2024 (7) TMI 143 - AT - Income Tax

Penalty u/s 271FA - delay in filing SFT statement as per section 285BA read with rule 114E of I.T. Rules - reasonable cause for delay in filing of SFT return given or not? - HELD THAT - As in the present case, the assessee has not adduced any reasonable cause for not filing the SFT. The submission of the Annual Information Return (AIR) is a crucial component of compliance for the companies obligated to do so. It is an essential requirement, as it enables the Income Tax Department to track high-value financial transactions carried out by individuals, businesses, and other entities. This collected information is used to verify if the reported income of taxpayers is consistent with their spending patterns, and to detect any potential tax evasion. The assessee suo moto ought to have filed the AIR/SFT as per the provisions of section 285BA within the specified deadline. But in the present case, despite issuance of notices under section 285BA(5) and under section 271FA read with 274 of the Act, the assessee failed to file the AIR/SFT - Decided against assessee.

Summary

Issues:
1. Penalty imposed under section 271FA for delay in filing SFT statement.
2. Reasonable cause for delay in filing SFT return.
3. Compliance with section 285BA of the Income Tax Act, 1961.

Analysis:
1. The appeal was filed against the penalty imposed under section 271FA for delay in filing the SFT statement. The assessee contended that there was a reasonable cause for the delay and cited a judgment from ITAT Nagpur in support. The delay was condoned, and the appeal was admitted for hearing.

2. The brief facts revealed that the assessee, a Cooperative Bank, failed to file the SFT within the due date despite multiple notices from the Department. The penalty was imposed by the Addl. CIT for non-compliance. The CIT(A) observed the lack of reasonable cause for the delay and dismissed the appeal based on the careless attitude of the assessee towards statutory notices.

3. During the appeal hearing, the authorized representative of the assessee argued for the existence of a reasonable cause for the delay in filing the SFT. The Department, however, maintained that the assessee was given ample time and opportunities for compliance but failed to provide a satisfactory explanation for the delay. The penalty imposed was deemed justified by the authorities.

4. The Tribunal analyzed the case, emphasizing the importance of timely submission of the AIR/SFT for effective tax monitoring and evasion detection. It was noted that the assessee failed to file the required documents despite repeated notices, leading to the confirmation of the penalty under section 271FA. The Tribunal distinguished the present case from the ITAT Nagpur judgment cited by the assessee, where a reasonable cause was established for non-filing.

5. Ultimately, the Tribunal upheld the decision of the lower authorities, confirming the penalty under section 271FA. The lack of a reasonable cause for the delay in filing the SFT statement led to the dismissal of the assessee's appeal. The importance of compliance with section 285BA for reporting financial transactions was reiterated, and the penalty was deemed appropriate in this case.

In conclusion, the Tribunal affirmed the penalty under section 271FA due to the lack of a reasonable cause for the delay in filing the SFT statement, emphasizing the significance of timely compliance with reporting requirements for financial transactions as mandated by the Income Tax Act.