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

ITA 1608/AHD/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 50960 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 6 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-11-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 19-10-2011
• Assessment Year: 2004-2005
• 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: Depreciation; Opportunity of being heard; Difference of opinion; Reason to believe; Capital expenditure
• Section: 143(3); 260A; 115JB

Judgement Text

- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH B AHMEDABAD BEFORE S/SHRI D.K.TYAGI, JM AND A. MOHAN ALANKAMON Y, 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 : 21/10/2011 DATE OF PRONOUNCEMENT : 25/11/2011 O R D E R PER D. K. TYAGI, JUDICIAL MEMBER . THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF LD. CIT(A0 DATED 02.02.2009 FOR ASST. YEAR 2004-05, RAI SING FOLLOWING GROUNDS :- (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 AND ON FACTS IN DELETING THE PENALTY ON DISALLOWANCE OF DEDUCTIO N U/S 42 IN RESPECT OF J.V. FIELD. ITA NOS.1608/AHD/2009 ASST. YEARS :2004-05 ITA NO.1608/AHD/2009 ASST. YEAR 2004-05 2 (3) THE LD. CIT(A)-XXI, AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE PENALTY ON DISALLOWANCE OF DEDUCTIO N U/S 42 IN RESPECT OF SURAT FIELD. (4) THE LD. CIT(A)-XXI, AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE PENALTY ON DISALLOWANCE OF DEPRECIA TION ON LBDP. (5) THE LD. CIT(A)-XXI, AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE PENALTY ON DISALLOWANCE OF SCHOOL B UILDING. (6) THE LD. CIT(A)-XXI, AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE PENALTY ON DISALLOWANCE OF DEPRECIA TION ON 3614 PIPE LINE. (7) 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 T HE TAX LIABILITY AS PER RETURN OF INCOME AND ORDER GIVING EFFECT TO CIT(A)/ITATS REMAINS THE SAME DUE TO PROVISIONS OF MAT. 2. BRIEF FACTS OF THE CASE AS THEY EMERGE FROM THE ORDER OF LD. CIT(A) ARE THAT ASSESSEE IS A COMPANY INCORPORATED IN CANA DA IS ENGAGED IN THE BUSINESS OF OIL AND NATURAL GAS EXPLORATION. THE AS SESSEE IS A TAX RESIDENT OF CANADA AND IS ELIGIBLE FOR THE BENEFITS OF THE A GREEMENT BETWEEN THE GOVERNMENT OF INDIA AND THE GOVERNMENT OF CANADA FO R THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASIO N WITH RESPECT TO TAXES ON INCOME AND ON CAPITAL. 2.1 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 DEVEL OPMENT OF FIVE DESIGNATED NATURAL GAS AND OIL FIELDS IN GUJARAT. ITA NO.1608/AHD/2009 ASST. YEAR 2004-05 3 2.2 THE ASSESSEE ALSO ENTERED INTO A PSC ON JULY 17 , 2001 WITH THE GOVERNMENT OF INDIA FOR EXPLORATION AND EXTRACTION OF OIL AND NATURAL GAS FROM CAMBAY ONSHORE, INDIA IDENTIFIED AS CB-ONN-200 0/2 IN SURAT DISTRICT (HEREINAFTER REFERRED TO AS SURAT BLOCK), GUJARAT. THE COMMERCIAL PRODUCTION OF NATURAL GAS FROM THIS BLOCK HAD COMME NCED DURING THE FINANCIAL YEAR 2002-03. 2.3 THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE YEAR UNDER APPEAL ON NOVEMBER 01, 2004 DECLARING A TOTAL INCOME OF RS.NI L. THE RETURN WAS PROCESSED U/S 143(1) ON MARCH 21, 2005. 2.4 THE ASSESSEES CASE WAS SELECTED FOR SCRUTINY B Y THE AO. THE ASSESSMENT ORDER UNDER SECTION 143(3) OF THE ACT WA S PASSED ON DECEMBER 26, 2006, WHEREIN THE TOTAL INCOME WAS DET ERMINED AT RS.180,28,35,714/- AFTER MAKING ADDITIONS/DISALLOWA NCES ON FOLLOWING GROUNDS :- (A) DISALLOWANCE UNDER SECTION 42 OF THE ACT FOR HAZIRA AND BHANDUT BLOCK -RS.11,58,92,939/-. (B) DISALLOWANCE U/S 42 OF THE ACT FOR SURAT BLOCK (BHE EMA FIELD) - RS.54,39,72,612/-. (C) DISALLOWANCE OF DEDUCTION UNDER SECTION 80IB(9) OF THE ACT IN RESPECT OF H-2 & H-3 WELLS -RS.115,35,54,283/-. (D) ALTERNATIVE CLAIM OF DEPRECIATION RESTRICTED TO 10% ON DRILLING WELLS. ALLOWABLE DEPRECIATION COMES TO RS.2,62,24,5 00/-. (E) ADDITION ON ACCOUNT OF SCHOOL BUILDING EXPENSES TRE ATING IT AS CAPITAL EXPENDITURE AMOUNTING TO RS.36,04,177/-. (F) DISALLOWANCE OF CLAIM OF DEPRECIATION ON 3614 KMS HAZIRA- MORA PIPELINES OF RS.1,20,48,703/-. ITA NO.1608/AHD/2009 ASST. YEAR 2004-05 4 THE PENALTY PROCEEDING UNDER SECTION 271(1)(C) OF T HE ACT WAS ALSO INITIATED. 