DOLPHIN OFFSHORE ENTERPRISES (I) LTD, MUMBAI v. DCIT 3(1), MUMBAI

ITA 2830/MUM/2010 | 2002-2003
Pronouncement Date: 30-03-2011 | Result: Allowed

Appeal Details

RSA Number 283019914 RSA 2010
Assessee PAN AAACD0522D
Bench Mumbai
Appeal Number ITA 2830/MUM/2010
Duration Of Justice 11 month(s) 21 day(s)
Appellant DOLPHIN OFFSHORE ENTERPRISES (I) LTD, MUMBAI
Respondent DCIT 3(1), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 30-03-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted D
Tribunal Order Date 30-03-2011
Assessment Year 2002-2003
Appeal Filed On 09-04-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL 'D' BENCH MUMBAI BEFORE SHRI N.V. VASUDEVAN JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH ACCOUNTANT MEMBER ITA NOS. 2826 TO 2832/MUM/2010 (ASSESSMENT YEARS: 1998-99 TO 2004-05) M/S. DOLPHIN OFFSHORE ENTERPRISES (I) DCIT 3(1) LTD. 1001 RAHEJA CENTRE MUMBAI 214 NARIMAN POINT MUMBAI 400021 VS. PAN - AAACD 0522 D APPELLANT RESPONDENT APPELLANT BY: SHRI M. SUBRAMANIAN RESPONDENT BY: SHRI JITRENDRA YADAV O R D E R PER BENCH THESE SEVEN APPEALS ARE BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A) VII MUMBAI DATED 11.01.2010 PASSED RESPECTIVELY FO R THE RELEVANT ASSESSMENT YEARS CONFIRMING THE PENALTY ON THE CLAI M OF 35D WHILE DELETING THE PENALTY ON THE CLAIM UNDER SECTION 33AC. 2. ASSESSEE CLAIMED AN AMOUNT OF ` 4 99 510/- AS EXPENDITURE INCURRED IN PUBLIC ISSUE IN A.Y. 1995-96 AND CLAIMED DEDUCTI ON OF 1/10 UNDER SECTION 35D FOR THE FIRST TIME FOR THAT YEAR. RESPE CTIVE CLAIMS WERE MADE FOR ALL THE YEARS UNDER CONSIDERATION AT ` 4 99 510/- PER YEAR. IN THE ASSESSMENT FOR A.Y. 1995-96 THE CLAIM WAS DISALLOWED BY THE A. O. ON THE REASON THAT ASSESSEE BEING IN THE BUSINESS OF OPERATION OF SHIP S IS NOT AN INDUSTRIAL UNDERTAKING SO AS TO ALLOW THE DEDUCTION UNDER SECT ION 35D. THE A.O. DISALLOWED THE CLAIM IN THE VERY FIRST YEAR AND ASS ESSEE HAS NOT TAKEN UP THE MATTER BEFORE THE CIT(A). HOWEVER ON SIMILAR DISALL OWANCE IN LATER YEARS ASSESSEE CONTESTED AND WITHDREW THE GROUND AS NOT P RESSED. IN VARIOUS PROCEEDINGS THE A.O. WAS DISALLOWING THE CLAIM UNDE R SECTION 35D ON THE SAME REASON. THE A.O. FINALISED THE PENALTIES PENAL TY UNDER SECTION 271(1)(C) ON THIS ISSUE ALONG WITH ANOTHER ISSUE OF CLAIM OF DEDUCTION UNDER SECTION 33AC. THE CIT(A) DELETED THE PENALTY LEVIED ON THE CLAIM UNDER SECTION 33AC ITA NO. 2826/MUM/2010 M/S. DOLPHIN OFFSHORE ENTERPRISES (I) LTD. 2 WHEREAS HE CONFIRMED THE PENALTY PERTAINING TO THE CLAIM UNDER SECTION 35D ON AN AMOUNT OF ` 4 99 510/-. ASSESSEE IS AGGRIEVED. 