Delay of 210 days in filing STF Return due to late Receipt of Advisory Notice and Show Cause Notice: ITAT sets aside Penalty [Read Order]

The Income Tax Appellate Tribunal (ITAT), New Delhi set aside the penalty imposed on the ground that there was a delay of 210 days in filing the Statement of Financial Transaction (STF) Return due to late receipt of advisory notice and show cause notice.

The assessee, The Rewari Central Cooperative Bank Ltd is a District Cooperative Bank, registered under the Cooperative Societies Act and controlled by the state of Haryana. The assessee is engaged in banking activities like borrowing, raising or taking up money, and lending or advancing money to its members. A show cause notice has been issued on 08/09/2017 by the Director of Income Tax calling upon the assessee to explain the reason for not filing the statement of financial transaction return (SFT Return).

On receipt of the show cause notice, the assessee filed the SFT Return on 14/09/2017 for the period from 08/11/2016 to 30/12/2016. The Director of Income Tax was not satisfied with the reasons for the delay of 210 days in filing the STF Return, therefore, imposed the penalty of Rs. 1,05,000/- (Rs. 500 per day for 210 days) and passed an order on 19/09/2017 u/s 271 FA of the Income Tax Act.

 Aggrieved by the assessment order dated 19/09/2017, the assessee has preferred an Appeal before the CIT(A). The CIT (A) has dismissed the appeal filed by the assessee on 18/03/2019 by confirming the penalty imposed by the u/s 271FA of the Act. As against the order dated 18/03/2019, the assessee has preferred the Appeal before the Tribunal.

The Bench consisting of Shamim Yahya, Accountant Member, and Yogesh Kumar the US, Judicial Member observed that “The assessee being a District Cooperative Bank has filed a statement of financial transaction with a delay of 210 days i.e. after receipt of the show cause notice issued by the Director of Income Tax.

 The explanation is given by the assessee that the assessee has not received an advisory notice issued u/s 285 BA (5) and the show cause notice of penalty u/s 271FA due to change of mail id and further contended that, the delay in filing the return was not deliberate. By taking into the above facts and circumstances and also the fact that, the assessee has already filed an SFT return, in our opinion, the Ld. AO should have taken a lenient view by adopting a fair objective of the penalty proceedings.’

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