Niko Resources Ltd.,, Baroda v. The ACIT., Circle-6, Baroda

ITA 2475/AHD/2008 | 2000-2001
Pronouncement Date: 30-04-2010 | Result: Allowed

Appeal Details

RSA Number 247520514 RSA 2008
Assessee PAN AAACN7060L
Bench Ahmedabad
Appeal Number ITA 2475/AHD/2008
Duration Of Justice 1 year(s) 10 month(s)
Appellant Niko Resources Ltd.,, Baroda
Respondent The ACIT., Circle-6, Baroda
Appeal Type Income Tax Appeal
Pronouncement Date 30-04-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted D
Tribunal Order Date 30-04-2010
Date Of Final Hearing 16-03-2010
Next Hearing Date 16-03-2010
Assessment Year 2000-2001
Appeal Filed On 30-06-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL : D BENCH : AHMEDABAD (BEFORE HONBLE SHRI T.K. SHARMA J.M. & HONBLE SH RI N. S. SAINI A.M.) I.T.A. NO. 2475/AHD./2008 ASSESSMENT YEAR : 2000-2001 NIKO RESOURCES LIMITED BARODA -VS.- ASSISTANT COMMISSIONER OF INCOME TAX (PAN : AAACN 7060 L) CIRCLE-6 BARODA (APPELLANT) (RESPONDENT) APPELLANT BY : S/SHRI PERCY P. PA RDIWALLA SR. ADVOCATE TANVISH BHATT VISPI T. PAT EL RESPONDENT BY : SHRI J AGDEO CIT D.R. O R D E R PER SHRI T.K. SHARMA JUDICIAL MEMBER : THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE O RDER DATED 14.05.2008 OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-XXI AHMEDABAD CONFIRMING THE PENALTY LEVIED BY THE ASSESSING OFFICER UNDER SECTION 271(1)(C) IN RESPEC T OF DISALLOWANCE OF DEDUCTION AMOUNTING TO RS.5 64 53 064/- CLAIMED UNDER SECTION 42 OF THE IN COME TAX ACT IN RELATION TO NIKO- GSPC BLOCK AND DISALLOWANCE OF DEPRECIATION ON LAND BASE D PLATFORM WHICH WAS RESTRICTED FROM 25% TO 10% FOR THE ASSESSMENT YEAR 2000-01. 2. BRIEFLY STATED THE FACTS ARE THAT THE ASSESSEE I S A COMPANY INCORPORATED IN CANADA. IT IS ENGAGED IN THE BUSINESS OF NATURAL GAS AND OIL EXPL ORATION. THE ASSESSEE IS A TAX RESIDENT OF CANADA AND IS ELIGIBLE FOR THE BENEFITS OF THE AGRE EMENT BETWEEN THE GOVERNMENT OF INDIA AND THE GOVERNMENT OF CANADA FOR THE AVOIDANCE OF DOUBLE TA XATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME AND ON CAPITAL. THE ASSESSEE-COMPANY ENTERED INTO A JOINT VENTURE WITH GUJARAT STATE PETROLEUM CORPORATION LI MITED (IN SHORT GSPCL) FOR THE EXPLORATION AND DEVELOPMENT OF NATURAL GAS AND OIL FIELDS IN INDIA. THE NIKO-GSPCL JOINT VENTURE ENTERED INTO PRODUCTION SHARING CONTRACTS ( IN SHORT PSC) WITH THE GOVERNMENT OF INDIA ON 23.09.1994 FOR THE EXPLORATION AND DEVELOPMENT O F FIVE DESIGNATED NATURAL GAS AND OIL FIELDS IN GUJARAT (IN SHORT NIKO-GSPC BLOCK_. THE ASSESS EE-COMPANY WAS PERMITTED BY THE RESERVE