3. THE LEARNED COUNSEL SUBMITTED THAT THIS IS A MERE C LAIM MADE BONAFIDELY ON THE EXPENSES SPENT IN 1995-96 AND ASS ESSEE IS CONTESTING THE SAME BEFORE THE CIT(A) AND SO MERE DISALLOWANCE OF CLAIM CANNOT LEAD TO PENALTY UNDER SECTION 271(1)(C). HE RELIED ON VARIO US CASE LAWS INCLUDING THAT OF HON'BLE SUPREME COURT IN THE CASE OF RELIAN CE PETROPRODUCTS (P) LTD. 322 ITR 158. THE LEARNED COUNSEL ALSO EXPLAINED VAR IOUS FACTS REGARDING THE CLAIMS IN RESPECTIVE YEARS AND WHY PENALTY SHOULD N OT BE LEVIED WHICH WE DISCUSS IN RESPECT OF EACH ASSESSMENT YEAR. 4. THE LEARNED D.R. HOWEVER CONTESTED THAT THE ASSES SEES CLAIM WAS ORIGINALLY CONSIDERED IN A.Y. 1995-96 AND INSPITE O F NOT ALLOWING THE CLAIM ASSESSEE WENT ON MAKING THE CLAIM IN ALL THE YEARS SO PENALTY IS WARRANTED ON THE FACTS OF THE CASE AS THE ASSESSEE CONTINUED TO CLAIM INSPITE OF BEING DENIED BY THE A.O. IN EARLIER YEARS. THE CLAIM WAS NOT BONAFIDE. 5. WE HAVE CONSIDERED THE ISSUE EXAMINED THE RECORD A ND ARGUMENTS OF THE RIVAL PARTIES. AS SEEN FROM THE RECORD THE ASSE SSEE HAS ORIGINALLY CLAIMED THE DEDUCTION IN A.Y. 1995-96 AND THE 10 TH YEAR OF CLAIM ENDED IN A.Y. 2004-05. A.O. SEEMS TO HAVE DISALLOWED THE AMOUNT F OR THE FIRST TIME IN 1995-96 AND AS SEEN FROM SOME OF THE APPELLATE ORDE RS THE ISSUE IS ALSO THERE IN A.Y. 1998-99. AFTER WARDS THE A.O. AGAIN S PECIFICALLY DISALLOWED IN RESPECTIVE ASSESSMENT YEARS AND HE INITIATED PENALT Y PROCEEDINGS ONLY IN A.Y. 2004-05 ON THE ISSUE SPECIFICALLY MAKING A SAT ISFACTION RECORDED AFTER THE DISALLOWANCE. IT IS A CLAIM BY THE ASSESSEE MAD E BONAFIDELY FOR THE PUBLIC ISSUE EXPENSES INCURRED AND THE ASSESSEE WAS OF THE OPINION THAT BEING AN INDUSTRIAL UNDERTAKING THE CLAIM WAS ALLOWABLE. THE SAME WAS NOT ALLOWED BY THE A.O. ON THE REASON THAT ASSESSEE BEING IN TH E BUSINESS OF OPERATION OF SHIPS CANNOT BE CONSIDERED AS AN INDUSTRIAL UNDERTA KING. THERE IS NO FURNISHING OF ANY INACCURATE PARTICULARS ON THIS IS SUE AS THE ORIGINAL CLAIM WAS MADE IN A.Y. 1995-96 AND THE CLAIM WAS REPEATED IN ALL THE YEARS. IN THE CASE OF ITO VS. ROBORENT INVESTMENT (P) LTD. 7 SOT 181 (MUM) THE COORDINATE BENCH OF THE ITAT AFTER EXAMINING THE EN TIRE GAMUT OF THE CASE ITA NO. 2826/MUM/2010 M/S. DOLPHIN OFFSHORE ENTERPRISES (I) LTD. 3 LAW AVAILABLE CAME TO THE CONCLUSION THAT MERE REJE CTION OF A LEGAL CLAIM OF THE ASSESSEE IS NOT BY ITSELF SUFFICIENT TO WARRANT IMPOSITION OF PENALTY. CASES INVOLVING GENUINE DIFFERENCE OF OPINION OF MA TTERS OF LAW BETWEEN THE ASSESSEE AND THE A.O. ARE CLEARLY OUTSIDE THE SCOPE OF EXPLANATION 1 TO SECTION 271(1)(C) PROVIDED THE ASSESSEE HAS MADE FU LL DISCLOSURE OF ALL RELEVANT FACTS AND ALSO ACTED BONAFIDELY. PRINCIPLE ESTABLISHED IN THE ABOVE CASE IS CLEARLY APPLICABLE TO THE FACTS OF ASSESSEE S CASE. 6. NOT ONLY THAT THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS (P) LTD. 322 ITR 158 ALSO CO NSIDERED THE PROVISIONS OF SECTION 271(1)(C) AND HAS HELD THAT MERE MAKING OF THE CLAIM WHICH IS NOT SUSTAINABLE IN LAW BY ITSELF WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. FOLLOWING THE PRINCIPLES ESTABLISHED BY THE HON'BLE SUPREME COURT WE ARE OF THE VIEW THAT THE FACTS IN THE PRESENT CASE DOES NOT WARRANT ANY PENALTY AS SESSEE AS HAS MADE COMPLETE DISCLOSURE OF ITS CLAIM AND THERE IS NO QU ESTION OF FURNISHING ANY INACCURATE PARTICULARS. NOW WITH THIS GENERAL PROPO SITION LET US EXAMINE THE INDIVIDUAL YEARS CLAIM. 7. A.Y. 1998-99 : IN THIS ASSESSMENT YEAR WHICH STANDS ON A DIFFER ENT FOOTING FROM THE OTHER YEARS THE ORDER WAS PASSED UNDER SECTION 143(3) R.W.S. 147. THE ORDER PASSED BY THE A.O. DATED 29.1 1.2005 DOES NOT INDICATE ANY DISALLOWANCE OF CLAIM UNDER PUBLIC ISSUE EXPENS ES. IN FACT THE COMPUTATION INDICATES THAT THE A.O. ADDED AN AMOUNT OF ` 4 99 510/- AND ALSO ALLOWED THE SAME EXPENSES. SINCE THERE IS NO D ISALLOWANCE OF CLAIM UNDER SECTION 35D WE ARE NOT SURE ON WHAT BASIS THE A.O. LEVIED PENALTY FOR DISALLOWANCE UNDER SECTION 35D AND CIT(A) UPHELD TH E PENALTY. SINCE THERE IS NO DISALLOWANCE THE QUESTION OF LEVY OF PENALTY DOES NOT ARISE. THE PENALTY IS CANCELLED 8. A.Y. 1999-2000 : FOR THIS YEAR IN ORDER DATED 19.05.2006 UNDER SECTION 143(3) R.W.S. 147 THE A.O. ADDED BACK THE A MOUNT OF ` 4 99 510/- AND DID NOT ALLOW ANY CLAIM BUT THERE IS NO DISCUSS ION IN THE ASSESSMENT ORDER AT ALL ABOUT THE CLAIM OF DISALLOWANCE AS IT IS A REASSESSMENT CONSEQUENT TO REOPENING FOR DISALLOWING THE CLAIM O F 33AC MADE BY THE A.O. ITA NO. 2826/MUM/2010 M/S. DOLPHIN OFFSHORE ENTERPRISES (I) LTD. 4 THE ORIGINAL ASSESSMENT UNDER SECTION 143(3) WAS CO MPLETED ON 13.02.2002 AND THE ORDER OF THE CIT(A) WAS ALSO PASSED ON 22.1 0.2003. IF AT ALL THERE WAS ANY DISALLOWANCE THE SAME WOULD HAVE BEEN DONE IN THE ORIGINAL ASSESSMENT AND SINCE THERE IS NO DISCUSSION ABOUT 3 5D IN THIS ORDER THE QUESTION OF LEVY OF PENALTY UNDER SECTION 271(1)(C) DOES NOT ARISE AS THE SAID DISALLOWANCE WAS NOT MADE IN THIS ORDER DATED 19.05 .2006 FOR WHICH PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) WERE INITIATED. EVEN IF PENALTY PROCEEDINGS WERE ORIGINALLY INITIATED FOR THE DISAL LOWANCE UNDER SECTION 35D THE SAME WOULD HAVE BEEN BARRED BY LIMITATION AFTER THE ORDERS OF THE CIT(A) DATED 22.10.2003. THIS PENALTY ORDER WAS PASSED ON 30.03.2009. THEREFORE THE ISSUE FOR LEVY OF PENALTY DOES NOT ARISE IN THI S ORDER UNDER SECTION 143(3) R.W.S. 147. THEREFORE THE PENALTY IS CANCELLED. 9. IT IS ALSO SEEN THAT THE REASSESSMENT PROCEEDINGS F OR THESE TWO YEARS OF AY 1998-99 AND 1999-2000 HAVE BEEN INITIATED AFT ER THE END OF FOUR YEARS AND THE ITAT VIDE ORDERS DATED 25 TH MARCH 2010 IN ITA NOS. 4699 & 4700/MUM/2007 FOR A.Y. 1998-99 AND 1999-2000 HAS CA NCELLED THE REASSESSMENT PROCEEDINGS. ACCORDINGLY THE QUESTION OF LEVY OF PENALTY IN THESE TWO ASSESSMENT YEARS ALSO DOES NOT ARISE AS T HE REASSESSMENT PROCEEDINGS ITSELF HAS BEEN HELD BAD IN LAW. 10. A.Y. 2000-01 : IN THIS YEAR THE PENALTY ORDER INDICATES THAT ASSESSMENT OF TOTAL INCOME WAS COMPLETED UNDER SECT ION 143(3) R.W.S. 263 VIDE ORDER DATED 29.11.2005 ASTHE CIT HAS SET ASIDE ORIGINAL ORDER ON THE ISSUE OF CLAIM OF DEDUCTION UNDER SECTION 33AC. AS THE ORIGINAL ORDER UNDER SECTION 143(3) DATED 31.03.2003 WAS CONTESTED BEFOR E THE CIT(A) ISSUES IN THAT ORDER WERE MERGED WITH CIT(A)S ORDER. CONSEQ UENTLY THE ORDER PASSED UNDER SECTION 143(3) R.W.S. 263 WAS ONLY ON THE ISS UE OF 33AC IN WHICH A DISALLOWANCE WAS MADE BUT IT WAS NOT UPHELD BY THE ITAT. BE THAT AS IT MAY THE CIT(A) HAS ALREADY DELETED THE PENALTY OF 33AC. THEREFORE SINCE THE ISSUE OF 35D WAS NOT SUBJECT MATTER OF THE ORDER DA TED 29.11.2005 THE QUESTION OF LEVY OF PENALTY ON 35D DISALLOWANCE DOE S NOT ARISE IN THIS PROCEEDINGS. THEREFORE THE ORDER DATED 30.30.2009 UNDER SECTION 271(1)(C) IS BAD IN LAW. THE PENALTY IS CANCELLED ITA NO. 2826/MUM/2010 M/S. DOLPHIN OFFSHORE ENTERPRISES (I) LTD. 5 11. A.Y. 2001-02 : IN THIS ASSESSMENT YEAR THE ASSESSMENT WAS DATED 23.05.2006 AND THE ORDER WAS COMPLETED UNDER SECTIO N 143(3) RWS SEC.263. THE ORIGINAL ASSESSMENT ORDER WAS DT. 22.03.2004 WH ICH WAS SUBJECT MATTER OF APPEAL BEFORE THE CIT(A) WHO HAS PASSED AN ORDER ON 27.07.2004. THE ONLY ISSUE WHICH WAS SETASIDE TO THE A.O. BY THE CI T UNDER SECTION 263 WAS AGAIN THE DEDUCTION UNDER SECTION 33AC AS IN A.Y. 2000-01 AND THE ISSUE OF 35D IS NOT SUBJECT MATTER OF EITHER THE SET ASIDE P ROCEEDINGS OR CONSEQUENTIAL PROCEEDINGS. THEREFORE THE QUESTION OF PENALTY ON DISALLOWANCE U/S 35D DOES NOT ARISE. THEREFORE TH E ORDER OF PENALTY BY THE A.O. INCLUDING THE 35D DISALLOWANCE IS BAD IN LAW. THE PENALTY IS CANCELLED 12. A.Y. 2002-03 TO AY 2004-05 : IN THESE YEARS THE CLAIM OF THE ASSESSEE UNDER SECTION 35D WAS DISALLOWED IN THE ORDERS UNDE R SECTION 143(3) PASSED BY THE A.O. IN RESPECTIVE ASSESSMENT YEARS. THE REA SON GIVEN WHILE DISALLOWING THE CLAIM IN THE ORDERS BY THE A.O. IS AS UNDER: - 5.1 THE ASSESSEE HAS DEBITED RS.4 99 510/- ON A/C. OF PUBLIC ISSUE AND CLAIMED DEDUCTION ON THIS AMOUNT U/S 35D. VIDE NOTICE U/S 142(1) DT. 17-5-2006 THE ASSESSEE WAS ASKED TO SHOW -CAUSE WHY THIS AMOUNT SHOULD NOT BE DISALLOWED ON THE BASIS O F ASSESSMENT ORDER PASSED FOR EARLIER A.Y. UPTO A.Y. 2003-04 AS THE ASSESSEE IS NOT ELIGIBLE FOR CLAIM OF THIS EXPENSE. REPLY TO THIS W AS FILED VIDE LETTER DT 15-6-2006 WHEREIN IT IS STATED THAT SUCH DEDUCTION HAS BEEN DISALLOWED BY THE A.O. IN EARLIER YEARS BUT THE ASS ESSEE COMPANY HAS NOT SUCCESSFUL IN GETTING RELIEF AT THE CIT(A) LEVEL. THE FACTS OF THE CASE REMAIN THE SAME. SUCH EXPENSES ARE ALLOWABLE O NLY IN CONNECTION WITH THE EXPANSION OF INDUSTRIAL UNDERTA KING. THE ASSESSEE COMPANY BEING NOT FALLING UNDER THIS CATEG ORY IS NOT ELIGIBLE FOR CLAIM OF THIS EXPENSE U/S 35D. HENCE THE CLAIM OF THE ASSESSEE IS DISALLOWANCE WHICH WORKS OUT TO RS.4 99 510/-. 13. AS CAN BE SEEN FROM THE ABOVE IT IS NOT THE CASE O F THE A.O. THAT ASSESSEE HAS EITHER CONCEALED PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF ITS INCOME. IT IS A MERE CLAIM WHICH WAS DISALLOWED. THEREFORE AS PER THE PRINCIPLES LAID DOWN BY THE HON'BLE SUPR EME COURT IN THE CASE OF RELIANCE PETROPRODUCTS (P) LTD (SUPRA) GROUND OF DI SALLOWANCE OF CLAIM DOES NOT ATTRACT ANY PENALTY. ITA NO. 2826/MUM/2010 M/S. DOLPHIN OFFSHORE ENTERPRISES (I) LTD. 6 14. THE LEARNED D.R. IN HIS ARGUMENT HAS MADE AN ARGUME NT THAT THE ASSESSEE INSPITE OF BEING DISALLOWED THE CLAIM IN 1 995-96 WENT ON MAKING THE CLAIM THEREFORE THE CLAIM IS NOT BONAFIDE. 15. AS SEEN FROM THE RELEVANT ORDERS PASSED THE CLAIM WAS DISALLOWED ON MERE INTERPRETATION OF LAW THAT ASSESSEES UNDERTAK ING IS NOT AN INDUSTRIAL UNDERTAKING BEING IN THE OPERATION OF SHIPS AND SHI PS ARE EXCLUDED FROM THE DEFINITION. ASSESSEE HOWEVER IS CONTESTING THE IS SUE IN EVERY YEAR AND SO CANNOT BE STATED THAT THERE IS NO BONAFIDE IN ASSES SEES CLAIM. THE EXPENDITURE WAS INCURRED IN A.Y. 1995-96 AND EVERY YEAR 1/10 OF THE CLAIM WAS BEING MADE LAST YEAR BEING A.Y. 2004-05. IT IS ALSO NOTICED THAT IN SOME YEARS THE A.O. EVEN IN THE REASSESSMENT PROCEEDING S HAS ALLOWED THE CLAIM THEREFORE IT CANNOT BE STATED THAT ASSESSEE HAS DE LIBERATELY MADE THE CLAIM. IN VIEW OF THIS WE ARE OF THE OPINION THAT MERE DI SALLOWANCE OF CLAIM UNDER SECTION 35D DOES NOT ATTRACT ANY PENALTY UNDER SECT ION 271(1)(C). IT IS ALSO NOTICED THAT IN THE YEAR OF ORIGINAL DISALLOWANCE O F 1995-96 THERE WAS NO INITIATION OF PENALTY PROCEEDINGS AND THEREFORE WE ARE OF THE OPINION THAT PENALTY CANNOT BE SUSTAINED. 16. IT IS SURPRISING TO NOTE THAT THE A.O. HAS PASSED SIMILAR ORDERS IN ALL THE YEARS RELYING ON CIT(A)S ORDER DATED 29.03.200 7 EXTRACTED IN PARA 2 OF THE PENALTY ORDER AND EXCEPT CHANGE IN FACTS IN PAR A 1 REST OF THE ORDER IS COMMON AND LEVY OF PENALTY IN PARA 12 IS ALSO SIMIL AR EXCEPT THE CHANGE OF AMOUNTS. THIS SHOWS THAT THE A.O. HAS NOT APPLIED H IS MIND AND PASSED THE ORDER MECHANICALLY IN ALL THE 7 YEARS. THE CIT(A) S ORDER DATED 29.03.2007 REFERRED TO BY THE A.O. IN THE PENALTY ORDER IS ON THE APPEAL