The Ahmedabad bench of the Income Tax Appellate Tribunal ( ITAT ) confirmed the penalty under Section 271FA for failure to file the Statement of Financial Transactions ( SFT ) within the stipulated date given in the notice under Section 285BA of the Income Tax Act.
The Waghodia Urban Co-op. Bank Limited [hereinafter referred as Reporting Entity (RE)] had not filed statement of financial transaction (i.e. SFT 005) for Assessment Year (A.Y.) 2019-20 till the due date i.e. 31.05.2019. The reporting entity is required to file SFT-005 for all reportable transactions. Subsequently, the notice under Section 285BA (5) of the Income Tax Act, 1961 was issued on 26.04.2022 requesting the assessee to file the SFT-001 and SFT005 on or before 11.05.2022.
The Assessing Officer observed that the reporting entity filed SFT-001 and SFT-005 on 29.11.2022 thereby showing nil transaction and specific financial transaction which was not reported within the due date i.e.31.05.2019. Hence, a notice under Section 274 read with section 271FA of the Act was issued on 13.01.2023 to the assessee. In response to the notices, the assessee i.e. the Reporting Entity submitted that at the time of filing of SFT return, data was generated given by the system but SFT-005 data was not generated, so the Reporting Entity could not file SFT-005 return. After taking cognizance of the assessee‘s submissions, the Assessing Officer levied penalty under Section 271FA amounting to Rs.5, 38,000/- and Rs.2, 02,000/- for this specified period totaling to Rs.7, 40,000/-.
Mr. Samir Parikh representing the assessee submitted that the assessee is a Co-op. Banks engaged in the business of the banking sector. The assessee accepted and repaid the deposits from its six members as per the provisions of Reserve Bank of India. The assessee is required to file SFT return prescribed under Section 285BA of the Act but due to the Server issue, the assessee filed the SFT-005 belatedly and not within the due date.
Further prayed that though there was a delay in filing SFT-005, the reason was that the details were not generated due to the technical difficulties of the server and, therefore, the data was not generated. Since the data was not available till November 2022 the assessee once recovered the data and immediately filed the SFT-004 details/return. Therefore, it was submitted that there was no negligence or any bad intention on the part of the assessee for not filing the SFT004 before the due date. Therefore, the levy of penalty in fact still impacts adversely as it was a huge penalty of Rs.7,40,000/- for a present Bank.
Mr. Sanjay Jain, representing the revenue vehemently opposed the contentions of the AR and submitted that ample opportunities were given to the assessee for filing the details/return of SFT-005 within the due date of 31.05.2019, but the assessee has chosen to file the same after almost three years which should not be condoned. The penalty was rightly invoked by the Assessing Officer.
The bench noted that the due date for filing SFT-004 return/statement was 31.05.2019 and the notice has given by the Assessing Officer under Section 285BA (5) on 26.04.2022 and directed the assessee to file the SFT-001 and SFT005 on or before 11.05.2022.
Further the single member bench of the tribunal comprising Suchithra Kamble ( Judicial member) noted that the factual aspect in the present case clearly set out that the assessee despite giving one month period has failed to file the SFT return within the stipulated date given in notice under Section 285BA(5) of the Income Tax Act.
The Tribunal has excluded the period prior to issuance of notice but the Section clearly set out that the concerned assessee shall furnish the statement in respect of such specified financial transaction or such reportable account for the purpose of this Act. The Income Tax authority shall be furnishing the same for such period within such time and in the form and manner as may be prescribed. Thus, it is mandatory provision and, therefore, physical calculation by the Assessing Officer was rightly done and levied under Section 285BA (5) of the Income Tax Act.
The contention of the AR that the server was not working or there was some issue with the server has not been demonstrated thoroughly before the Tribunal and merely on the plea ITAT cannot accept the same. Thus, the appeal of the assessee was dismissed.
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