BANK OF INDIA TO SET UP A PROJECT OFFICE IN INDIA W .E.F. 14.08.1994. FOR THE ASSESSMENT YEAR UNDER APPEAL THE ASSESSEE-COMPANY FILED ITS RETURN OF IN COME ON 27.11.2000 DECLARING INCOME OF 2 ITA NO. 2475/AHD/200 8 RS.1 37 99 468/-. SINCE THE TOTAL INCOME COMPUTED U NDER NORMAL PROVISIONS OF INCOME TAX ACT FELL SHORT OF 30% OF THE BOOK PROFIT THEREFORE IT RETURNED ITS INCOME AT RS.2 25 77 576/- U/S. 115JA OF I.T. ACT 1961. THE ASSESSING OFFICER FRAM ED THE ASSESSMENT UNDER SECTION 143(3) VIDE ORDER DATED 26.02.2003 AT INCOME OF RS.1 47 26 220/ -. THE A.O. ALSO COMPUTED 30% OF BOOK PROFIT UNDER SECTION 115JA AT RS.2 25 77 576/-. SIN CE 30% OF BOOK PROFIT WAS MORE HE FRAMED THE ASSESSMENT UNDER SECTION 115JA AT 30% OF BOOK P ROFIT RS.2 25 77 576/-. THEREAFTER THE A.O. FRAMED THE ASSESSMENT UNDER SECTION 147 READ WITH S ECTION 143(3) WHEREIN HE MADE TOTAL INCOME OF RS.5 60 05 517/-. IN THIS ASSESSMENT ORDER THE A.O. (I) INTER ALIA DISALLOWED THE EXPENDITURE INCURRED ON EXPLORATION AND DRILLING ACTIVITIES AMO UNTING TO RS.4 58.84 791/- CLAIMED UNDER SECTION 42 OF THE INCOME TAX ACT 1961 AND (II) DI SALLOWANCE OF EXCESSIVE DEPRECIATION ON LAND BASED DRILLING PLATFORM BY ALLOWING IT AT 10% INSTE AD OF 25%. IN QUANTUM APPEAL THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) CONFIRMED BOTH THE DISALLOWANCES. SUBSEQUENTLY THE A.O. LEVIED THE PENALTY UNDER SECTION 271(1)(C) AMO UNTING TO RS.5 64 53 064/- IN RESPECT OF VARIOUS ADDITIONS/ DISALLOWANCES WHICH INTER ALIA INCLUDE AFORESAID TWO ADDITIONS/ DISALLOWANCES. 3. ON APPEAL AGAINST THE PENALTY ORDER IN THE IMPU GNED ORDER THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) CONFIRMED THE PENALTY LEVIED BY THE ASSESSING OFFICER IN RESPECT OF AFORESAID TWO ADDITIONS/ DISALLOWANCES. AGGRIEVED B Y THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS) CONFIRMING THE PENALTY IN RESPE CT OF AFORESAID TWO ADDITIONS THE ASSESSEE IS IN APPEAL BEFORE US. 4. AT THE TIME OF HEARING BEFORE US ON BEHALF OF A SSESSEE SHRI PERCY P. PARDIWALLA SR. ADVOCATE APPEARED AND TOOK US THROUGH THE RELEVANT PORTION OF THE ORDER OF ASSESSING OFFICER/ LEARNED COMMISSIONER OF INCOME TAX(APPEALS) IN QUAN TUM APPEAL PENALTY ORDER OF ASSESSING OFFICER AND IMPUGNED ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS). ULTIMATELY HE MADE THE FOLLOWING SUBMISSIONS :- (A) THE ORDER PASSED UNDER SECTION 271(1)(C) DOES N OT SPELL OUT AS TO WHAT INACCURATE PARTICULARS HAVE BEEN FURNISHED. IT MERE LY PROCEEDS ON THE BASIS THAT AS THE APPELLANT HAS CLAIMED A DEDUCTION WHICH WAS NOT ALLOWED