AGAINST THE ORDER UNDER SECTION 143(3) R.W.S. 263 WHEREIN THE I SSUE CONTESTED BEFORE AND DECIDED BY THE CIT(A) WAS ONLY WITH REFERENCE TO TH E DEDUCTION UNDER SECTION 33AC. THERE IS NO DISCUSSION ABOUT 35D. SIMILARLY I N A.Y. 2002-03 TO AY 2004-05 THE ISSUE WAS NOT PRESSED BEFORE THE CIT(A) . HENCE THE CIT(A) HAS NOT ADJUDICATED. FROM WHERE THE A.O. EXTRACTED PARA 2 (B) IN THE PENALTY ORDER CANNOT BE UNDERSTOOD. PENALTY ORDER DID INDIC ATE AS UNDER: - [B] THE ASSESSEE HAS DEBITED RS.4 99 510/- ON ACCOUNT O F PUBLIC ISSUE AND CLAIM DEDUCTION ON THIS AMOUNT U/S 35D. SUCH EX PENSES ARE ALLOWABLE ITA NO. 2826/MUM/2010 M/S. DOLPHIN OFFSHORE ENTERPRISES (I) LTD. 7 ONLY IN CONNECTION WITH THE EXPANSION OF INDUSTRIAL UNDERTAKING. THE ASSESSEE COMPANY BEING NOT FALLING UNDER THIS CATEGORY IS NO T ELIGIBLE FOR CLAIM OF THIS EXPENSES U/S. 35D. HENCE THE ACTION OF THE ASSESSIN G OFFICER TO DISALLOWANCE SUCH DEDUCTION U/S 35D IS JUSTIFIED. THIS FINDING OF THE CIT(A) ON DEDUCTION U/S 35D IS NOT IN THE ORDER REFERRED BY THE AO. IT SEEMS THE SAME MUST HAVE EXTRACTED FR OM AN EARLIER ORDER NOT PERTAINING TO THE YEAR INVOLVED. THERE SEEMS TO BE NO LOGIC IN LEVYING PENALTY BY THE AO AS SEEN FROM THE ORDERS. 17. AS DISCUSSED ABOVE AS FAR AS A.Y. 1998-99 IS CONCERNED THERE IS NO DISALLOWANCE. AS FAR AS A.Y. 1999-2000 IS CONCERNE D EVENTHOUGH THERE IS A DISALLOWANCE BUT IT WAS MADE IN THE FIRST ORDER AND NOT IN THE ORDER ON WHICH PENALTY WAS CONSIDERED. IN A.Y. 2000-01 AND 2 001-02 THE ORDERS WERE PASSED CONSEQUENT TO SETTING ASIDE UNDER SECTION 26 3 AND EVENTHOUGH THE A.O. STATES THAT THE ORDERS ARE CONSEQUENTIAL TO SE C 263 THE FACT WAS THAT THERE WAS NO DISALLOWANCE UNDER SECTION 35D IN THAT ORDER AND THE ISSUE DOES NOT ARISE OUT OF CIT ORDER. FOR OTHER YEARS THE REFERENCE TO CIT(A)S ORDER PASSED IN ANOTHER YEAR WHILE LEVYING THE PENA LTY DOES NOT SEEM TO BE APPROPRIATE CONSIDERING THAT THE PENALTY WAS LEVIE D U/S 271(1)(C). IT IS SURPRISING THAT THE MECHANICAL ORDERS PASSED BY THE A.O. GOT CONFIRMED BY THE CIT(A) WITHOUT ANY EXAMINATION. WE ARE OF THE O PINION THAT THIS CASUAL APPROACH OF THE OFFICERS PARTICULARLY IN LEVYING P ENALTY UNDER SECTION 271(1)(C) SHOULD BE CONDEMNED. 18. ALL PENALTIES ARE THEREFORE CANCELLED. IN THE RESULT THE APPEALS ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH MARCH 2011. SD/- SD/- (N.V. VASUDEVAN) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI DATED: 30 TH MARCH 2011 ITA NO. 2826/MUM/2010 M/S. DOLPHIN OFFSHORE ENTERPRISES (I) LTD. 8 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) VII MUMBAI 4. THE CIT III MUMBAI CITY 5. THE DR D BENCH ITAT MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT MUMBAI BENCHES MUMBAI N.P.