2.5 BEING AGGRIEVED BY THE IMPUGNED ORDER AND THE A DDITIONS MADE THEREOF, THE ASSESSEE PREFERRED AN APPEAL BEFORE TH E LD. CIT(A). THE PENALTY PROCEEDING WAS KEPT IN ABEYANCE UNTIL DISPO SAL OF THE SAID APPEAL. THE LD. CIT(A) PARTLY ALLOWED THE APPEAL VIDE ORDER DATED JULY 26, 2007 CONFIRMING THE DISALLOWANCE MADE BY THE ACIT AS MEN TIONED AT PARAS (A), (B), (C) &(F) OF 2.4 ABOVE. THE LD. CIT(A) HAD ALLO WED A DEPRECIATION AT THE RATE OF 80% ON DRILLING WELL INSTEAD OF 10% RES TRICTED BY THE AO AND HAD ALLOWED THE EXPENSES ON SCHOOL BUILDING OVER A PERIOD OF 10 YEARS. 2.6 AGGRIEVED BY THE ABOVE ORDER OF LD. CIT(A) BOTH THE ASSESSEE AND THE DEPARTMENT PREFERRED APPEALS BEFORE THE TRIBUNA L. THE TRIBUNAL HAD CONFIRMED THE DISALLOWANCE MADE BY THE AO AS MENTIO NED AT PARAS (A), (D) & (F) OF 2.4 ABOVE WHEREAS THE DEDUCTION U/S 80 IB(9) OF THE ACT IS CONCERNED, IT HAD RULED IN FAVOUR OF THE ASSESSEE. WHILE THE TRIBUNAL HAD REJECTED THE GROUND MENTIONED AT (B) ABOVE, IT HAD ALLOWED THE ASSESSEE TO REVISIT AND ARGUE ON THIS GROUND IN CASE THEIR CLAI M OF DEDUCTION U/S 80IB(9) WAS NOT ACCEPTED IN FURTHER APPEAL. AS FAR AS THE PART DISALLOWANCE RELATING TO THE SCHOOL BUILDING IS CON CERNED, THE TRIBUNAL HAD UPHELD THE ORDER OF LD. CIT(A). 2.7 BASED ON THE INCOME DETERMINED CONSEQUENT TO TH E ORDER PASSED BY THE TRIBUNAL, THE AO PASSED AN ORDER LEVYING PENALT Y UNDER SECTION 271(1)(C) OF THE ACT. 2.8 AGGRIEVED BY THE ABOVE PENALTY ORDER THE ASSESS EE WENT IN APPEAL BEFORE THE LD. CIT(A). ITA NO.1608/AHD/2009 ASST. YEAR 2004-05 5 3. BEFORE LD. CIT(A) IT WAS SUBMITTED BY THE ASSESS EE THAT THE AO LEVIED PENALTY U/S 271(1)(C) OF THE ACT ON THE GROU ND THAT ASSESSEE WAS AWARE OF THE FACT THAT THE AGREEMENT I.E. PSC DID N OT PROVIDE FOR ALLOWANCE OF EXPENSES CLAIMED U/S 42 OF THE ACT, YE T THESE EXPENSES WERE CLAIMED IN THE COMPUTATION AND HENCE THE ASSESSEE H AD CLAIMED A WRONG DEDUCTION BY FILING INACCURATE PARTICULARS OF INCOM E. THE ASSESSEE SUBMITTED THAT IT HAD PROVIDED THE BRE AK UP OF THE NATURE OF EXPENSES CLAIMED U/S 42 OF THE ACT IN ANN EXURE-1 TO THE COMPUTATION OF INCOME. THE ASSESSEE UNDER CLAUSE 14 OF THE TAX AUDIT REPORT, HAD ALSO CLEARLY STATED THAT SINCE IT HAD C LAIMED DEDUCTION U/S 42 OF THE ACT IN RESPECT OF CAPITAL EXPENDITURE IN CON NECTION WITH EXPLORATION AND DRILLING ACTIVITIES, NO TAX DEPRECIATION WAS CL AIMED BY IT ON SUCH CAPITAL EXPENDITURE. FURTHER, THE ASSESSEE HAD PLAC ED ON RECORD BEFORE THE AO THE PSC FOR THE NIKO-GSPC BLOCK, STATING IN ITS SUBMISSION DATED NOVEMBER 29, 2006 THAT ARTICLE 15.3 OF THE PSC PROV IDES FOR THE DEDUCTIONS ENUMERATED UNDER SECTION 42 OF THE ACT. THE ASSESSEE HAD FURNISHED DETAILED REPLY TO THE AOS NOTICES WITH R EGARD TO ITS CLAIM U/S 42 FOR THE NIKO-GSPC BLOCK AND ANOTHER ISSUE. IN VIEW OF THE ABOVE, IT WAS SUBMITTED THAT THE AS SESSEE HAD NEITHER CONCEALED THE PARTICULARS OF HIS INCOME NOR HAD FUR NISHED INACCURATE PARTICULARS OF SUCH INCOME; FURTHER IT HAD OFFERED ALL THE TRUE AND APPROPRIATE EXPLANATION AND RELEVANT MATERIAL WHICH WAS SOUGHT BY THE AO IN THIS REGARD. ON A LIBERAL INTERPRETATION OF THE PROVISIONS OF S ECTION 42 OF THE ACT READ WITH ARTICLE 15 OF THE PSC, THE ASSESSEE SUBMI TTED THAT IT HAD BONA FIDE REASON TO BELIEVE, WHICH WAS SUBSTANTIATED BEF ORE THE AO, CIT{A) ITA NO.1608/AHD/2009 ASST. YEAR 2004-05 6 AND ITAT THAT IT