The ADIT.,(Intl.Taxn.), Ahmedabad V. The Niko Resources Ltd., Baroda

ITA 1605/AHD/2009

• Counselvise Citation: 160520514 RSA 2009
• Duration Of Justice: 2 year(s) 5 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 19-10-2011
• Assessment Year: 2000-2001
• Appeal Filed On: 18-05-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ALOK JOHRI
• Assessee Lawyers: VISPI T PATEL; RAJESH ATHAVALE ARS
• Keywords: Gift; Depreciation; Opportunity of being heard; Capital expenditure
• Section: 143(3); 260A; 147; 148

Judgement Text

- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH B AHMEDABAD BEFORE S/SHRI D.K.TYAGI, JM AND A. MOHAN ALANKAMONY , AM. ASSTT. DIRECTOR OF INCOME-TAX(INTL.TAXN.), AHMEDABAD. VS. NIKO RESOURCES LTD., 4 TH FLOOR, LANDMARK, RACE COURSE CIRCLE, BARODA. (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI ALOK JOHRI, CIT, DR RESPONDENT BY:- S/SHRI VISPI T. PATEL AND RAJESH ATHAVALE, ARS DATE OF HEARING : 19/10/2011 DATE OF PRONOUNCEMENT : 31/10/2011 O R D E R PER D. K. TYAGI, JUDICIAL MEMBER . THESE THREE APPEALS ARE FILED BY THE REVENUE AGAIN ST SEPARATE ORDERS OF LD. CIT(A) XXI, AHMEDABAD OF EVEN DATE 0 2.02.2009. SINCE THE APPEALS PERTAIN TO THE SAME ASSESSEE AND THE GR OUNDS RAISED IN THESE APPEALS ARE COMMON, THESE WERE HEARD TOGETHER AND A RE BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. ITA NO.1605/AHD/2009 ASST. YEAR 2000-01 2. GROUNDS RAISED IN THIS APPEAL ARE AS UNDER :- (1) THE LD. CIT(A)-XXI, AHMEDABAD HAS ERRED IN LAW IN N OT GIVING THE OPPORTUNITY OF BEING HEARD TO THE AO AS REQUIRE D U/S 250 OF ITA NOS.1605 TO 1607/AHD/2009 ASST. YEARS :2000-01, 2002-03 & 2003-04 ITA NOS.1605 TO 1607/AHD/2009 ASST. YEARS 2000-01, 2002-03 & 2003-04 2 IT ACT. IT IS REQUESTED THAT THE DECISION OF LD. CI T(A) OUGHT TO BE SET ASIDE AND RESTORED BACK TO THE FILE OF CIT(A ) TO ADJUDICATE AFTER GIVING OPPORTUNITY TO THE AO AS REQUIRED UNDE R THE LAW. (2) THE LD. CIT(A)-XXI, AHMEDABAD HAS ERRED IN LAW IN H OLDING THAT THE DEPRECIATION ON OPENING BLOCK OF ASSETS SH OULD ALSO BE REDUCED WHILE COMPUTING THE INCOME IN RESPECT OF WH ICH ASSESSEE HAS FURNISHED INACCURATE PARTICULARS IN RE SPECT OF CLAIM OF DEDUCTION U/S 42 OF IT ACT. ITA NO.1606/AHD/2009 ASST. YEAR 2002-03 3. FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEA L :- (1) THE LD. CIT(A)-XXI, AHMEDABAD HAS ERRED IN LAW IN N OT GIVING THE OPPORTUNITY OF BEING HEARD TO THE AO AS REQUIRE D U/S 250 OF IT ACT. IT IS REQUESTED THAT THE DECISION OF LD. CI T(A) OUGHT TO BE SET ASIDE AND RESTORED BACK TO THE FILE OF CIT(A ) TO ADJUDICATE AFTER GIVING OPPORTUNITY TO THE AO AS REQUIRED UNDE R THE LAW. (2) THE LD. CIT(A)-XXI, AHMEDABAD HAS ERRED IN LAW IN H OLDING THAT THE DEPRECIATION ON OPENING BLOCK OF ASSETS SH OULD ALSO BE REDUCED WHILE COMPUTING THE INCOME IN RESPECT OF WH ICH ASSESSEE HAS FURNISHED INACCURATE PARTICULARS IN RE SPECT OF CLAIM OF DEDUCTION U/S 42 OF IT ACT. (3) THE LD. CIT(A) HAS ERRED IN LAW IN DIRECTING TO GIV E EFFECT TO THE ITATS ORDER WHICH IS RECEIVED ONLY AFTER PASSING T HE PENALTY ORDER DATED 10/11/2008. ITA NO.1607/AHD/2009 ASST. YEAR 2003-04 4. REVENUE HAS RAISED FOLLOWING GROUNDS IN THIS APP EAL :- (1) THE LD. CIT(A)-XXI, AHMEDABAD HAS ERRED IN LAW IN N OT GIVING THE OPPORTUNITY OF BEING HEARD TO THE AO AS REQUIRED U/ S 250 OF IT ACT. IT IS REQUESTED THAT THE DECISION OF LD. CIT(A) OUG HT TO BE SET ASIDE AND RESTORED BACK TO THE FILE OF CIT(A) TO ADJUDICA TE AFTER GIVING OPPORTUNITY TO THE AO AS REQUIRED UNDER THE LAW. (2) THE LD. CIT(A)-XXI, AHMEDABAD HAS ERRED IN LAW IN H OLDING THAT NO PENALTY SHOULD BE LEVIED U/S 271(1)(C) IF THE TA X LIABILITY AS PER ITA NOS.1605 TO 1607/AHD/2009 ASST. YEARS 2000-01, 2002-03 & 2003-04 3 RETURN OF INCOME AND ORDER GIVING EFFECT TO CIT(A)/ ITATS REMAINS THE SAME DUE TO PROVISIONS OF MAT. (3) THE LD. CIT(A)-XXI, AHMEDABAD HAS ERRED IN LAW IN H OLDING THAT THE DEPRECIATION ON OPENING BLOCK OF ASSETS SHOULD ALSO BE REDUCED WHILE COMPUTING THE INCOME IN RESPECT OF WHICH ASSE SSEE HAS FURNISHED INACCURATE PARTICULARS IN RESPECT OF CLAI M OF DEDUCTION U/S 42 OF IT ACT. 5. WE FIRST TAKE UP THE APPEAL IN ITA NO.1605/AHD/2 009 FOR ASST. YEAR 2000-01. BRIEF FACTS OF THE CASE AS THEY EMERG E FROM THE ORDER OF LD. CIT(A) ARE THAT ASSESSEE IS A COMPANY INCORPORATED IN CANADA IS ENGAGED IN THE BUSINESS OF OIL AND NATURAL GAS EXPLORATION. THE ASSESSEE IS A TAX RESIDENT OF CANADA AND IS ELIGIBLE FOR THE BENEFITS OF THE AGREEMENT BETWEEN THE GOVERNMENT OF INDIA AND THE GOVERNMENT OF CANADA FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME AND ON CAPITAL. 5.1 THE ASSESSEE ENTERED INTO A JOINT VENTURE WITH GUJARAT STATE PETROLEUM CORPORATION LTD. (GSPCL) FOR THE EXPLORAT ION AND DEVELOPMENT OF NATURAL GAS AND OIL FIELDS IN INDIA. NIKO-GSPCL, JV ENTERED INTO A PRODUCTION-SHARING CONTRACTS WITH T HE GOVERNMENT OF INDIA ON SEPTEMBER 23,1994 FOR THE EXPLORATION AND DEVELO PMENT OF FIVE DESIGNATED NATURAL GAS AND OIL FIELDS IN GUJARAT. T HE ASSESSEE WAS PERMITTED BY THE RESERVE BANK OF INDIA TO SET UP A PROJECT OFFICE IN INDIA WITH EFFECT FROM AUGUST 14, 1994. 5.2 THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE YEAR UNDER APPEAL ON NOVEMBER 27, 2000. THE AO COMPLETED THE REGULAR ASS ESSMENT UNDER SECTION 143(3) OF THE ACT VIDE ORDER DATED 26.02.20 03. AS AGAINST THE RETURNED INCOME OF RS.1,37,99,468/- COMPUTED UNDER THE REGULAR PROVISIONS OF THE ACT, THE ASSESSED INCOME WAS COMP UTED AT ITA NOS.1605 TO 1607/AHD/2009 ASST. YEARS 2000-01, 2002-03 & 2003-04 4 RS.1,47,26,220/- AFTER MAKING CERTAIN ADJUSTMENTS. TAX WAS, HOWEVER, CALCULATED BASED ON THE PROVISIONS OF SECTION 115JA OF THE ACT AS 30% OF THE BOOK PROFITS AMOUNTED TO RS.2,25,77,576/- WHICH WAS HIGHER THAN THE RETURNED INCOME AS WELL AS THE ASSESSED INCOME BASE D ON THE REGULAR PROVISIONS OF THE ACT. 5.3 SUBSEQUENTLY, THE AO INITIATED RE-ASSESSMENT PR OCEEDINGS THROUGH A NOTICE ISSUED UNDER SECTION 148 OF THE ACT ON THE BELIEF THAT THE ASSESSEE HAD CLAIMED DEDUCTION OF CAPITAL EXPENDITURE INCURR ED OTHER THAN USED ON EXPLORATION AND DRILLING UNDER SECTION 42 OF THE AC T. THE RE-ASSESSMENT WAS COMPLETED UNDER SECTION 147 R.W.S 143(3) OF THE ACT VIDE ORDER DATED MARCH 17,2005. 5.4 AGGRIEVED BY THIS ASSESSMENT ASSESSEE WENT IN A PPEAL BEFORE LD. CIT(A) WHO CONFIRMED THE ADDITION MADE BY THE AO. 5.5 ON THE BASIS OF INCOME DETERMINED CONSEQUENT TO THE ORDER PASSED BY THE LD. CIT(A) THE AO PASSED AN ORDER LEVYING PE NALTY UNDER SECTION 271(1)(C) R.W.S. 275 OF THE ACT ON THE ALLEGED TAX SOUGHT TO BE EVADED WHICH WAS PARTLY CONFIRMED BY THE LD. CIT(A). 5.6 FURTHER AGGRIEVED, THE ASSESSEE PREFERRED AN AP PEAL BEFORE THE TRIBUNAL AGAINST THE ORDER OF LD. CIT(A) AND THE TR IBUNAL PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. 5.7 ON THE BASIS OF INCOME DETERMINED CONSEQUENT TO THE ORDER PASSED BY THE TRIBUNAL IN QUANTUM APPEAL AND THE ORDER PAS SED BY CIT(A)IN PENALTY APPEAL, THE AO REVISED HIS ORIGINAL PENALTY ORDER U/S 271(1)(C) BY PASSING AN ORDER U/S 275(1A) R.W.S. 274 OF THE ACT CALCULATING THE REVISED PENALTY. ITA NOS.1605 TO 1607/AHD/2009 ASST. YEARS 2000-01, 2002-03 & 2003-04 5 5.8 AGGRIEVED BY THIS ORDER OF THE AO THE ASSESSEE WENT IN APPEAL BEFORE LD. CIT(A). 5.9 BEFORE LD. CIT(A) THE ASSESSEES CONTENTION WAS THAT WHILE CALCULATING THE PENALTY THE AO HAS IGNORED THE DEPR ECIATION ON OPENING BLOCK OF FIXED ASSETS IN RELATION TO DISALLOWANCE M ADE U/S 42 IN EARLIER YEARS. HAD THE AO CONSIDERED THE DEPRECIATION ON TH E OPENING BLOCK OF ASSETS, THE AMOUNT SOUGHT TO BE CONCEALED ON ACCOUN T OF DISALLOWANCE U/S 42 WOULD HAVE REDUCED FURTHER AND ACCORDINGLY THE P ENALTY WOULD HAVE REDUCED SUBSTANTIALLY. THEREFORE, IT WAS PRAYED THA T THE LD. AO BE DIRECTED TO CONSIDER THE DEPRECIATION ON THE OPENING BLOCK O F ASSET WHILE COMPUTING THE CONCEALED INCOME. THE WORKING OF AMOU NT SOUGHT TO BE CONCEALED ON ACCOUNT OF DISALLOWANCE U/S 42 AND PEN ALTY THEREON WERE ALSO SUBMITTED BEFORE THE LD. CIT(A). THUS WE SEE T HAT THE ASSESSEES SUBMISSIONS BEFORE LD. CIT(A) WAS THAT EVEN IF THE PENALTY WAS TO BE LEVIED, THE AO BE DIRECTED TO COMPUTE THE SAME AS P ER THE EXPLANATION 4(C) TO SECTION 271(1) OF THE ACT. THE LD. CIT(A) A LLOWED THE APPEAL OF THE ASSESSEE BY OBSERVING AS UNDER :- I HAVE CONSIDERED THE SUBMISSION OF THE APPELLANT. I FIND THAT THE AO HAS DETERMINED THE AMOUNT SOUGHT TO BE CONCEALED ON ACCOUNT OF DIS ALLOWANCE MADE U/S 42 AS UNDER :- DISALLOWANCE OF EXPENSES CLAIMED U/S 42 FOR THE YEA R 4,58,84,789 LESS :DEPRECIATION ON SUCH EXPENDITURE 48,86 ,224 ------- ------- 4,09,98 ,656 ====== == IT WAS ALSO BROUGHT TO MY NOTICE THAT THE CLAIM OF THE APPELLANT IN RESPECT OF DEDUCTION U/S 42 HAS BEEN SUBJECT MATTER OF DISALLOWANCE SINC E ASST. YEAR 1998-99 AND THEREFORE, IF ONE NEEDS TO FIND OUT THE AMOUNT SOUG HT TO BE CONCEALED ON ACCOUNT OF DISALLOWANCE U/S 42 OF THE ACT, THE EFFECT OF DISAL LOWANCE MADE U/S 42 AND DEPRECIATION THEREON HAVE TO BE CONSIDERED. I, THER EFORE, DIRECT THE AO TO CONSIDER THE EFFECT OF DISALLOWANCE MADE U/S 42 AND THE DEPRECIA TION ALLOWABLE IN RESPECT OF SUCH DIFFERENCE IN EACH YEAR. IN OTHER WORDS, FOR COMPUT ING DISALLOWANCE U/S 42 OF THE ACT ITA NOS.1605 TO 1607/AHD/2009 ASST. YEARS 2000-01, 2002-03 & 2003-04 6 FOR THE CURRENT ASST. YEAR THE DEPRECIATION ON OPEN ING BLOCK OF ASSETS AND THE ADDITIONS MADE DURING THE YEAR SHOULD BE REDUCED FR OM SUCH DISALLOWANCE. IN THE RESULT, THE APPEAL IS ALLOWED. AGGRIEVED BY THIS ORDER OF LD. CIT(A), THE REVENUE IS IN APPEAL BEFORE US. 6. AT THE TIME OF HEARING THE LD. COUNSEL OF THE AS SESSEE AT THE OUTSET SUBMITTED THAT THE APPEAL FILED BY THE REVENUE HAS BECOME INFRUCTUOUS AS IN VIEW OF THE DECISION OF HONBLE TRIBUNAL IN ITA NO.2475/AHD/2008 ASST. YEAR 2000-01 THE PENALTY IMPOSED BY THE AO AN D PARTLY SUSTAINED BY LD. CIT(A) HAS BEEN DELETED. SINCE THE PENALTY A S SUCH HAS BEEN DELETED BY THE HONBLE TRIBUNAL, THE QUESTION OF IT S RECALCULATION U/S 275(1A) DOES NOT ARISE. CONCLUDING HIS ARGUMENTS HE STATED THAT THE APPEAL FILED BY THE REVENUE MAY KINDLY BE DISMISSED AS INFRUCTUOUS. 7. THE LD. DR ON THE OTHER HAND, VEHEMENTLY ARGUED THAT SINCE THE AO HAS PASSED HIS ORDER U/S 275(1A) KEEPING IN VIEW TH E DECISION OF LD. CIT(A) IN PENALTY PROCEEDINGS AND HONBLE TRIBUNAL S ORDER IN QUANTUM APPEAL, THE SAME HAS MERGED WITH THE ORDER OF HONB LE TRIBUNAL AND SUBSEQUENTLY ORDER PASSED BY THE TRIBUNAL IN PENALT Y PROCEEDINGS U/S 271(1)(C) OF THE ACT HAS NO ENFORCING VALUE AND HE FURTHER SUBMITTED THAT IN PENALTY PROCEEDINGS THE TRIBUNAL HAS DELETED THE PENALTY BY PLACING RELIANCE ON THE DECISION OF HONBLE SUPREME COURT I N THE CASE OF CIT VS. RELIANE PETROPRODUCTS (P) LTD. 322 ITR 158 (SC) WHI LE IN SUBSEQUENT DECISION IN THE CASE OF GUJARAT STATE FINANCIAL SER VICES LTD. VS. ACIT (2010) 39 SOT 570 (AHD) AND IN THE CASE OF SHRI PRA MOD MITTAL, PROP. M/S GUPTA CONSTRUCTION CO. VS. ACIT IN ITA NO.884/D EL/08, ITA NO.2019/DEL/2009 & ITA NO.718/DEL/2010 ASST. YEAR 2 005-06 & 2006- 07 THE HONBLE TRIBUNAL, AHMEDABAD BENCH AND DELHI BENCH HAVE UPHELD THE ISSUE OF PENALTY IN FAVOUR OF THE REVENU E. ITA NOS.1605 TO 1607/AHD/2009 ASST. YEARS 2000-01, 2002-03 & 2003-04 7 7.1 IN THE LIGHT OF ABOVE, IN THE ORDER PASSED BY T HE TRIBUNAL, IT HAS NOT PROPERLY INTERPRETED THE CASE LAWS AND, THEREFORE, THE SAME MAY NOT BE FOLLOWED. HE ALSO RELIED ON THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF COMMISSIONER OF GIFT TAX VS. ARUNBHAI H ARGOVANDAS PATEL (2003) 264 ITR 586 (GUJ) AND SUBMITTED THAT IF THE VIEWS OF THE HONBLE SUPREME COURT EXPRESSED IN AN EARLIER DECISION ARE EXPLAINED IN A SUBSEQUENT DECISION OF THE HON. SUPREME COURT, THE EXPLANATION IN THE SUBSEQUENT DECISION WILL HAVE TO BE FOLLOWED BY THE HIGH COURT, EVEN IF THE SUBSEQUENT DECISION IS RENDERED BY A SMALLER BE NCH OF THE HON. SUPREME COURT. HE, THEREFORE, CONCLUDED HIS ARGUMEN T THAT THE ORDER PASSED BY LD. CIT(A) MAY KINDLY BE SET ASIDE AND TH AT OF AO BE RESTORED. 8. AFTER HEARING BOTH THE PARTIES AND PERUSING THE RECORD, WE FIND THAT THE AO IN THIS CASE IMPOSED PENALTY OF RS.5,64,53,0 64/- U/S 271(1)(C) OF THE ACT VIDE HIS ORDER DATED 27/6/2007. THIS ORDER WAS MODIFIED BY HIM ON 10/11/2008 U/S 275(1A) OF THE ACT BY REDUCING TH E PENALTY TO RS.2,67,50,182/- IN PURSUANCE OF HONBLE TRIBUNALS DECISION IN QUANTUM APPEAL AND LD. CIT(A)S ORDER IN PENALTY PROCEEDING S. AGAINST THIS ORDER PASSED BY THE AO U/S 275(1A) ASSESSEE WENT IN APPEA L BEFORE LD. CIT(A) WHO DIRECTED THE AO TO RECOMPUTE THE PENALTY. AGAIN ST THIS ORDER OF LD. CIT(A) THE REVENUE HAS FILED THIS APPEAL. WE FURTHE R FIND THAT THE PENALTY IMPOSED BY THE AO AND PARTLY SUSTAINED BY THE LD. C IT(A) HAS BEEN DELETED BY THE TRIBUNAL VIDE ITS ORDER IN ITA NO.24 75/AHD/2008 ASST. YEAR 2000-01 DATED 30.4.2010 BY OBSERVING AS UNDER :- 7. HAVING HEARD BOTH THE SIDES, WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. RECENTLY, THE HON'BLE SUPREME CO URT IN THE CASE OF CIT VS.- RELIANCE PETROPRODUCTS PVT. LTD. [2010] 322 IT R 158 (SC) HELD THAT MAKING INCORRECT CLAIM DOES NOT AMOUNT TO CONCEALME NT OF PARTICULARS OF INCOME. THE HEAD-NOTES OF THE SAID DECISION READS AS UNDER :- ITA NOS.1605 TO 1607/AHD/2009 ASST. YEARS 2000-01, 2002-03 & 2003-04 8 A GLANCE AT THE PROVISIONS OF SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961, SUGGESTS THAT IN ORDER TO BE COVERED BY IT, THERE HAS TO BE CONCEALMENT OF THE PARTICULARS OF THE INCOME OF THE ASSESSEE. SECONDLY, THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICULARS OF HIS INCOME. THE MEANING OF THE WORD PARTICULARS USED IN SECTION 271(1)(C) WOULD EMBRACE THE DETAILS OF THE CLAIM MA DE. WHERE NO INFORMATION GIVEN IN THE RETURN IS FOUND TO BE INCORRECT OR INACCURAT E, THE ASSESSEE CANNOT BE HELD GUILTY OF FURNISHING INACCURATE PARTICULARS. IN ORDER TO E XPOSE THE ASSESSEE TO PENALTY, UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION, THE PENALTY PROVISION CANNOT BE INVOKED. BY NO STRETCH OF IMAGINATION CAN MAKING AN INCORREC T CLAIM TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS. THERE CAN BE NO DISPUTE THA T EVERYTHING WOULD DEPEND UPON THE RETURN FILED BY THE ASSESSEE, BECAUSE THAT IS T HE ONLY DOCUMENT WHERE THE ASSESSEE CAN FURNISH THE PARTICULARS OF HIS INCOME. WHEN SUC H PARTICULARS ARE FOUND TO BE INACCURATE, THE LIABILITY WOULD ARISE. TO ATTRACT P ENALTY, THE DETAILS SUPPLIED IN THE RETURN MUST NOT BE ACCURATE, NOT EXACT OR CORRECT, NOT ACCORDING TO THE TRUTH OR ERRONEOUS. WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE THERE I S NO QUESTION OF INVITING THE PENALTY UNDER SECTION 271(1)(C). A MERE MAKING OF A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PA RTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CANNO T AMOUNT TO FURNISHING INACCURATE PARTICULARS. DECISION OF THE GUJARAT HIGH COURT AFFIRMED. 8. IT IS TRUE THAT IN QUANTUM PROCEEDINGS, DISALLOW ANCE OF EXPENDITURE CLAIMED UNDER SECTION 42 AS WELL AS DISALLOWANCE OF EXCESS DEPRECIATION ON LAND BASED DRILLING PLATFORM IS CONFIRMED RIGHT UPTO TRI BUNAL. IN THE ORIGINAL ASSESSMENT FRAMED BY THE ASSESSING OFFICER UNDER SE CTION 143(3) ON 26.02.2003, BOTH THE CLAIMS OF THE ASSESSEE WERE AL LOWED. THIS, IN OUR OPINION, IS SUFFICE TO HOLD THAT THE JUDGMENT OF TH E HON'BLE SUPREME COURT IN THE CASE OF CIT VS.- RELIANCE PETROPRODUCTS PVT. L TD. (SUPRA) IS SQUARELY APPLICABLE TO THE FACTS OF ASSESSEES CASE. THE APP EAL OF THE ASSESSEE AGAINST NON-ALLOWANCE OF CLAIM UNDER SECTION 42 OF THE I.T. ACT HAS BEEN ADMITTED BY THE HON'BLE GUJARAT HIGH COURT UNDER SE CTION 260A OF THE INCOME TAX ACT, 1961. WHETHER LAND BASED DRILLING PLATFORM IS TO BE TREATED AS PART AND PARCEL OF PLANT AND MACHINERY OR NOT IS A DEBAT ABLE ISSUE. ADMITTEDLY, THE CASE OF THE ASSESSEE DOES NOT FALL WITHIN THE MISCH IEF OF MAIN PROVISION OF SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 BECAU SE MERE REJECTION OF ASSESSEES CLAIM WOULD NOT BE SUFFICIENT TO HOLD TH E ASSESSEE TO BE GUILTY OF CONCEALMENT. THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF SARABHAI CHEMICAL (P) LTD. [2002] 257 ITR 355 (GUJ.) HELD AS UNDER :- THE DEEMING FICTION THAT THE ADDED/ DISALLOWED AMO UNTS REPRESENT THE NCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED CO NTAINED IN EXPLANATION 1 WILL NOT APPLY IF THE EXPLANATION THAT WAS GIVEN BY THE ASSE SSEE IN THE QUANTUM PROCEEDINGS WHICH HE COULD NOT SUBSTANTIATE IN THOSE PROCEEDING S WAS (I) BONA FIDE AND (II) IF HE HAD DISCLOSED ALL THE FACTS RELATING TO THE SAME AN D MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME. IN CASES WHERE EXPLANATION WAS OFFERE D, BUT WAS REJECTED AS IT COULD NOT BE SUBSTANTIATED BY THE ASSESSEE, THERE WOULD ARISE NO PRESUMPTION OF CONCEALMENT OF ITA NOS.1605 TO 1607/AHD/2009 ASST. YEARS 2000-01, 2002-03 & 2003-04 9 THE PARTICULARS OF INCOME THAT WAS ADDED OR DISALLO WED AND SUCH ASSESSEE CAN SHOW THAT THE SAID EXPLANATION OFFERED BY HIM WAS A BONA FIDE ONE AND THAT HE HAD DISCLOSED ALL FACTS RELATING TO SUCH EXPLANATION AN D MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME DURING THE QUANTUM PROCEEDINGS. 9. IN THE PRESENT CASE, THE ASSESSEE HAS DISCLOSED ALL THE MATERIAL FACTS. IT HAS ALSO FURNISHED THE EXPLANATION, WHICH IS NOT ONLY BONA FIDE BUT THE ASSESSEE HAS ALSO SUBSTANTIATED THE SAME BY THE FACT THAT IN ORIGINAL ASSESSMENT, DEDUCTION UNDER SECTION 42 AS WELL AS DEPRECIATION CLAIM WAS ALLOWED. MOREOVER, THE APPEAL OF ASSESSEE ON DISALLOWANCE CL AIMED UNDER SECTION 42 OF RS.4,58,84,791/- IS ADMITTED BY THE HON'BLE GUJA RAT HIGH COURT UNDER SECTION 260A. IN THIS VIEW OF THE MATTER, IN OUR OP INION, IT IS NOT A FIT CASE TO LEVY THE PENALTY UNDER SECTION 271(1)(C).THEREFORE, PENALTY CONFIRMED BY THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) IN RESP ECT OF BOTH THE ITEMS OF ADDITIONS/ DISALLOWANCES IS HEREBY DELETED. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. IN VIEW OF THIS DELETION OF THE PENALTY THE PROCEED INGS U/S 275(1A) MODIFYING THE PENALTY IMPOSED HAVE BECOME INFRUCTUO US. IN VIEW OF THIS FINDING OF OURS, THE ARGUMENTS ADVANCED BY THE LD. DR ARE DEVOID OF MERIT AS THE SAME HAVE BEEN ADVANCED WITHOUT TAKING ANY G ROUND FOR MAKING SUCH SUBMISSIONS. IN THE RESULT, REVENUES APPEAL IS DISMISSED. 10. SINCE THE ISSUES INVOLVED IN THE OTHER TWO APPE ALS I.E. IN ITA NO.1606 & 1607/AHD/2009 ASST. YEARS 2002-03 & 2003- 04 RESPECTIVELY, ARE IDENTICAL AND FACTS AND CIRCUMSTANCES OF THE CA SES ARE SIMILAR TO THE FACTS OF THIS CASE, FOLLOWING OUR ABOVE DECISION, W E DISMISS THESE APPEALS ALSO. ITA NOS.1605 TO 1607/AHD/2009 ASST. YEARS 2000-01, 2002-03 & 2003-04 10 11. IN THE RESULT, ALL THE THREE APPEALS FILED BY T HE REVENUE ARE DISMISSED. ORDER WAS PRONOUNCED IN OPEN COURT ON 31/10/2011 SD/- SD/- (A. MOHAN ALANKAMONY) (D.K. TYAGI) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD, MAHATA/- COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)- 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD 1.DATE OF DICTATION 20/10/2010. 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING MEMBER.OTHER MEMBER /10/2011 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.. 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER..