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2024 (5) TMI 1286 - AT - Income TaxPenalty u/s 271FA - non-filing of return/Statement of Financial Transaction (SFT) u/s 285BA(1) - no reportable transaction and no return of AIR was filed by the assessee - HELD THAT - On perusal of the Tax Audit Report, it is noticed that the assessee has reported that there are no reportable transaction and there is no requirement of filing Form No. 61, Form No. 61A and Form No. 61B. On perusal of the orders of the authorities below, AO as well as the CIT(A), we could not find that any reportable transactions have been identified in this case requiring the assessee to file SFT within the due date as prescribed u/s 285BA(1) of the Act read with Rule 114E of the Income Tax Rules. We noticed that penalty were levied ignoring the submissions of the assessee that there are no reportable transaction and therefore the provision of Section 285BA(1) of the Act are not applicable simply because the assessee did not file return of SFT. As relying on M/S GUNTUR DISTRICT CO-OPERATIVE CENTRAL BANK LTD. 2019 (2) TMI 43 - ITAT VISAKHAPATNAM we are of the view that the assessee had a bonafide belief that no return is required to be filed when there are no reportable transactions which is a reasonable cause u/s 273B of the Act for not levying the penalty u/s 271FA - Assessing Officer is not justified in levying penalty u/s 271FA of the Act and we direct the AO to delete the penalty levied u/s 271FA - Ground raised by the assessee is allowed.
Issues:
- Appeal against penalty u/s 271FA for non-filing of return/Statement of Financial Transaction (SFT) despite no reportable transactions. - Interpretation of Section 285BA(1) of the Income Tax Act and Rule 114E of the Income Tax Rules. - Applicability of penalty u/s 271FA in the absence of reportable transactions. - Bonafide belief of the assessee regarding the requirement to file a nil return. Analysis: 1. The appeal was filed against the penalty imposed u/s 271FA for not filing the return of SFT under Section 285BA(1) of the Act despite the absence of any reportable transactions. The assessee argued that as per the Tax Audit Report, there were no reportable transactions, and therefore, no return was required to be filed. The Counsel contended that the penalty was unjustified as the Assessing Officer did not identify any reportable transaction relating to the assessee. 2. The Counsel further argued that the assessee's primary business was leasing/renting of immovable property, as confirmed by the Tax Audit Report and other documents in the Paper Book. It was highlighted that the assessee was not required to furnish certain forms as reported in the Audit Report, indicating the absence of reportable transactions. The Counsel cited previous tribunal decisions to support the contention that penalty u/s 271FA should not be levied in the absence of reportable transactions. 3. The Tribunal examined the provisions of Section 271FA and Section 285BA, emphasizing that the obligation to furnish the AIR arises only when there are reportable transactions or specified transactions under the Act. In the absence of such transactions, there is no requirement to file the AIR. The Tribunal referred to the acknowledgment showing no reportable transactions for the relevant years, leading to the conclusion that the assessee was not obligated to file the return u/s 285BA. The Tribunal held that the penalty was unjustified in such circumstances and set aside the penalties imposed by the lower authorities. 4. The Tribunal also considered the bonafide belief of the assessee that no return was required to be filed when there were no reportable transactions. This belief was deemed reasonable under Section 273B of the Act, providing a valid cause for not levying the penalty u/s 271FA. Consequently, the Tribunal directed the Assessing Officer to delete the penalty levied u/s 271FA, allowing the appeal of the assessee. 5. The decision of the Tribunal aligned with previous judgments and established that penalties under Section 271FA should not be imposed when there are no reportable transactions, and the assessee had a bonafide belief in not filing a return in such circumstances. The Tribunal's ruling emphasized the importance of considering the specific facts and legal provisions before imposing penalties for non-compliance with reporting requirements. 6. In conclusion, the Tribunal allowed the appeal of the assessee, setting aside the penalty imposed under Section 271FA for non-filing of return/Statement of Financial Transaction due to the absence of reportable transactions and the assessee's bonafide belief in not filing a return in such circumstances.
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