NOT ONLY BY THE ASSESSING OFFICER BUT WHICH DISALLOWANC E WAS CONFIRMED BY THE 3 ITA NO. 2475/AHD/200 8 LEARNED COMMISSIONER OF INCOME TAX(APPEALS) WOULD T ANTAMOUNT TO FURNISHING OF INACCURATE PARTICULARS OF INCOME. (B) IN THE RETURN OF INCOME THE ASSESSEE CLAIMED D EDUCTION UNDER SECTION 42 OF THE I.T. ACT AND RELEVANT AGREEMENT ON THE BASIS OF WHICH THE CLAIM WAS MADE WAS A PART OF RECORD FOR THE ASSESSMENT PROCEE DINGS. (C) IT IS WELL SETTLED LAW THAT IF THE ASSESSEE MAK ES A BONAFIDE CLAIM FOR DEDUCTION WHICH IS NEGATIVE DOES NOT JUSTIFY THE IMPOSITION OF PENALTY. IN SUPPORT OF THIS RELIANCE WAS PLACED ON THE FOLLOWI NG DECISIONS :- (I) BURMAH SHELL OIL STORAGE DISTRIBUTING CO. OF IN DIA LTD. VS.- ITO [112 ITR 592 (CAL.); (II) CIT VS.- MEHTA ENGINEERS [300 ITR 308]; (III) CIT VS.- ORIENTAL POWER CASTLE LTD. [303 ITR 49]; (IV) MAHAVIR IRRIGATION PVT. LTD. VS.- CIT [314 IT R 150 (AT)]; (V) CIT VS.- HARYANA WAREHOUSING CORPORATION [314 ITR 214]; (VI) INDIA PETROLEUM PVT. LTD. VS.- JCIT [315 ITR 40 (AT)]; (VII) GUJARAT CREDIT CORPORATION LTD. VS.- ACIT [1 13 ITD133 (SB)]; (VIII) ACIT VS.- MAHINDRA SHABHLAB SERVICES LTD. [ 315 ITR 361]; (IX) ACIT VS.-VIP INDUSTRIES LTD. [122 TTJ 289]. (D) THE FACTS THAT CLAIM OF THE ASSESSEE WAS BONAFI DE IS BORNE OUT BY - (I) THE ASSESSING OFFICER HAS HIMSELF ALLOWED THE D EDUCTION UNDER SECTION 42 AS CLAIMED FROM ASSESSMENT YEARS 1996-97 TO ASSE SSMENT YEAR 2000-01 IN THE ORIGINAL ASSESSMENT ORDERS; 4 ITA NO. 2475/AHD/200 8 (II) EVEN IN THE ASSESSMENT FRAMED FOR THE ASSESSME NT YEAR 2001-02 THE ONLY DISALLOWANCE MADE WAS IN RESPECT OF THE DEPREC IATION OF ASSETS AND EXPENDITURE WHICH WAS NOT DIRECTLY RELATABLE TO THE DRILLING AND EXPLORATION OPERATIONS; (III) EVEN FOR ASSESSMENT YEAR 2001-02 WHEN THE ASS ESSING OFFICER INITIATED PROCEEDINGS UNDER SECTION 148 IT WAS ONLY TO PARTIA LLY DISALLOW THE DEPRECIATION ON ASSETS NOT DIRECTLY UTILIZED FOR TH E PURPOSE OF DRILLING OPERATIONS; (IV) THE LETTERS OF THE MINISTRY OF PETROLEUM DATED APRIL 11 2007 AND JUNE 17 2005 ALSO INDICATE THAT THE MINISTRY OF PETROLE UM WAS OF THE VIEW THAT THE ASSESSEE WAS ENTITLED TO A DEDUCTION UNDER SECT ION 42 AND IT WAS ONLY DUE TO AN OVERSIGHT THAT THE SAME WAS NOT SPECIFICA LLY MENTIONED IN THE PSC; (V) THE ASSESESES CONTENTION WAS SUPPORTED BY THE LANGUAGE OF ARTICLE 15.3 READ WITH ANNEXURE C OF THE PSC WHERE IT WAS CLEARL Y SPECIFIED THAT THE DEDUCTIONS ALLOWABLE UNDER THE INCOME TAX ACT WOULD BE ALLOWED AND THE METHODOLOGY OF DETERMINING THE DEVELOPMENT COST PR ODUCTION COST ETC. WAS ALSO SPELT