Brief Facts of the Case
The assessee is an investment company registered as non-banking financial company (NBFC) with Reserve Bank of India. For the relevant financial year under consideration, return of income was filed showing taxable income of Rs.5,29,14,607/- on 28.10.2005 and the AO completed the assessment u/s 143(3) of the Act at an income of Rs.5,93,93,381/- after making several disallowances including disallowance of Rs.52,30,121/- u/s 35D of the Act.
The aggrieved assessee filed an appeal before the CIT(A) wherein the assessee did not press disallowance made by the AO u/s 35D of the Act. Subsequently, the AO issued notice requiring the assessee to show cause as to why penalty u/s 271(1)(c) of the Act be not imposed with reference to additions sustained on further appeal before the CIT(A) viz. disallowance of Rs.52,30,127 u/s 35D of the Act and disallowance of Rs.97,381 u/s 14A of the Act.
After considering detailed reply of the assessee, the AO did not find himself satisfied with the explanation furnished by the assessee and imposed penalty u/s 271(1)(c) of the Act in respect of aforesaid both disallowances.
Question of Law
- Whether penalty can be imposed merely on the ground that the assessee submitted the claim under a bona fide belief and due to inadvertent mistake which was not found to be acceptable or was not accepted by the revenue?
- Whether penalty can be imposed because assesse didn’t objected the addition / disallowance?
Contention of the Assessee