WAS ELIGIBLE TO CLAIM DEDUCTION IN RESPECT OF EXPLORATION AND DRILLING COSTS FOR THE NIKO-GSPC BLOCK. IN THIS CONNECTION, THE ASSESSEE ALSO RELIED ON THE FOLLOWING DECISIONS WHEREIN IT HAS BEEN REITERATED THAT NO PE NALTY CAN BE LEVIED WHEN A DISCLOSURE HAS BEEN MADE AND CLAIMS WERE MAD E UNDER BONA FIDE BELIEF : KHODAY ESWARA & SONS (83 ITR 369) (SC) DCIT VS. LEE & MUIRHEAD LTD (60 ITB 57 (MUM) CIT VS. DHARAMCHAND L SHAH (204 ITR 462) ACIT VS. DELHI CLOTH & GENERAL MILLS CO. LTD (157 ITR 822) (DEL) CIT VS. PITA MALHOTRA (154 ITFT 550) (DEL) SUNDER LAL MOHINDER PAL. V. CIT (135 ITR 80) (P & H) CIT VS. SHIVLAL DESAI & SONS (114 ITR 377) (BOM) M.V. KENLUCKY VS. ACIT (60 ITD 492) (PUNE) CIT VS. P.M. SHAH (203 ITR 792) (BOM) IMPULSE INDIA (P) LTD. VS. ITO (40 ITD 36) (DELHI ) CIT VS. G.D. NAIDU (165ITR 63) (MAD) ITO VS. VEENA ESTATES P. LTD, (81 ITD 401) FURTHER, THE ASSESSEE SUBMITTED THAT NO PENALTY CAN BE LEVIED FOR DIFFERENCES IN OPINION. THE ASSESSEE SUBMITTED THAT MERE DIFFERENCES IN OPINION CANNOT BE CONSTRUED AS CONCEALMENT OF INCOM E OR FURNISHING OF INACCURATE PARTICULARS. IN THIS REGARD IT WAS SUBMI TTED THAT IT WAS A MERE DIFFERENCE IN THE OPINION OF THE ASSESSEE AND THAT OF THE AO, CIT(A) AND ITAT THAT LED TO THE DISALLOWANCE OF THE ASSESSEE'S CLAIM FOR DEDUCTION. IN FACT, THE AO HAD ALLOWED THE DEDUCTION U/S 42 OF THE ACT IN THE ORIGINAL ASSESSMENTS FROM THE AYS 1998-99 TO 2000-01. IN FAC T IN THE CASE OF ASSESSEE'S CO-VENTURE PARTNER, THE AO HAD ALLOWED T HE CLAIM MADE U/S 42 IN RESPECT OF THE SAME PSC. EVEN IN AY 2001-02, THE AO IN THE ASSESSMENT ORDER HAD PARTIALLY ALLOWED THE ASSESSEE 'S CLAIM U/S 42. HOWEVER, THE SAME WAS SUBSEQUENTLY DISALLOWED ENTIRELY BY WAY OF ENHANCEMENT OF ASSESSMENT BY THE CIT(A) WHICH HAS T HEN BEEN ITA NO.1608/AHD/2009 ASST. YEAR 2004-05 7 CONFIRMED BY THE ITAT IN THE APPELLATE PROCEEDINGS. ON THE BASIS OF THE CLT(A)'S ORDER FOR AY 2001-02 THE AO HAD DISALLOWED THE CLAIM OF THE ASSESSEE IN THE ASSESSMENT PROCEEDINGS FOR THE YEAR UNDER CONSIDERATION. LD. CIT(A)S ATTENTION WAS FURTHER INVITED TO THE F ACT THAT THE MINISTRY OF PETROLEUM AND NATURAL GAS VIDE ITS LETTER DATED APRIL 11, 2007 POINTED OUT TO THE JOINT SECRETARY, DEPARTMENT OF REVENUE, MINI STRY OF FINANCE THAT OUT OF 13 P5CS SIGNED BY THE GOVERNMENT OF INDIA 11 DID NOT CONTAIN THE SPECIFIC PROVISION FOR ALLOWANCES/DEDUCTION/SET-OFF FOR EXPENDITURE INCURRED BY COMPANIES FOR THE PURPOSE OF COMPUTING OF PROFITS AND GAINS OF THE BUSINESS CONSISTING OF PROSPECTING FOR OR EX TRACTION OF MINERAL OIL, WHICH WAS AN OVERSIGHT, AS CONTRACTS SIGNED UNDER THE FIRST OFFER CONTAIN SIMILAR TERMS AND CONDITIONS. THEREFORE, IT HAD REQ UESTED THE DEPARTMENT OF REVENUE, MINISTRY OF FINANCE TO ISSUE NECESSARY CLARIFICATION TO THE CONCERNED ASSESSING OFFICER TO APPLY THE PROVISIONS OF SECTION 42 IN THE CASE OF THOSE 11 PSCS. HOWEVER, THE TRIBUNAL FOR TH E AY 2001-02 HAS CONFIRMED THE DISALLOWANCE ON THE GROUND THAT THE A LLOWANCES ARE NOT SPECIFIED IN THE PSC. THE ASSESSEE FURTHER SUBMITTED THAT ON THE BASIS OF THE CLT(A)'S ORDER FOR THE AY 2001-02 THE SAME AO HAD ALSO REOPE NED THE ASSESSMENT FOR THE AYS 1998-99 AND 1999-2000 AND HAD DISALLOWE D THE APPELLANT'S CLAIM U/S 42, HOWEVER, HE HAD NOT INITIATED ANY PEN ALTY PROCEEDINGS FOR CONCEALMENT OF INCOME FOR THOSE TWO YEARS. IN VIEW OF THE ABOVE AND THE FACT THAT THE AO HAD E ARLIER ALLOWED THE ASSESSEE'S ON THE BASIS OF THE SAME PSC, THE AS SESSEE SUBMITTED THAT IT IS DEBATABLE WHETHER THE PSC FOR THE NIKO-GSPC BLOC K PROVIDES FOR DEDUCTION U/S 42 OF THE ACT. THE SAME IS ALSO CAPAB LE OF DIFFERENT VIEWS, AS EXPRESSED BY DIFFERENT AOS IN THE APPELLANT'S CA SE. IN THIS CONNECTION, A ITA NO.1608/AHD/2009 ASST. YEAR 2004-05 8 RELIANCE WAS PLACED ON THE