OUT. THUS THE ASSESSEES CONTENTION WAS BASED ON A PURE INTERPRETATION OF THE RELEVANT PROVISIONS OF THE AG REEMENT; (VI) EVEN THE ASSESSING OFFICER WHEN HE COMPLETED T HE REASSESSMENT FOR THE ASSESSMENT YEARS 1998-99 AND 1999-2000 IN WHICH REA SSESSMENT HE DISALLOWED THE CLAIM FOR DEDUCTION UNDER SECTION 42 HAS NOT EVEN INITIATED PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) RELEVA NT ORDER PLACED ON RECORD; (VII) NEITHER THE ASSESSING OFFICER NOR THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HAVE INITIATED / LEVIED PENALTY UNDER SECTION 5 ITA NO. 2475/AHD/200 8 271(1)(C) EITHER FOR THE PARTIAL DISALLOWANCE OR TH E COMPLETE DISALLOWANCE OF THE DEDUCTION CLAIMED UNDER SECTION 42 FOR THE A SSESSMENT YEAR 2001-02 WHICH ORDER IS THE BASIS FOR MAKING THE DISALLOWANC E IN THE YEAR UNDER APPEAL; (VIII) THE LEARNED COMMISSIONER OF INCOME TAX(APPEA LS) WAS NOT JUSTIFIED IN AFFIRMING THE LEVY OF PENALTY ON THE CLAIM FOR D EPRECIATION AT THE RATE OF 25% ON THE LAND BASE AND DRILLING PLATFORM AS AGAIN ST THE DEPRECIATION THAT WAS ACTUALLY ALLOWED AT THE RATE OF 10%. THE C LAIM FOR DEPRECIATION WAS NEVER MADE IN THE RETURN OF INCOME AND HENCE TH E QUESTION OF IMPOSITION OF PENALTY CAN NEVER ARISE. IN FACT IT WAS ONLY AN ALTERNATIVE CONTENTION THAT WAS URGED IN THE ASSESSEES LETTER TO THE ASSESSING OFFICER DATED 25 TH FEBRUARY 2005 WHEREIN THE ASSESSEE REQUESTED THE ASSESSING OFFICER THAT EVEN IF THE CLAIM UNDER SECTION 42 IS DISALLOWED A DEDUCTION FOR DEPRECIATION IN TERMS OF SECTION 32 SHOULD BE A LLOWED AS A DEDUCTION. IT IS SUBMITTED THAT THE IMPOSITION OF PENALTY IN R ESPECT OF AN ISSUE WHICH WAS RAISED AS AN ALTERNATIVE CONTENTION IS WITHOUT ANY BASIS. (IX) WITHOUT PREJUDICE TO THE ABOVE THE COMPUTATION OF THE PENALTY ON THE BASIS OF THE DIFFERENCE BETWEEN THE TAX PAYABLE ON THE INCOME ASSESSED AS A CONSEQUENCE OF GIVING EFFECT TO THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) AS WELL AS THE TAX PAYABLE O N THE INCOME DECLARED IN THE RETURN IS ERRONEOUS. THIS IS SO BECAUSE THE TAX PAYABLE DETERMINED AS A CONSEQUENCE OF THE ORDER GIVING EFFECT TO THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) IS WORKED OUT AT RS.6 72 90 300/- WHICH IS EVEN HIGHER THAN THE DEDUCTION UNDER SECTION 42 OF RS.4 58 84 791/- THAT WAS CLAIMED AND DISALLOWED. THE MAIN REASON FOR THE DIF FERENTIAL IS ON ACCOUNT OF THE FACT THAT THE SET OFF OF THE BROUGHT FORWARD LOSS OF RS.13 21 37 659/- WHICH WAS ALLOWED IN THE REASSESSMENT WAS NOT ALLOW ED WHILST GIVING EFFECT TO THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) 