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TMI Blog2023 (8) TMI 638X X X X Extracts X X X X X X X X Extracts X X X X ..... order passed by the ld. CIT(A) and delete the penalty levied under section 271FAA - Appeals filed by the Reporting Entity are allowed. - Shri V. Durga Rao, Judicial Member And Shri Manjunatha, G. Accountant Member For the Appellant : Shri VA Mehta, C.A. For the Respondent : Shri P. Sajit Kumar, JCIT ORDER PER V. DURGA RAO, JUDICIAL MEMBER: These three appeals filed by the assessee are directed against separate but identical orders of the ld. Commissioner of Income Tax (Appeals) 16, Chennai, all dated 09.02.2023 relevant to the assessment years 2018-19, 2019-20 and 2020-21 passed under section 271FAA of the Income Tax Act, 1961 [ Act in short] levying penalty of ₹.50,000/- for each calendar years 2017, 2018 and 2019. 2. Brief facts of the case are that the KEB Hana Bank having ITDREIN AADCK4261D.BO183 filed the original Statement of Reportable Account in Form-61-B for CY 2017, CY 2018 CY 2019 on 30.05.2018, 25.05.2019 29.05.2020 respectively. From the information available, the Prescribed Authority has noticed that the Reporting Entity had not reported 16 accounts in the statements filed for CY 2017, 2018 2019. Accordingly, the above di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reaty countries. The above mentioned reporting of specified high value transaction/asset of residents of 85 countries has to be done by 31st May following the calendar year by each of the prescribed Financial Institutions so as to facilitate sharing of such details with the Treaty countries in time to enable them to take action as per their domestic law. In time reporting is the fundamental requirement, as every law has time limitation by which any action on defaulting taxpayer could be initiated. To ensure complete reporting of all reportable transaction/asset, sub-section (7) of section 285BA has mandated every such reportable entity to put in place 'Due diligence' process to ensure no reportable transaction/asset is missed out from in time reporting. What are the Due diligence processes to be put in place by such reportable entities, has been laid out in detail under Rule-114H of the IT Rules, 1962. Considering the seriousness of such cent-percent reporting of all reportable transaction in time and considering that there could be such failure in the first instance of reporting, the law has factored by way of sub-section (6) of section 285BA, to every such rep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per calendar year is just and need to be upheld as such punitive action would ensure such lapses are not repeated in future. The assessee's counsel has also heavily relied on sub-section (4) of section 285BA and stated that without default, within the notice timeline given of 30 days, the assessee bank had filed voluntarily its corrected statement including entries which the Department had not detected and hence there is no default which would attract penalty. It may be mentioned that nowhere in the sub-section (4), it has been stated that the assessee who comply by filing rectified statement with the timeline specified will be absolved of payment of penalty. Secondly, this compliance, cannot under any stretch of imagination, could be treated as voluntary compliance on the part of the assessee bank. The compliance came only after nearly three years that too after the Department identified omission. More importantly, the penalty in the assessee's case was levied under clause (a) of section 271FAA for non-compliance to the Due diligence' process as required sub-section (7) of section 285BA read with rule 114H of IT Rules and not on account of non furnishing of a rectified ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... passed by Addl. DIT/]DIT(1 CI) by order dated 9.2.2023. 9. In terms of section 271 FAA penalty is leviable only if the person referred to in sub section (1) of section 285BA, who is required to furnish a statement under that section, provides inaccurate information in the statement, Form 61B. 10. Form 61B filed by KEB Hana Bank, duly revised /rectified by KEB Hana Bank within the time allowed by section 285BA(4), did not contain inaccurate information. 11. The FAQ to The User Guide issued by the Income Tax Department for Report Generation Utility (61B) at question no. 19 reads: What are the consequences of failure to correct inaccurate or defective statement of financial account filed? The answer is section 271 FAA (Annexure A) KEB Hana Bank has revised/rectified Form 61B within time provided by the law. There is no failure to correct inaccurate or defective statement of financial account filed. Hence, no penalty is leviable. Grounds of appeal and objections to the penalty order: 1. No penalty is leviable under section 271 FAA, since, as explained above, the defects pointed out by the Income Tax Officer, Intelligence and Criminal Investigat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 50,000/- should be allowed. 6. We have heard both the sides, perused the materials available on record and gone through the orders of authorities below. In the present case, the Prescribed Authority has noticed that the Reporting Entity had not reported 16 accounts in the statements filed for CY 2017, 2018 2019 on account of omission of one saving of Mr. SinmoSoan (Account No. 8206000515) and 15 Term Deposit accounts of the same person. Accordingly, the Reporting Entity was requested to rectify Form 61-B and furnish the details for the same vide letter dated 30.03.2021 for the CYs 2017, 2018 and 2019. The Reporting Entity duly rectified the defects pointed out by the Prescribed Authority and revised/rectified Form 61-B was filed on 13.04.2021, 13.04.2021 and 15.04.2021 within the time allowed under section 285BA(4) of the Act for the CY 2017, 2018 and 2019 respectively. The Reporting Entity has also furnished its explanation as well as copy of the excel sheets were uploaded for the CY 2017, 2018 and 2019. However, the Prescribed Authority has levied penalty of ₹.50,000/- each for the CY 2017, 2018 2019 under section 271FAA of the Act for the reason that the Reporting ..... X X X X Extracts X X X X X X X X Extracts X X X X
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