FOLLOWING DECISIONS OF T HE SUPREME COURT WHEREIN IT HAS BEEN HELD THAT PENALTY SHOULD NOT BE LEVIED ON INTERPRETATION ISSUES: COMMISSIONER OF CENTRAL EXCISE, TRICHY VS. GRASIM INDUSTRIES LTD. 2005 (183) E.LT. 123 (S.C,) NORTHERN PLASTIC LTD VS COLLECTOR OF CUSTOMS & CE NTRAL EXCISE 1998 (101) E.LT. 549 (S.C.) RELIANCE WAS ALSO PLACED ON THE FOLLOWING JUDICIAL PRONOUNCEMENTS WHEREIN IT WAS HELD THAT PENALTY CANNOT BE LEVIED I F THERE ORE CONFLICTING OPINIONS ON CLAIM OF A DEDUCTION: * CITV. HARSHVARDHAN CHEMICALS AND MINERALS LTD. 25 9 ITR 212 (RAJ,) * CIT V. SIVANADA STEELS LTD. 256 ITR 683 (MADRAS) * BURMAH SHELL OIL STORAGE DISTRIBUTING COMPANY OF INDIA LTD. V ITO (1978) 112 ITR 592 (CAL) * COMMISSIONER OF INCOME TAX V CALCUTTA CREDIT CORP ORATION [1986] 166 ITR 29 (CAL.) * CIT VS. G.D, NAIDU (1987) 165 ITR 63 (MAD), * ITO V ROBORANT INVESTMENTS (P) LTD. 7 SOT 181 (MU M) * COMMISSIONER OF INCOME TAX V. MANILA! TARACHAND ( 254 ITR 630)(GUJ) * RUPAM MERCANTILES LTD, VS. DCIT 91 ITD 237 (AHEMD ABAD TRIBUNAL) THIRD MEMBER * SHRI VIVEK JAIN V DCIT (ITA NO.645/D/2007) (200 8-TIOL 144- ITAT-DEL (DEL) * CIT V. SHRI SOHAN PAL HUF (ITA NO. 582 OF 2007) ( 2008-TIOL- 160- HC-P&H-IT (P & H) SMT. LAXAMI (L.R. FOR 5HRI GANESH DAS NARANG) V CIT M.P.-II [1983] 144 ITR 82 (MP); COMMISSIONER OF INCOME TAX VS. JAGABANDHU PRA SANNA KUMAR RUPAL SEN PODDAR [1982] 133 ITR 156 (CAL.); ACT V, DELHI CLOTH AND GENERAL MILLS CO. LTD (198 6) 157 ITR 822 (DEL); AND DCIT VS. RAHOUL SIEMSSEN ENGG (P) LTD, [2004) 140 TAXNAN 100 (DELHI ITAT), ITA NO.1608/AHD/2009 ASST. YEAR 2004-05 9 IN VIEW OF THE ABOVE, IT WAS SUBMITTED THAT SINCE T HE ASSESSEE HAD CLAIMED DEDUCTIONS WHICH WERE DEBATABLE, ARGUABLE AND CAPAB LE OF DIFFERENT INTERPRETATIONS OR VIEWS AND HAD MADE FULL DISCLOSU RE OF ALL MATERIAL FACTS IN THAT REGARD, IT COULD NOT BE SAID TO HAVE CONCEA LED ANY INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME FOR EVAS ION OF TAX. THE ASSESSEE ALSO FAIRLY POINTED OUT THAT THE CIT(A ) HAD CONFIRMED THE PENALTY ON A SIMILAR GROUND IN AY 2000-01, 2002-03 AND 2003-04 WITHOUT APPRECIATING THE ABOVE SUBMISSIONS. 4. THE LD. CIT(A) DECIDED THE ISSUE BY OBSERVING AS UNDER :- I HOVE CONSIDERED THE SUBMISSION OF THE APPELLANT THE ISSUE RAISED IN THIS GROUND IS WHETHER THE APPELLANT BY CLAIMING DE DUCTION U/S 42 HAS CONCEALED ANY PARTICULARS OR INCOME OR FURNISHED IN ACCURATE DETAILS OF INCOME. FURTHER, WHETHER THE APPELLANT WAS AWARE AB OUT THE FACT THAT THE AGREEMENT DID NOT PROVIDE FOR THE ALLOWANCE OF EXPE NSES U/S 42 AND YET THESE EXPENSES WERE CLAIMED AS A DEDUCTION WITH AN INTENTION TO EVADE TAX? I FIND THAT THE APPELLANT HAD FILED ITS TAX RE TURN WITH NOTES THEREFORE, FINANCIAL STATEMENTS AND TAX AUDIT REPORT WITHIN ST IPULATED TIME. DURING THE COURSE OF ASSESSMENT PROCEEDINGS ALSO, IT HAD M ADE VARIOUS SUBMISSIONS BY FILING A COPY OF THE RELEVANT P5C TO SUBSTANTIATE ITS CLAIM U/S 42. THESE DEMONSTRATE THAT THE APPELLANT HAD FI LED ALL THE PARTICULARS WITH THE AO TO SUBSTANTIATE ITS CLAIM FOR U/S 42 L IT WAS ALSO BROUGHT TO MY NOTICE THAT THIS DISPUTE ON THE VERY ISSUE IS GOING ON SINCE AY 1998-99 AND WHICH HAS NOW BEEN SETTLED BY THE HON'BLE TTAT AGAINST THE APPELLANT. ALTHOUGH THE APPELLANT HAD LOST ITS CLAI M FOR DEDUCTION U/S 42 ON MERITS, THAT REMAINS TO BE ANSWERED IS WHETHER T HERE IS ANY CONCEALMENT OR FURNISHING OF INACCURATE PARTICULA RS OF INCOME. FURTHER, CAN IT BE SAID THAT THE APPELLANT IS AWARE THAT THE AGREEMENT DOESN'T PROVIDE A DEDUCTION UNDER SECTION 42 OF ACT HENCE THERE IS A FURNISHING OF INACCURATE PARTICULARS OF INCOME? MY ATTENTION WAS INVITED TO THE P5C WHEREIN AT PARA 15.3, IT PROVIDES FOR CERTAIN DEDUCTIONS. FURTHER, THE APPELLANT'S CO-VENTURE PARTNER HAD ALSO BEEN ALLOWED A DEDUCTION UNDER SECTION 42 O N THE SAME PSC IT WAS ALSO BROUGHT TO MY NOTICE THAT LETTER DATED APRIL 1 1, 2007 WRITTEN BY MINISTRY OF PETROLEUM AND NATURAL GAS TO THE JOINT SECRETARY, DEPARTMENT OF REVENUE, STATES THAT OUT OF 13 P5CS S IGNED BY THE ITA NO.1608/AHD/2009 ASST. YEAR 2004-05 10 GOVERNMENT OF INDIA 11 DO NOT CONTAIN THE SPECIFIC PROVISION FOR ALLOWANCE3DEDUCTION/SET-OFF FOR E XPENDITURE INCURRED BY COMPANIES FOR THE PURPOSE COMPUTING THE PROFITS AND GAINS OF THE BUSINESS CONSISTING OF PROSPECTING FOR OR EXTRACTIO N OF MINERAL OIL, WHICH WAS AN OVERSIGHT, AS CONTRACTS SIGNED UNDER THE FIR ST OFFER CONTAIN SIMILAR TERMS AND CONDITIONS. I HOVE ALSO GONE THROUGH THE ORDER OF MY LEARNED PR EDECESSOR WHEREIN HE HAD CONFIRMED THE PENALTY ON THE GROUND THAT THE AP PELLANT WAS FULLY IN THE KNOWLEDGE OF THE FACT THAT THE CONDITIONS AS LA ID DOWN IN SECTION 42 ARE NOT PRESENT IN THE PSC STILL THE APPELLANT MADE CLAIM OF THE DEDUCTION WHICH CLEARLY MEANS THAT THE APPELLANT HAD MADE WRO NG DEDUCTION. HOWEVER, WITH DUE RESPECT, I BEG TO DIFFER ON THIS ISSUE. BECAUSE, FIRSTLY, IT WAS BONA FIDE BELIEF OF THE APPELLANT FOR CLAIMING THE DEDUCTION WHICH CAN BE DEMONSTRATED BY WAY OF LETTER OF MINISTRY OF PETROLEUM AND NATURAL GAS AND THE DEDUCTION U/S 42 WAS ALLOWED TO THE CO-VENTURE PARTNER OF THE APPELLANT IN RESPECT OF THE SAME P5C . FURTHER, I WAS SURPRISED TO SEE THAT WITHIN THE TAX DEPARTMENT ITSELF THERE WERE DIFFERENCES OF OPINION ON THE VERY ISSUE WHICH CAN BE EVIDENCED FROM THE FOLLOWING : * THE AO HAD ALLOWED THE DEDUCTION U/S 42 OF THE A CT IN THE ORIGINAL ASSESSMENT FOR ASST. YEAR 1998-99 TO 2000-01; * EVEN IN AY 2001-02, THE AO IN THE ASSESSMENT ORDE R HAD PARTIALLY ALLOWED THE APPELLANTS CLAIM U/S 42, HOWEVER, THE SAME WAS SUBSEQUENTLY DISALLOWED ENTIRELY BY WAY OF ENHANC EMENT OF ASSESSMENT BY THE CIT(A) & ITAT IN THE APPELLAT E PROCEEDINGS; AND * NO PENALTY PROCESS U/S 271(L)(C) WAS INITIATED BY THE AO WHO HAD DISALLOWED DEDUCTION U/S 42 BY REOPENING THE ASSESS MENT FOR AY 1998-99 A 1999-00. IN VIEW OF THE ABOVE, I AM OF THE OPINION THAT NO P ENAL ACTION BE TAKEN IF THERE IS A DIFFERENCE OF OPINION. FURTHER, I ALSO A GREE WITH THE CONTENTIONS RAISED BY THE APPELLANT THAT MERE DISALLOWANCE WILL NOT TANTAMOUNT TO PENALTY. IN VIEW OF THE ABOVE, THE PENALTY LEVIED ON THE DIS ALLOWANCE MADE U/S 42 BY THE ASSESSING OFFICER IS DIRECTED TO BE DELETED. ITA NO.1608/AHD/2009 ASST. YEAR 2004-05 11 AGGRIEVED BY THIS ORDER OF LD. CIT(A), THE REVENUE IS IN APPEAL BEFORE US. 5. AT THE TIME OF HEARING BEFORE US, AT THE OUTSET THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT IN RESPECT OF ALL THE GROUN DS EXCEPT GROUND NO.5 THE PENALTY HAS BEEN DELETED BY THE HONBLE TRIBUNA L IN EARLIER YEARS IN ASSESSEES OWN CASE. THEREFORE, FOLLOWING THE EARLI ER YEARS DECISION, THE GROUNDS TAKEN BY THE REVENUE IN THIS APPEAL MAY KIN DLY BE DISMISSED. 5.1 HOWEVER, IN RESPECT OF GROUND NO.5 THE LD. COUN SEL REITERATED THE SAME SUBMISSIONS AND RELIED ON THE FOLLOWING CASE L AWS :- (1) CIT VS. NALWA SONS INVESTMENTS LTD. (DELHI HIGH COURT) IN ITA NO.1420 OF 2009 DECIDED ON AUGUST 26, 2010. (2) M/S RUCHI STRIPS & ALLOYS LTD. VS. DCIT CEN.CIR CLE-40, MUMBAI IN ITA NO.6940/MUM/2008 ASST. YEAR 2005-06 DECIDED ON JANUARY 21, 2011. ITAT, MUMBAI-D BENCH. 6. THE LD. DR ON THE OTHER HAND SUBMITTED THAT PENA LTY HAS BEEN DELETED BY THE TRIBUNAL IN EARLIER YEARS BY FOLLOWI NG THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIAN CE PETROPRODUCTS (P) LTD. (2010) 322 ITR 158 (SC) WHICH ACCORDING TO HIM WAS NOT PROPER AND PLACING RELIANCE ON THE FOLLOWING DECISIONS:- (1) GUJARAT STATE FINANCIAL SERVICES LTD. VS. ACIT (2010) 39 SOT 570 (AHD) (2) SHRI PRAMOD MITTAL, PROP. M/S GUPTA CONSTRUCTIO N CO., VS. ACIT ITA NO.884/DEL/08, ITA NO.2019/DEL/ 2009 & ITA NO.718/DEL/2010 ASST. YEAR 2005-06 & 2006-07 ITA NO.1608/AHD/2009 ASST. YEAR 2004-05 12 (3) CIT VS. HAR PRASAD & CO. LTD.328 ITR 53 (DEL) (4) PSB INDUSTRIES INDIA (P) LTD. VS. CIT IN ITA NO .792 OF 2011 (DELHI HIGH COURT). IT WAS ARGUED THAT IN THESE CASES AFTER DETAILED DI SCUSSION THE DECISION OF HONBLE APEX COURT IN THE CASE OF RELIANCE PETROPR ODUCTS (P) LTD., WAS NOT FOLLOWED. THEREFORE, THE ORDERS PASSED BY TRIBU NAL IN ASSESSEES OWN CASE DELETING THE PENALTY U/S.271(1) (C) OF THE AC T IN EARLIER YEARS FOLLOWING THE HONBLE APEX COURT DECISION OF RELIAN CE PETROPRODUCTS (P) LTD. SHOULD NOT BE FOLLOWED AND THE PENALTY IMPOSED BY AO MAY KINDLY BE CONFIRMED. 6.1 IN REPLY THE LD. COUNSEL OF THE ASSESSEE SUBMIT TED THAT SINCE ASSESSEES CLAIM WAS BONA FIDE AND DEDUCTION CLAIME D BY THE ASSESSEE WERE ALSO ALLOWED BY THE AO IN ORIGINAL ASSESSMENT, NO PENALTY COULD HAVE BEEN LEVIED EVEN WITHOUT FOLLOWING THE DECISIO N OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS (P) LTD. (SUPRA). HE FURTHER SUBMITTED THAT IN ALL THE CASES RELIED ON BY THE LD. DR THE ASSESSEES CLAIM WAS NOT FOUND BONA FIDE BY THE VARIOUS COURTS AND IN THAT SITUATION, THE COURTS DECIDED NOT TO FOLLOW TH E DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS (P) LTD. (SUPRA) WHILE IN THE CASE OF THE ASSESSEE IT HAS BE EN CATEGORICALLY MENTIONED BY THE HONBLE TRIBUNAL IN ITS ORDER IN I TA NO.2475/AHD/2008 ASST. YEAR 2000-01 DATED 30.04.201 0, IN ITA ITA NO.1608/AHD/2009 ASST. YEAR 2004-05 13 NO.2476/AHD/2008 ASST. YEAR 2002-03 & IN ITA NO.271 8/AHD/2008 ASST. YEAR 2002-03 DATED 30.04.2010 AND IN ITA NO.2 477/AHD/2008 ASST. YEAR 2003-04 & ITA NO.2719/AHD/2008 ASST. YEA R 2003-04 DATED 30.4.2010 THAT ASSESSEES CLAIM WAS NOT ONLY BONA F IDE BUT THE ASSESSEE HAS ALSO SUBSTANTIATED ITS CLAIM BY THE FACT THAT I N THE ORIGINAL ASSESSMENT DEDUCTION U/S 42 AS WELL AS DEPRECIATION WAS ALLOWE D. THEREFORE, THE ORDER PASSED BY THE LD. CIT (A) DESERVES TO BE UPHE LD. 7. AFTER HEARING BOTH THE PARTIES AND PERUSING THE RECORD, WE FIND THAT THE HONBLE TRIBUNAL VIDE ITS ORDER IN ITA NO.2477/ AHD/2008 ASST. YEAR 2003-04 & ITA NO.2719/AHD/2008 ASST. YEAR 2003-04 H AS CONFIRMED THE ORDER OF THE LD. CIT (A) DELETING THE PENALTY B Y OBSERVING AS UNDER :- 9. HAVING HEARD BOTH DIE SIDES, WE HAVE CAREFULLY GONE THROUGH, THE ORDERS OF AUTHORITIES BELOW. IT IS PERTINENT TO NOT E THAT THESE CROSS APPEALS WERE HEARD ALONG-WITH THE ASSESSEES APPEAL BEING I TA NO. 2475/AHD/2008 THE ASSESSMENT YEAR 2000-01. IN THAT ASSESSMENT YEA R, WE HAVE CANCELLED THE PENALTY UNDER SECTION 27L(L)(C) IN RESPECT OF DISALLOWANCE OF DEDUCTION WADER SECTION 42 OF THE I NCOME TAX ACT, 1961 IN RELATION TO NIKO-GSPC BLOCK AND DISALLOWANCE OF DEPRECIATION ON LAND BASED PLATFORM WHICH WAS RESTRICTED FROM 25% TO 10% FOR THE ASSESSMENT YEAR 2000-01. THE REASONING GIVEN BY THE TRIBUNAL I N THAT ORDER IS CONTAINED IN PARAS 7, 8 & 9, WHICH IS RE-PRODUCED H EREUNDER :- 7. HAVING HEARD BOTH THE SIDES, WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. RECENTLY, THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS (P) LTD. (2010) 3 22 ITR 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 :- A GLANCE AT THE PROVISIONS OF SECTION 271(1)(C) O F THE INCOME-TAX ACT, 1961, SUGGESTS THAT IN ORDER TO BE COVERED BY IT, T HERE HAS TO BE CONCEALMENT OF THE PARTICULARS OF THE INCOME OF THE ASSESSEE. SECONDLY, THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICU LARS OF HIS INCOME. THE MEANING OF THE WORD PARTICULARS USED IN SECTI ON 271(1)(C) WOULD EMBRACE THE DETAILS OF THE CLAIM MADE. WHERE NO INFORMATION ITA NO.1608/AHD/2009 ASST. YEAR 2004-05 14 GIVEN IN THE RETURN IS FOUND TO BE INCORRECT OR INA CCURATE THE ASSESSEE CANNOT BE