6 ITA NO. 2475/AHD/200 8 AS A CONSEQUENCE OF A DISALLOWANCE MADE IN THE REAS SESSMENT PROCEEDINGS FOR THE EARLIER ASSESSMENT YEARS VIZ. ASSESSMENT Y EARS 1998-99 AND 1999- 2000. THE ADJUSTMENT MADE ON ACCOUNT OF SUCH BROUGH T FORWARD LOSS BEING DISALLOWED CANNOT RESULT IN THE IMPOSITION OF THE P ENALTY AS THE SAME IS NOT THE BASIS FOR INITIATION OR FOR THE LEVY AND IN ANY EVENT THE LOSSES WERE CORRECTLY CLAIMED WHEN THE RETURN WAS FILED. (X) WITHOUT PREJUDICE TO THE AFORESAID EVEN ASSUMI NG A PENALTY HAS TO BE CONFIRMED THE SAME CAN ONLY BE ON THE BASIS THAT T HE TAX SOUGHT TO BE EVADED WAS RS.8 41 574/- WHICH IS THE TAX WORKED OU T ON THE DEDUCTION OF RS.4 58 84 791/- CLAIMED UNDER SECTION 42 AS REDUCE D BY THE DEPRECIATION THEREON AMOUNTING TO RS.58 72 411/- AND DEDUCTION A LLOWED UNDER SECTION 80IB OF RS.3 82 59 100/- AS A CONSEQUENCE OF THE OR DER OF THE TRIBUNAL. 5. ON THE OTHER HAND SHRI JAGDEO THE LD. CIT D.R . APPEARING ON BEHALF OF REVENUE SUPPORTED THE ORDER OF LEARNED COMMISSIONER OF INCO ME TAX(APPEALS). HE POINTED OUT THAT DISALLOWANCE OF EXPENDITURE CLAIMED UNDER SECTION 4 2 AMOUNTING TO RS.4 58 84 791/- AS WELL AS THE DISALLOWANCE OF EXCESS DEPRECIATION CLAIMED IS CONFIRMED BY THE TRIBUNAL. THE EXCESS EXPENDITURE CLAIMED ALSO AMOUNT TO FURNISHING OF IN ACCURATE PARTICULARS FOR WHICH PENALTY CAN BE LEVIED UNDER SECTION 271(1)(C). FOR THIS THE LD. D .R. RELIED ON THE DECISION OF THE ITAT KOLKATA BENCH IN THE CASE OF ACIT VS.- MCLEOD RUSSEL INDIA LTD. REPORTED IN 101 ITD 39. HE ACCORDINGLY SUBMITTED THAT PENALTY CONFIRMED BY THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) IN RESPECT OF BOTH THESE DISALLOWANCES BE UPHELD. 6. IN REPLY THE LD. COUNSEL OF THE ASSESSEE SUBMIT TED THAT THE ASSESSEE HAD FURNISHED ALL THE DETAILS OF ITS EXPENDITURE AS WELL AS INCOME IN ITS RETURN OF INCOME WHICH DETAILED IN THEMSELVES WERE NOT FOUND TO BE INACCURATE NOR IT COULD BE VIE WED AS CONCEALED OF INCOME ON ITS PART. WHETHER TO ACCEPT ITS CLAIM IN THE RETURN OR NOT I T IS UPTO THE AUTHORITIES. MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE EXPENDITURE WHICH CLAIM W AS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVENUE THAT ALONE CANNOT ATTRACT PENALTY UNDER SE CTION 271(1)(C). HE SUBMITTED THAT THE HON'BLE GUJARAT HIGH COURT HAS ADMITTED THE APPEAL OF THE A SSESSEE AGAINST THE DECISION OF THE TRIBUNAL 7 ITA NO. 2475/AHD/200 8 CONFIRMING THE DISALLOWANCE OF EXPENDITURE ON EXPLO RATION AND DRILLING ACTIVITIES AMOUNTING TO RS.4 58.84 791/- CLAIMED UNDER SECTION 42 OF THE IN COME TAX ACT 1961. THEREFORE IN RESPECT OF DISALLOWANCE OF BONAFIDE EXPENDITURE/ DEDUCTION CLA IMED IN THE RETURN OF INCOME PENALTY UNDER SECTION 271(1)(C) IS NOT LEVIABLE. FOR THIS RELIAN CE WAS PLACED ON THE DECISION OF ITAT AHMEDABAD (THIRD MEMBER) IN THE CASE OF RUPAM MERCA NTILE LTD. VS.