The Hyderabad bench of the Income Tax Appellate Tribunal (ITAT) has held that a bonafide action on the part of the co-operative bank not filing annual information report (AIR) will not attract penalty under section 271FA of the Income Tax Act, 1961.
The assessee, M/s Cumbum Co-operative Town Bank Limited, being a “specified person” as per the provisions of section 285BA of the Act has an obligation to file Annual Information Report (AIR) in Form No.61A in respect of specified transactions before 31st August, 2013. Despite receiving notices, the assessee neither filed AIR information nor replied to the penalty notice.
A two-Member bench of the Tribunal comprising Shri R.K. Panda (Accountant Member)and Shri Laliet Kumar (Judicial Member) observed that the reading of 114E Income Tax Rules 1962, as applicable to the relevant Assessment Year, make it abundantly clear that assessee Bank (banks, including the Co-operative Bank) are having an obligation to furnish the Annual Information Return (AIR) in the manner provided by Rule 114E.
“This above noted rule was inserted in the Income Tax Rules 1962 w.e.f 01.12.2004, hence the contention of ld.AR that it was effective from 1/4/2015 has no legs to stand. Admittedly, there wasfailure on the part of assessee to comply with the mandatory requirement of law, therefore the action of ld.CIT(A)) was in accordance with law,” the Tribunal said.
Concluding the order, the Tribunal held that “we may mention that the banking institutions are the backbone of our economy, and bank are required to religiously follow the mandatory requirement of complying with the various mandatory provisions as per Income Tax Rules, 1962 or Income Tax Act, 1961. There is an inbuilt philosophy, to check and deter the deposit of cash in the bank account, to curb laundering of money. If the annual information return had been filled by the bank in time, then the tax authorities would have access to various specified activities of various individuals, who had deposited more than 10 lakhs cash amount in a year in his/her bank account. Based on this information, revenue would have taken actions against erring persons, however tax authorities were failed to initiate action against such persons, on account of failure and non-compliance by the assessee before us. Thus, non-furnishing of such AIR, in fact had helped the evasion of the taxes by the dishonest unscrupulous persons by taking advantage of technicalities.”
Shri S. Ramarao, Advocate appeared for the assessee.
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