From the given facts it cannot be said that there was any surreptitious mechanism embarked upon by the assessee nor it can be said that the assessee failed to exercise their transactions with all the due diligence. In the present case the assessee has prepared its TP report in good faith and with due care. There is nothing on record to disprove the good faith and the due diligence discharged by the assessee in determining the ALP of transactions in the TP report submitted by the assessee. Therefore, it was held that Explanation 7 to section 271(1)(c) is not attracted in the present case, and hence, it is not a fit case for levying the penalty u/s 271(1)(c). Appeal of revenue was dismissed.  (AY. 2006-07)