- DCIT [91 ITD (AHD.) (TM) 237]. WITH REGARD TO PENALTY LEVIED BY THE A.O . RESTRICTING THE DEPRECIATION TO 10% AS AGAINST 25% CLAIMED BY THE ASSESSEE ON EXPENDITURE ON LAND BASED DRILLING PLATFORM THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT THE SAID ISS UE IS HIGHLY DEBATABLE FOR WHICH NO PENALTY UNDER SECTION 271(1)(C) IS LEVIABLE. BOTH THE CLAIM S MADE BY THE ASSESSEE ARE BONAFIDE WHICH IS EVIDENT FROM THE FACT THAT IN THE ORIGINAL ASSESSME NT FRAMED UNDER SECTION 143(3) ON 26.02.2003 THESE WERE ALLOWED BY THE A.O. ON THIS GROUND ALONE PENALTY LEVIED BY THE ASSESSING OFFICER UNDER SECTION 271(1)(C) IN RESPECT OF THESE TWO ADD ITIONS/ DISALLOWANCES DESERVE TO BE DELETED. 7. HAVING HEARD BOTH THE SIDES WE HAVE CAREFULLY G ONE THROUGH THE ORDERS OF AUTHORITIES BELOW. RECENTLY THE HON'BLE SUPREME COURT IN THE C ASE OF CIT VS.- RELIANCE PETROPRODUCTS PVT. LTD. [2010] 322 ITR 158 (SC) HELD THAT MAKING INCOR RECT CLAIM DOES NOT AMOUNT TO CONCEALMENT OF PARTICULARS OF INCOME. THE HEAD-NOTES OF THE S AID DECISION READS AS UNDER :- 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 T HERE 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 2 71(1)(C) WOULD EMBRACE THE DETAILS OF THE CLAIM MADE. WHERE NO INF ORMATION GIVEN IN THE RETURN IS FOUND TO BE INCORRECT OR INACCURATE THE ASSESSEE CANNOT BE HELD GUILTY OF FURNISHING INACCURATE PARTICULARS. IN ORD ER TO EXPOSE THE ASSESSEE TO PENALTY UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION THE PENALTY PROVISION CANNOT BE INVOKED. BY NO STRETCH OF IMAGI NATION CAN MAKING AN INCORRECT CLAIM TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS. THERE CAN BE NO DISPUTE THAT EVERYTHING WOULD DEPEND UPON THE RETURN FILED BY THE ASSESSEE BECAUSE THAT IS THE ONLY DOCUMENT WHE RE THE ASSESSEE CAN FURNISH THE PARTICULARS OF HIS INCOME. WHEN SUCH PA RTICULARS ARE FOUND TO BE INACCURATE THE LIABILITY WOULD ARISE. TO ATTRAC T PENALTY THE DETAILS SUPPLIED IN THE RETURN MUST NOT BE ACCURATE NOT EX ACT 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 FA LSE THERE IS NO QUESTION OF INVITING THE PENALTY UNDER SECTION 271(1)(C). A MERE MAKING OF A CLAIM 8 ITA NO. 2475/AHD/200 8 WHICH IS NOT SUSTAINABLE IN LAW BY ITSELF WILL NO T AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FURNISHING