HELD GUILTY OF FURNISHING INACCURATE PART ICULARS,. IN ORDER TO EXPOSE THE ASSESSEE TO PENALTY, UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION, THE PENALTY PROVISIONS CANNOT BE INVOKED . BY NO STRETCH OF IMAGINATION CAN MAKING AN INCORRECT CLAIM TANTAMOUN T TO FURNISHING INACCURATE PARTICULARS. THERE CAN BE NO DISPUTE THA T EVERYTHING WOULD DEPEND UPON THE RETURN FILED BY THE ASSESSEE, BECAU SE THAT IS THE ONLY DOCUMENT WHERE THE ASSESSEE CAN FURNISH THE PARTICU LARS OF HIS INCOME. WHEN SUCH PARTICULARS ARE FOUND TO BE INACCURATE, T HE LIABILITY WOULD ARISE. TO ATTRACT PENALTY, THE DETAILS SUPPLIED IN THE RETURN MUST NOT BE ACCURATE, NOT EXACT OR CORRECT, NO ACCORDING TO THE TRUTH OR ERRONEOUS. WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIE D BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORRECT OR ERRONEOUS O R FALSE THERE IS 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 PARTICULARS REGARDI NG THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CANNO T AMOUNT TO FURNISHING INACCURATE PARTICULARS. 8. IT IS TRUE THAT IN QUANTUM PROCEEDINGS, DISALLO WANCE OF EXPENDITURE CLAIMED UNDER SECTION 42 AS WELL AS DISALLOWANCE OF EXCESS DEPRECIATION ON LAND BASED DRILLING PLATFORM IS CONFIRMED RIGHT UPT O TRIBUNAL. IN THE ORIGINAL ASSESSMENT FRAMED BY THE ASSESSING OFFICER UNDER SE CTION 143(3) ON 26.02.2003, BOTH THE CLAIM OF THE ASSESSEE WERE ALL OWED. THIS, IN OUR OPINION, IS SUFFICE TO HOLD THAT THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS (P) LTD. (SUPRA) IS SQUARELY APPLICABLE TO THE FACTS OF ASSESSEES CASE. THE APPEAL OF THE ASS ESSEE AGAINST NON-ALLOWANCE OF CLAIM UNDER SECTION 42 OF THE IT ACT HAS BEEN AD MITTED BY THE HONBLE GUJARAT HIGH COURT UNDER SECTION 260A OF THE INCOME -TAX ACT, 1961. WHETHER LAND BASED DRILLING PLATFORM IS TO BE TREATED AS PA RT AND PARCEL OF PLANT AND MACHINERY OR NOT IS A DEBATABLE ISSUE. ADMITTEDLY T HE CASE OF THE ASSESSEE DOES NOT FALL WITHIN THE MISCHIEF OF MAIN PROVISION OF S ECTION 271(1)(C) OF THE INCOME-TAX ACT, 1961 BECAUSE HERE REJECTION OF ASSE SSEES CLAIM WOULD NOT BE SUFFICIENT TO HOLD THE ASSESSEE TO BE GUILTY OF CON CEALMENT. THE HONBLE GUJARAT HIGH COURT IN THE CASE OF SARABHAI CHMICAL (P) LTD. (2002) 257 ITR 355 (GUJ) HELD AS UNDER - THE DEEMING FICTION THAT THE ADDED/DISALLOWED AMO UNTS REPRESENT THE INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CO NCEALED CONTAINED IN EXPLANATION 1 WILL NOT APPLY IF THE EXPLANATION THAT WAS GIVEN BY THE ASSESSEE IN THE QUANTUM PROCEEDINGS WHICH HE COULD NOT SUBSTANTIATE IN THOSE PROCEEDINGS WAS (I) BONA FIDE AND (II) IF HE HAD DISCLOSED ALL THE FACTS RELATING TO THE SAME AND 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, T HERE WOULD ARISE NO PRESUMPTION OF CONCEALMENT OF THE PARTICULARS OF IN COME THAT WAS ADDED OR DISALLOWED AND SUCH ASSESSEE CAN SHOW THAT THE SAID EXPLANATION OFFERED BY HIM WAS A BONA FIDE ONE AND THAT HE HAD ITA NO.1608/AHD/2009 ASST. YEAR 2004-05 15 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 IS ALSO FURNISHED THE EXPLANATION, WHICH IS NOT ONL Y 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 HONBLE GUJARAT HIGH COURT UNDER SECTION 260A. IN THIS VIEW OF THE MATTER, IN OUR OPINION IT IS NOT A FIT CASE TO LEVY THE PENALTY UNDER SECTION 271(1)C. THEREFORE, PENALTY C ONFIRMED BY THE LD. CIT(A) IN RESPECT OF BOTH THE ITEMS OF ADDITIONS/ DISALLOW ANCES IS HEREBY DELETED. 10. IN THE ASSESSMENT YEAR 2002-03 IN CROSS APPEAL BEING NO.2476/AHD/2008 & 2618/AHD/2008 WE HAVE CANCELLED THE PENALTY, WHICH IS CONFIRMED BY THE LD. CIT(A) IN RESPECT OF DISALLOWANCE OF DEDUCTION CLAIMED UNDER SECTION 42 AND IN RESPECT O F CLAIM OF DEPRECIATION ON LAND BASED PLATFORM, WHICH WAS REST RICTED FROM 25% TO 10%. FURTHER IN THAT ORDER, THE APPEAL OF THE REVEN UE AGAINST THE ORDER OF LD. CIT(A) CANCELING THE PENALTY ON ACCOUNT OF D ISALLOWANCE OF DEPRECIATION CLAIMED ON COST OF 3614 KM PIPELINE W AS ALSO REJECTED. THE FACTUAL MATRIX AND REASONING GIVEN BY THE LD. C IT(A) FOR PARTLY CONFIRMING THE PENALTY IN ASSESSMENT YEAR UNDER APP EAL ARE SAME AS GIVEN IN THE ASSESSMENT YEAR 2003-03. FOR THIS YEAR ALSO, WE FOUND CONSIDERABLE FORCE IN THE SUBMISSIONS MADE BY THE L D. CIT(A) THAT ALL THE DEDUCTIONS/EXEMPTION CLAIMED BY THE ASSESSEE WERE B ONA FIDE FOR WHICH PENALTY UNDER SECTION 271(1)(C) IS NOT LEVIABLE. IN SUPPORT OF THIS, RELIANCE CAN BE PLACED ON THE LATEST JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS (P) LTD. (20 10) 322 ITR 158 (SC). 11. WITHOUT PREJUDICE TO ABOVE, AS PER EXPLANATION 4(C) TO SECTION 271(1) ( C) OF THE INCOME TAX ACT,1961 IN THIS CASE , NO PENALTY IS LEVIABLE BECAUSE ULTIMATE TAX LIABILITY WAS DETERMINED UNDER SECTION 15JB OF INCOME TAX ACT,1961. IN THE RETURN OF INCOME, THE A SSESSEE HAS DECLARED INCOME UNDER SECTION 115JB AND PAID THE TAXES THERE ON. THE LD. CIT (A)- XXI, AHMEDABAD IN ASSESSEES OWN CASE FOR THE ASSES SMENT YEAR 2003-04 VIDE ORDER DATED 17-12-2008 CANCELLED THE PENALTY, WHICH WAS FINALLY RE- DETERMINED AT RS.10,29,18,109/- (AFTER GIVING APPEA L EFFECT TO THE ORDER OF THE CIT(A)/ITAT IN QUANTUM APPEAL). THE VIEW TAKEN BY THE LD. CIT(A) IS SUPPORTED BY THE JUDGMENT OF THE HONBLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. HARSHVARDHAN CHEMICALS & MINERALS L TD. 259 ITR 212 (RAJ. HC JAIPUR BENCH). ITA NO.1608/AHD/2009 ASST. YEAR 2004-05 16 12. WE, THEREFORE, HOLD THAT THE LD. CIT (A) IS FUL LY JUSTIFIED FOR CANCELING THE PENALTY IN RESPECT OF DISALLOWANCE OF DEDUCTION CLAIMED UNDER SECTION 42 AND DISALLOWANCE OF DEPRECIATION O N LAND BASED PLATFORM, WHICH WAS RESTRICTED FROM 25% TO 10%.FURT HER, IN OUR CONSIDERED OPINION, THE LD. CIT (A) OUGHT TO HAVE C ANCELLED THE PENALTY IN RESPECT OF DEDUCTION UNDER SECTION 42 IN RESPECT OF BHEMMA FIELD/SURAT BLOCK AND DEPRECIATION FOR CLAIM ON THE COST OF 3614 KM. PIPELINE. CONSEQUENTLY, THE ORDER OF LD. CIT (A) PA RTLY CANCELING THE PENALTY IS UPHELD. FURTHER PART PENALTY CONFIRMED B Y THE LD. CIT (A) AGAINST WHICH THE ASSESSEE IS IN APPEAL IS ALSO CAN CELLED. 8. IN VIEW OF THE ABOVE, WE FIND NO MERIT IN THE AR GUMENT ADVANCED BY THE LD. D.R. AND RESPECTFULLY FOLLOWING THE ABOV E ORDER OF THE TRIBUNAL WE CONFIRM THE ORDER OF LD. CIT (A) IN DEL ETING THE PENALTY IN RESPECT OF DISALLOWANCE OF DEDUCTION CLAIMED U/S. 4 2, DISALLOWANCE OF DEPRECIATION ON LAND BASED DRILLING PLATFORM, DISAL LOWANCE OF DEPRECIATION ON 36 14 KM. PIPELINE. WE ALSO CONFIRM THE ORDER O F THE LD. CIT (A) IN HOLDING THAT NO PENALTY SHOULD BE LEVIED U/S. 271(1 )(C) IF THE TAX LIABILITY AS PER THE RETURN OF INCOME AND ORDER GIVING EFFECT TO CIT(A)/ITAT REMAINS THE SAME DUE TO PROVISIONS OF MAT. AS FAR THE PENALTY IMPOSED ON DISALLOWANCE ON SCHOOL BUILDING IS CONCERNED, WE FIND THAT SINCE THE ASSESSEE HAS MADE BONAFIDE CLAIM IN THE RETURN OF I NCOME, THE LD. CIT (A) HAS RIGHTLY DELETED THE PENALTY ON THIS DISALLO WANCE ALSO. WE THEREFORE, FIND NO INFIRMITY IN THE ORDER PASSED BY THE LD. CIT (A) AND THE SAME IS CONFIRMED. 9. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DI SMISSED. ORDER WAS PRONOUNCED IN OPEN COURT ON 25-11-11. SD/- SD/- (A. MOHAN ALANKAMONY) (D.K. TYAGI) ACCOUNTANT MEMBER JUDICI AL MEMBER AHMEDABAD. MAHATA/- ITA NO.1608/AHD/2009 ASST. YEAR 2004-05 17 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 21/10/2010. 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING MEMBER.OTHER MEMBER 15/11/2011 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S 22-11-11 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..