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2025 Supreme(Guj) 1792
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
BHARGAV D. KARIA, PRANAV TRIVEDI, JJ.
Director Of Income Tax (International Taxation) - Appellant
Versus
Niko Resources Ltd – Respondent
R/Tax Appeal No. 256 of 2012 With R/Tax Appeal No. 279 of 2012 With R/Tax Appeal No. 280 of 2012 With R/Tax Appeal No. 281 of 2012
Decided On : 13-11-2025
Penalty under Section 271(1)(c) of the Income Tax Act cannot be levied when no accurate particulars are found incorrect. Claims made by the assessee were bona fide and MAT provisions do not warrant penalty if tax liability remains unchanged.
Headnote:(A) Income Tax Act, 1961 - Section 260A - Section 271(1)(c) - Minimum Alternate Tax (MAT) - Penalty proceedings - Appellate Tribunal confirmed cancellation of penalty for alleged inaccurate particulars of income and held that no penalty is leviable if tax liability remains unchanged due to MAT provisions - The Tribunal relied on the Supreme Court ruling in CIT v. Reliance Petroproducts Pvt. Ltd. which states that making an incorrect claim does not equate to concealment of particulars of income - All deductions claimed by the assessee were bona fide, and the facts were disclosed - Penalty cannot be levied where details in return are accurate. (Paras 3, 15, 18)
(B) The primary issues were whether the Appellate Tribunal erred in confirming the cancellation of penalty under Section 271(1)(c) and the implications of MAT on penalty imposition. (Paras 3, 4)
Findings of Court:
The Appellate Tribunal's decision to cancel the penalty and conclude that the penalty was not warranted given the circumstances of the case was upheld.
Result: Appeals dismissed.
| Table of Content |
|---|
| 1. background on the assessee's business and operations. (Para 6 , 7) |
| 2. details on the tax assessment conducted. (Para 8 , 9) |
| 3. penalties initiated and the appeals process. (Para 10 , 12) |
| 4. analysis of legal precedents affecting penalty. (Para 15 , 18) |
| 5. final decision on appeals. (Para 19) |
JUDGMENT :
BHARGAV D. KARIA, J.
1. Heard learned Senior Standing Counsel Mr. Varun K. Patel for the appellant and learned advocate Mr. B.S. Soparkar for the respondent.
2. Tax Appeal No.256 of 2012 is filed by the Revenue under section 260A of the INCOME TAX ACT , 1961 (For short “the Act”) arising out of order dated 25.11.2011 in ITA No.1608/Ahd/2009 for the Assessment Year 2004-2005 and Tax Appeal Nos. 279 of 2012, 280 of 2012 and 281 of 2012 arises out of common order dated 31.10.2011 in ITA Nos.1605 to 1607/Ahd/2009 for Assessment Years 2000-2001, 2002-2003 and 2003-2004 respectively passed by the Income Tax Appellate Tribunal, Ahmedabad, Bench-D, (For short “the Tribunal”).
3. Tax Appeal No. 256 of 2012 is admitted vide order dated 09.08.2012 for consideration of the following substantial questions of law:
“1. Whether the Appellate Tribunal has substantially erred in confirming the order passed by the CIT(A) in cancelling the penalty of Rs. 27,17,33,613/- levied under section 271(1)(c)of the I.T.Act, 1961 ?
2. Whether the Appellate Tribunal has substantially erred in confirming the order of the CIT(A) in holding that no penalty should be levied under section 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 ?”
4. Tax Appeal Nos. 279, 280 and 281 of 2012 are admitted vide common order dated 09.08.2012 on the following substantial questions of law:
“1. Whether the Appellate Tribunal has substantially erred in confirming the order passed by the CIT(A) in cancelling the penalty levied under section 271(1) (c) read with section 275(1A) of the I.T.Act, 1961
2. Whether the Appellate Tribunal has substantially erred in confirming the order of the CIT(A) in holding that no penalty should be levied under section 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 ?”
5. Since the issue involved in all these tax appeals are identical, they have been heard together and would be disposed of by this common judgment.
6. For the sake of convenience, Tax Appeal No.256 of 2012 is treated as lead case. Brief facts of the case are that the assessee company which is incorporated in Canada is engaged in the business of natural gas and oil exploration.
7. The assessee company entered into a joint venture with the Gujarat State Petroleum Corporation Ltd. (GSPCL) for the exploration and development of natural gas and oil fields located in India. The joint venture resulted in entering into production sharing contracts with the Government of India on 23.09.1994 for exploration and development of five designated natural gas and oil fields in Gujarat. The assessee company also entered into production sharing contracts on 17.07.2001 with the Government of India for exploration and extraction of oil and natural gas from Cambay Onshore India in Surat District, Gujarat.
8. The assessee company filed its return of income for the year under consideration on 01.11.2004 declaring a total income of Rs. Nil. The return was processed under section 143(1) of the Act on 21.03.2005.
9. Case of the assessee was selected for scrutiny by the Assessing Officer. The Assessing Officer framed the assessment under section 143(3) of the Act vide order dated 26.12.2006 determining total income at Rs.180,28,35,714/- after making the following additions/ disallowances:
i) Disallowance under section 42 of the Act amounting to Rs.11,58,92,939/- for Hazira and Bhandut block
ii) Disallowance under section 42 of the Act amounting to Rs.54,39,72,612/- for Surat Block
iii) Disallowance of deduction under section 80IB(9) of