INAC CURATE 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 O N LAND BASED DRILLING PLATFORM IS CONFIRMED RIGHT UPTO TRIBUNAL. IN THE ORIGINAL ASSESSMENT FRA MED BY THE ASSESSING OFFICER UNDER SECTION 143(3) ON 26.02.2003 BOTH THE CLAIMS OF THE ASSESS EE WERE ALLOWED. THIS IN OUR OPINION IS SUFFICE TO HOLD THAT THE JUDGMENT OF THE HON'BLE SU PREME COURT IN THE CASE OF CIT VS.- RELIANCE PETROPRODUCTS PVT. LTD. (SUPRA) IS SQUARELY APPLICA BLE TO THE FACTS OF ASSESSEES CASE. THE APPEAL OF THE ASSESSEE AGAINST NON-ALLOWANCE OF CLAIM UNDE R SECTION 42 OF THE I.T. ACT HAS BEEN ADMITTED BY THE HON'BLE GUJARAT HIGH COURT UNDER SECTION 260 A 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 THE CASE OF THE ASSESS EE DOES NOT FALL WITHIN THE MISCHIEF OF MAIN PROVISION OF SECTION 271(1)(C) OF THE INCOME TAX AC T 1961 BECAUSE MERE REJECTION OF ASSESSEES CLAIM WOULD NOT BE SUFFICIENT TO HOLD THE 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 INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CO NCEALED CONTAINED IN EXPLANATION 1 WILL NOT APPLY IF THE EXPLANATION THA T 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 COMP UTATION OF HIS TOTAL INCOME. IN CASES WHERE EXPLANATION WAS OFFERED BUT WAS REJECTED AS IT COULD NOT BE SUBSTANTIATED BY THE ASSESSEE THERE W OULD ARISE NO PRESUMPTION OF CONCEALMENT OF THE PARTICULARS OF IN COME THAT WAS ADDED OR DISALLOWED AND SUCH ASSESSEE CAN SHOW THAT THE S AID EXPLANATION OFFERED BY HIM WAS A BONA FIDE ONE AND THAT HE HAD DISCLOSED ALL FACTS RELATING TO SUCH EXPLANATION AND MATERIAL TO THE CO MPUTATION 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 TH E ASSESSEE HAS ALSO SUBSTANTIATED THE SAME BY THE FACT THAT IN ORIGINAL ASSESSMENT DEDUCTION UND ER SECTION 42 AS WELL AS DEPRECIATION CLAIM WAS 9 ITA NO. 2475/AHD/200 8 ALLOWED. MOREOVER THE APPEAL OF ASSESSEE ON DISALL OWANCE CLAIMED UNDER SECTION 42 OF RS.4 58 84 791/- IS ADMITTED BY THE HON'BLE 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 CONFIRMED BY THE LEARNED COMMISS IONER OF INCOME TAX(APPEALS) IN RESPECT OF BOTH THE ITEMS OF ADDITIONS/ DISALLOWANCES IS HE REBY DELETED. 10. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. THE ORDER WAS PRONOUNCED IN THE COURT ON 30.04.2010 . SD/- SD/- (N.S. SAINI) (T.K. SHARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 30 / 04 /2010 COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE (2) THE DEPARTMENT. 3) CIT(A) CONCERNED (4) CIT CONCERNED (5) D.R. ITAT AHMEDABAD. TRUE COPY BY ORDER DEPUTY REGISTRAR ITAT AHMEDABAD LAHA/SR.P.S.