THE ASSESSEE. THE ASSESSING OFFICER F OUND 7 THAT THE BILLS AND VOUCHERS PRODUCED BY THE ASSESSEE WAS NOT VERIFIABLE SINCE THE ASSESSEE HAS NOT MAINTAINED PROPER BI LLS/VOUCHERS FOR PAYMENT OF MARKETING DEVELOPMENT, BUSINESS PROMOT ION AND OTHER EXPENDITURE. ACCORDINGLY THE ASSESSING OFFICER ISSUED A SHO W CAUSE NOTICE DATED 12-12-2007 BOTH TO THE ASSESSEE AS WELL AS M /S AGRIGOLD FARM LTD., IN FACT THE ASSESSING OFFICER HAS ISSUED ONLY ONE SHOW CAUSE NOTICE ADDRESSED TO BOTH THE COMPANY NAMELY THE ASSE SSEE COMPANY AND AGRI GOLD FARMS LTD., IN THE SHOW CAUSE NOT ICE, AFTER EXTRACTING THE STATEMENT RECORDED DURING THE COURSE OF SE ARCH OPERATION THE ASSESSING OFFICER OBSERVED THAT NO MECHANISM WAS EVOLVED TO IDENTIFY THE INCOME COMPONENT. THEREFORE, THE ASSESSING OFFICER PROPOSED TO ESTIMATE THE PROFIT AT 8% OF THE T OTAL FUNDS MOBILIZED DURING THE ASSESSMENT YEARS UNDER CONSIDERATION. THE ASSESSEE BY REPLY DATED 27-12-2007 EXPLAINED THE METHOD OF ACCOUNTING FOLLOWED BY THE ASSESSEE HOWEVER EXPRESSED NO O BJECTION FOR ESTIMATING THE PROFIT OF BOTH THE COMPANIES AT 5% INSTEAD OF 8% AS PROPOSED. THE QUESTION ARISES FOR THE CONSIDERATION IS WHE THER THERE WAS ANY CONCEALMENT OF INCOME ON THE PART OF THE ASSESSEE F OR THE ASSESSMENT YEARS UNDER CONSIDERATION OR WHETHER THE A SSESSEE HAS FURNISHED INACCURATE PARTICULARS OF THE INCOME ESPECIALLY WHEN IT EXPRESSED NO OBJECTION FOR ESTIMATING THE PROFIT AT 5% INSTEAD OF 8% AS PROPOSED BY THE ASSESSING OFFICER. 9. THE CIT (A) AFTER EXAMINING THE FACTS OF THE CASE FO UND THAT NO MATERIAL WAS FOUND DURING THE COURSE OF SEARCH OPERATION TO SHOW THAT THE ASSESSEE SUPPRESSED ANY PART OF THE INCOME OR INFLATED THE EXPENDITURE. THE ONLY DEFECT POINTED OUT BY THE ASSESSIN G OFFICER IS METHOD OF ACCOUNTING ADOPTED BY THE ASSESSEE FOR REVENUE RECOGNITION. CIT (A) FURTHER FOUND THAT THE METHOD O F ACCOUNTING 8 FOLLOWED BY THE ASSESSEE WAS FOLLOWED CONSTANTLY SINCE DAY ONE AND IT WAS ALSO ACCEPTED BY THE DEPARTMENT BEFORE THE SEARCH. T HEREFORE THE METHOD OF ACCOUNTING FOLLOWED BY THE ASSESSEE CANNOT BE DO UBTED AT THIS STAGE. THE CIT (A) FURTHER FOUND THAT TEAM OF I NSPECTORS DEPUTED BY ASSESSING OFFICER FOUND NO ERROR IN THE BILLS/VOUCHER S. ACCORDINGLY THE CIT (A) DELETED THE PENALTY. THE CIT (A) BY FOL LOWING THE VERY REASONS, DELETED THE PENALTY IMPOSED ON THE GROUP CONCER N VIZ., AGRI GOLD FARMS LTD., THE DEPARTMENT CHALLENGED THE ORDER OF CIT (A) BEFORE THE VISAKHAPATNAM BENCH OF THE TRIBUNAL. THE V ISAKHAPATNAM BENCH OF THE TRIBUNAL CONFIRMED THE ORDER OF THE CIT (A) IN ITA 414 TO 420/VIZAG/2009 DATED 30-04-2010. IN VIEW OF THE DECI SION OF THE COORDINATE BENCH OF VISAKHAPATNAM BENCH, IN OUR OPINIO N, THE APPEAL OF THE REVENUE HAS NO MERIT AT ALL. 10. PENALTY CAN BE LEVIED U/S 271 (1) ( C) PROVIDED TH ERE WAS A CONCEALMENT OF INCOME OR ASSESSEE HAS FURNISHED ANY INACCURAT E PARTICULARS OF INCOME. IN THE CASE BEFORE US DURING THE CO URSE OF SEARCH OPERATION THE REVENUE CLAIMS THAT THEY UNEARTHE D CERTAIN INCRIMINATING MATERIALS. AS RIGHTLY OBSERVED BY THE CI T (A) THAT NO INCRIMINATING MATERIAL WAS FOUND TO SHOW THAT THE ASSESSEE HAS SUPPRESSED ANY PART OF THE RECEIPT OR INFLATED ANY EXPE NDITURE. THE ASSESSING OFFICER FOUND FAULT WITH THE ASSESSEE IN FOLLOWING A PARTICULAR METHOD OF ACCOUNTING. THIS PARTICULAR METHOD OF ACCOUNTI NG WAS ADMITTEDLY FOLLOWED BY THE ASSESSEE CONSISTENTLY FROM THE DAY ONE OF ITS BUSINESS. THEREFORE, WE DO NOT FIND ANY JUSTIFICATIO N ON THE PART OF THE ASSESSING OFFICER TO FOUND FAULT WITH THE ASSESSEE IN F OLLOWING THE VERY SAME METHOD OF ACCOUNTING FOR REVENUE RECOGNITION. MOREOVER IT IS NOT THE CASE OF THE REVENUE THAT THE ASSESSEE WAS NOT MA INTAINING BILLS/VOUCHERS. THE ASSESSING OFFICER APPEARS TO HAVE DOUB TED THE 9 EXPENDITURE MERELY BECAUSE IT WAS PAID IN CASH. AS RIGHTL Y POINTED OUT BY THE CIT (A) THE INSPECTORS DEPUTED BY THE ASSESSING OFF ICER TO VERIFY THE BILLS/VOUCHERS COULD NOT FOUND ANY ERROR. THE ASSESSEE 'S BUSINESS, ADMITTEDLY INVOLVE A CHAIN OF 12 LEVELS AND SPREAD OV ER IN THE STATE OF ANDHRA PRADESH, KARNATAKA, TAMIL NADU AND ORISSA. THER EFORE, THERE MAY BE SOME JUSTIFICATION IN THE EXPLANATION OF THE A SSESSEE, THAT DUE TO VOLUMINOUS BILLS/VOUCHERS IT COULD NOT BE VERIFIED. MERELY BECAUSE THE PROFIT WAS ESTIMATED THERE CANNOT BE ANY PRESUMPTIO N THAT THERE WAS A CONCEALMENT OF INCOME ESPECIALLY WHEN THE ASSESSEE WAS MAINTAINING THE BOOKS OF ACCOUNTS, BILLS AND VOUCHERS. A DMITTEDLY THE ASSESSEE PRODUCED BILLS/VOUCHERS BEFORE THE ASSESSING OFFICER FOR VERIFICATION. THE ASSESSEE HAS ALSO EXPLAINED BEFORE THE A SSESSING OFFICER THAT DUE TO VOLUMINOUS TRANSACTIONS THAT THE ENT IRE BILLS AND VOUCHERS COULD NOT BE VERIFIED AT ALL AND IT IS ALSO NOT PRACTICALLY POSSIBLE TO FURNISH THE ENTIRE BILL FOR VERIFICATION. I T DOES NOT MEAN THAT THE ASSESSEE HAS NOT MAINTAINED ANY BILLS AND VOUCHERS. SIN CE THERE ARE CERTAIN DEFECTS IN THE BILLS AND VOUCHERS AND SOME O F THE BILLS COULD NOT BE VERIFIABLE THE PROFIT HAS TO BE ESTIMATED ON T HE BASIS OF THE MATERIAL AVAILABLE ON RECORD. THOUGH THE ASSESSING OFFICE R PROPOSED TO ESTIMATE THE PROFIT AT 8% ULTIMATELY THE ASSESSING OFFICE R AGREED WITH THE ASSESSEE TO ESTIMATE THE PROFIT AT 5% OF THE GROSS RECE IPTS. AS POINTED OUT BY THE LEARNED REPRESENTATIVE FOR THE A SSESSEE THAT FOR THE ASSESSMENT YEAR 2003-04 THE ASSESSEE ITSELF RETURNED TH E INCOME AT RS.3.78 CORES. HOWEVER, THE ASSESSING OFFICER ASSESSED THE INCOME AT RS.1,95,81,610/- AFTER ESTIMATING THE PROFIT AT 5% OF THE GROSS RECEIPTS. IF THAT IS SO, WHERE IS THE CONCEALMENT ? MEREL Y BECAUSE BILLS AND VOUCHERS COULD NOT BE VERIFIED, THE PROFIT WAS ASSESSE D ON ESTIMATION BASIS. THEREFORE, IT IS NOT A CASE OF CONCEALM ENT OF INCOME. IT MAY BE A CASE OF NON MAINTENANCE OF PROPER BILLS AND VOUCHERS FOR 10 VERIFICATION. THEREFORE, THERE MAY BE A JUSTIFICATION FOR ESTIMATING THE PROFIT, HOWEVER, WE DO NOT FOUND ANY REASON TO HOLD THAT THE ASSESSEE CONCEALED ANY PART OF THE INCOME. WHEN THE ASSESSING OFFI CER ESTIMATED THE INCOME LESS THAN THE RETURN INCOME FOR TH E ONE ASSESSMENT YEAR, HE CANNOT MAKE ANY ALLEGATION THAT THE ASSESSEE HAS CONCEALED ANY PART OF THE INCOME FOR THE REST OF THE ASSE SSMENT YEARS. THEREFORE, IN OUR OPINION THE CIT (A) HAS RIGHTLY DE LETED THE PENALTY IMPOSED BY THE ASSESSING OFFICER FOR ALL THE ASSESSMENT YEA RS. 11. WE HAVE ALSO GONE THROUGH THE DECISION OF THE VIS AKHAPATNAM BENCH OF THE TRIBUNAL IN THE CASE OF AGRI GOLD FARMS LT D., IN ITA NOS. 414 TO 420/VIZ/2009 DATED 30-4-2010. THE VISAKHAPATN AM BENCH OF THE TRIBUNAL EXAMINED THE VERY SAME ORDER OF THE CIT (A) WHICH IMPUGNED BEFORE THIS TRIBUNAL AND FOUND THAT THE ASSESSE E HAS DISCLOSED ALL THE FACTS BEFORE THE ASSESSING OFFICER AND ACCOUN TED FOR ALL THE RELEVANT RECEIPTS AND EXPENDITURE IN THE BOOK S OF ACCOUNTS. THEREFORE, THE ACTION OF THE ASSESSEE CANNOT BE TERMED AS NEITHER CONCEALMENT OF INCOME NOR FURNISHING OF INACCURATE PARTI CULARS. SINCE THE COORDINATE BENCH OF THE TRIBUNAL AT VISAKHAPATNAM EXAMINED THE VERY SAME ORDER OF THE CIT (A) AND FOUND THAT THERE WAS NO CONCEALMENT, IN OUR OPINION THE DECISION TAKEN BY THE COORDINATE BENCH AT VISAKHAPATNAM IS BINDING ON US. THEREFORE, FOR THE REASONS CITED BY THE VISAKHAPATNAM BENCH OF THE TRIBUNAL IN T HE CASE OF AGRIGOLD FARMS LTD., THE PENALTY HAS TO BE DELETED. 12. WE ALSO CAREFULLY GONE THROUGH THE JUDGMENT OF TH E KERALA HIGH COURT IN THE CASE OF D.K. B. & CO.(SUPRA). IN THE CASE BEFORE THE KERALA HIGH COURT THERE WAS SEARCH IN THE ASSESSEE FARM AND THE RESIDENCE OF THE PARTNERS. FOUR OF THE PARTNERS INDICATE D THAT THEY ARE 11 AGREEING FOR ADDITION OF 41 LAKHS PROVIDED PENAL PRO VISIONS WERE NOT APPLIED. HOWEVER, AT THE INSTANCE OF THE ASSESSING OFFICER A REVISED RETURN WAS FILED DISCLOSING 41 LAKHS AS ADDITIONAL PROFI T. THE ASSESSING OFFICER COMPLETED THE ASSESSMENT ON THE BASIS OF THE REVISED RETURN AND INITIATED THE PENALTY PROCEEDINGS. ON THESE FACTS A ND CIRCUMSTANCES, THE KERALA HIGH COURT AFTER EXAMINING THE DOCTRINE OF PROMISSORY ESTOPPELS FOUND THAT THERE CANNOT BE ANY EST OPPELS AGAINST THE STATUTE. ULTIMATELY THE KERALA HIGH COURT REMAND ED THE MATTER TO THE TRIBUNAL FOR CONSIDERATION OF THE EXPLANATION OF THE ASSESSEE. THEREFORE THIS JUDGMENT OF THE KERALA HIGH COURT MAY NOT BE OF ANY ASSISTANCE TO THE REVENUE. 13. WE HAVE GONE THROUGH THE JUDGMENT OF THE KERALA HIGH COURT IN THE CASE OF ANAND LIQUORS (SUPRA). IN THE CASE BEFORE TH E KERALA HIGH COURT, THE ASSESSEE FIRM WAS AN ABKARI CONTRACTOR. THE ASSESSE E DEBITED VARIOUS EXPENDITURES SUCH AS COMMISSION, TRANSPORT EXPENSES ETC., HOWEVER, THE SAME WAS NOT SUPPORTED BY THE NECESSARY VOUCHERS. THE CASH CREDITS WERE FOUND IN THE NAME OF 18 P ERSONS WHO WERE PARTNERS OF THE ASSESSEE. HOWEVER, THE ASSESSEE COULD NOT EXPLAIN THE SOURCE OF THE CREDITS INSPITE OF SEVERAL OPPO RTUNITIES. ACCORDING TO THE ASSESSING OFFICER MADE THE ADDITION AND A LSO LEVIED THE PENALTY U/S 271(1) (C ) OF THE ACT. THE KERALA HI GH COURT AFTER EXAMINING THE PROVISIONS OF SEC.271 (1) (C ) OF THE ACT, FOUND THAT THAT THE TRIBUNAL DELETED THE PENALTY ON THE GROUND THAT THERE WAS AN UNDERSTANDING BETWEEN THE ASSESSEE AND THE DEPARTMENT FO R NOT LEVYING THE PENALTY. AFTER GOING THROUGH THE CONTENT S OF THE LETTER DATED 04-07-1983, THE KERALA HIGH COURT FOUND THAT T HERE WAS NO SEMBLANCE OF AN UNDERSTANDING MUCH LESS AN AGREEMENT BET WEEN THE ASSESSEE AND THE DEPARTMENT. THE KERALA HIGH COURT FOUN D THAT THERE 12 WAS NO MATERIAL TO SUPPORT THE CASH CREDITS AND BECAUSE O F NON COOPERATION OF THE ASSESSEE IN THE PROCESS OF ASSESSMENT THE AD DITION WAS MADE. THEREFORE, THE KERALA HIGH COURT FOUND THAT THE ASSESSING OFFICER HAS RIGHTLY LEVIED THE PENALTY U/S 271 (1) (C ) OF THE ACT. IN THE CASE BEFORE US THE FACTS ARE ENTIRELY DIFFERENT. THE PRO FIT WAS ESTIMATED ON THE BASIS OF THE MATERIAL AVAILABLE ON RECORD. THER EFORE THIS JUDGMENT OF THE KERALA HIGH COURT, IN OUR OPINION, M AY NOT BE OF ANY ASSISTANCE TO THE REVENUE. 14. WE HAVE CAREFULLY GONE THROUGH THE MADRAS HIGH COU RT IN THE CASE OF RATHNAM AND CO (SUPRA). IN THE CASE BEFORE THE MADRAS HIGH COURT THE ASSESSEE FIRM WAS CARRYING ON BUSINESS AS BUILDING CONTRACTOR AND DEALERS IN TYRES. THE ASSESSING OFFICER MADE ADDITION FOR BOGUS HUNDI CREDITS AND LOW DRAWINGS ON AGREED BASI S. THE ASSESSING OFFICER LEVIED THE PENALTY U/S 271(1) (C ) OF T HE ACT. IN THOSE FACTUAL SITUATION THE MADRAS HIGH COURT FOUND THAT ONCE THE DELIBERATE CONCEALMENT IS FOUND, SEC.271 (1) (C ) OF THE ACT WILL S TAND ATTRACTED AND ITS APPLICABILITY DOES NOT DEPEND UPON CONSENT OR O THERWISE OF THE ASSESSEE. IN THE CASE BEFORE US IT IS NOT THE CASE OF THE RE VENUE THAT THERE WAS ANY SPECIFIC ADDITION WAS MADE. THE EXPLANATI ON OF THE ASSESSEE WAS THAT DUE TO VOLUMINOUS VOUCHERS IT COULD NOT B E PRODUCED FOR VERIFICATION. ACCORDINGLY, A TEAM OF INSP ECTORS DEPUTED BY THE ASSESSING OFFICER. THEREFORE, IN OUR OPINION, THIS JU DGMENT OF THE MADRAS HIGH COURT MAY NOT BE OF ANY ASSISTANCE TO THE REV ENUE. 15. WE HAVE ALSO CAREFULLY GONE THROUGH THE JUDGMENT OF THE MADRAS HIGH COURT IN THE CASE OF S. KRISHNA SWAMY & SONS (SUPRA ). THE ASSESSEE BEFORE THE MADRAS HIGH COURT WAS DOING TRANSPORT BUSINESS. THERE WAS A SEARCH IN THE PREMISES OF THE ASSESSEE AND THE REVENUE 13 AUTHORITIES FOUND TRIP SEATS WHICH SHOWED SUPPRESSION OF T HE COLLECTION FROM BUSES FOR 33 DAYS FOR THE ASSESSMENT YEAR 1979-80 AND FOR 54 DAYS FOR THE ASSESSMENT YEAR 1980-81. THE ASSESSEE ADMIT TED THE SUPPRESSION AND FILED THE RETURN FOR THOSE TWO YEARS. IN THOSE FACTS OF THE SITUATION, THE ASSESSING OFFICER LEVIED THE PENALTY U /S 271 (1) (C) OF THE ACT. THE MADRAS HIGH COURT FOUND THAT THOUGH TH ERE WAS AGREED ADDITION ON THE BASIS OF THE MATERIAL FOUND DURING TH E SEARCH OPERATION, THE SETTLEMENT SAID TO BE ARRIVED BETWEEN THE ASSESSEE AND THE COMMISSIONER AMOUNTS TO PLEADING OF ESTOPPELS AGAI NST A STATUTE AND SUCH ESTOPPELS CANNOT BE PRESSED INTO SERVICE AGAINST T HE TERMS OF THE STATUE. THE FACTS ARE ENTIRELY DIFFERENT IN THE CASE BEFORE US. THEREFORE, THIS JUDGMENT OF THE MADRAS HIGH COURT IN T HE CASE OF S. KRISHNA SWAMY & SONS (SUPRA) ALSO MAY NOT BE OF ANY ASSI STANCE TO THE REVENUE. 16. WE HAVE CAREFULLY GONE THROUGH THE JUDGMENT OF A LLAHABAD HIGH COURT IN LAXMI INDUSTRIES AND COLD STORAGE CO. LTD.,( SUPRA). IN THE CASE BEFORE THE ALLAHABAD HIGH COURT, A SUM OF RS.41,500 /- WAS ADDED ON ACCOUNT OF UNEXPLAINED CASH CREDITS AND RS.50,000/- WA S ADDED ON ACCOUNT OF UNEXPLAINED RAW MATERIAL. IN THOSE FACTS OF THE SITUATION, THE ALLAHABAD HIGH COURT HELD THAT THE ASSESSING OFFICER HAS RIGHTLY LEVIED THE PENALTY FOR CONCEALMENT OF INCOME SINCE THE A SSESSEE COULD NOT PROPERLY EXPLAIN THE CASH CREDITS AND THE RAW MATE RIAL. IN THE CASE BEFORE US IT IS NOT THE CASE OF THE REVENUE THAT THEY H AVE FOUND ANY SPECIFIC INCOME WHICH WAS CONCEALED BY THE ASSESSEE. THEREFORE, THIS JUDGMENT OF THE ALLAHABAD HIGH COURT IS NOT APPLICABLE TO THE FACTS OF THE CASE. 14 17. WE HAVE ALSO CAREFULLY GONE THROUGH THE DECISION OF THE AHMEDABAD BENCH OF THIS TRIBUNAL IN THE CASE OF KIRTI D AYABAI PATEL (SUPRA). THE CASE BEFORE THE AHMEDABAD BENCH OF THIS TR IBUNAL WAS THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF THE LAND DEVELOPMENT. DURING THE COURSE OF THE SEARCH OPERATION, THE REVENUE FOUND INCRIMINATING MATERIAL AND THE RETURN FILED BY THE A SSESSEE U/S 153A WAS ACCEPTED BY THE ASSESSING OFFICER. SIMULTANEOUSLY THE ASSE SSING OFFICER INITIATED PENALTY PROCEEDING U/S 271(1) (C ) OF THE ACT. THE ASSESSEE CLAIMED THAT THE CONFESSION WAS MADE U/S 132 AND T AXES WERE ALSO PAID. THEREFORE, NO PENALTY COULD BE LEVIED IN VIEW OF THE EXPLANATION 5 (2) OF THE SEC. 271(1) C OF THE ACT. HO WEVER, THE ASSESSING OFFICER LEVIED PENALTY ON APPEAL BY THE ASSESSEE T HE CIT (A) DELETED THE PENALTY. ON FURTHER APPEAL BY THE REVEN UE BEFORE THE TRIBUNAL THERE WAS A DIFFERENCE OF OPINION BETWEEN TH E MEMBERS OF THE BENCH. BY MAJORITY OPINION THE TRIBUNAL FOUND THAT I N THE CASE BELONGING TO THE VERY SAME GROUP OF THE ASSESSEE AFTER R EFERRING TO THE JUDGMENT OF THE MADRAS HIGH COURT IN THE CASE OF CIT VS. S.D.V.CHANDRU 2006, 266 ITR 175 FOUND THAT THE IMMU NITY UNDER EXPLANATION 5(2) OF THE SECTION 271(1)C IS NOT AVAILA BLE TO THE ASSESSEE. THEREFORE, IT WAS FOUND THAT JUDICIAL DISCIPLINE REQUIRES THAT THE TRIBUNAL COULD NOT DEVIATE THE VIEW TAKEN IN THE ASSESSEE'S GROUP CASE. IN THE CASE BEFORE US IT IS NOT THE CASE OF THE REVEN UE THAT ANY STATEMENT WAS MADE U/S 132(4) OF THE IT ACT. IT IS ALSO NOT THE CASE OF THE ASSESSEE THAT IT IS CLAIMING IMMUNITY AS PROVIDED UND ER EXPLANATION 5(2) OF THE SEC.271(1)C OF THE ACT. FURTH ERMORE VISAKHAPATNAM BENCH OF THIS TRIBUNAL IN THE ASSESSEE'S GR OUP COMPANY ON IDENTICAL SET OF FACTS DELETED THE PENALTY. THEREFORE, AS FOUND BY THE MAJORITY DECISION OF THE AHMEDABAD BENCH OF THE TRIBUNAL, JUDICIAL DISCIPLINE REQUIRES TO FOLLOW THE D ECISION OF THE 15 VISAKHAPATNAM BENCH OF THIS TRIBUNAL IN THE ASSESSEE OWN G ROUP CASE. THEREFORE, THIS DECISION OF THE AHMEDABAD TRIBUNAL DOE S NOT SUPPORT THE CASE OF THE REVENUE. IN OUR OPINION, IT SUPPORTS TH E CASE OF THE ASSESSEE. 18. IN VIEW OF THE ABOVE DISCUSSION, BY FOLLOWING THE DECISION OF THE VISAKHAPATNAM BENCH OF THE TRIBUNAL IN THE ASSESSEE'S GRO UP COMPANY, IN THE CASE OF M/S AGRIGOLD FARM LTD AND FOR T HE REASONS STATED THEREON WE UPHOLD THE ORDERS OF THE CIT (A). 19. IN THE RESULT ALL THE APPEALS OF THE REVENUE STAND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 25.6.2010. SD/- SD/- (CHANDRA POOJARI) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER PVV/SPS 25-6-2010 COPY TO 1. THE DY.COMMISSIONER OF INCOME TAX CIRCLE-1(1) 4TH FLOO R, AAYKAR BHAVA, HYDERABAD 2. M/S AGRIGOLD FARM ESTATES (INDIA) (P) LTD., 6-3-668/10 /4, DURGANAGAR COLONY, PUNJAGUTTA, HYDERABAD 3. THE COMMISSIONER OF INCOME TAX (APPEALS) III HYDERABAD 4. THE COMMISSIONER OF INCOME TAX (CENTRAL), HYDERABAD 5. DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD