No Income Tax Penalty Leviable u/s 271FA without Reportable Transactions: ITAT [Read Order]

The Delhi bench  of  Income Tax Appellate Tribunal (ITAT) recently held that no Income Tax Penalty can be levied under Section 271FA of Income Tax Act, 1961 without having any reportable transactions.

The assessee Motor & General Finance Ltd.is engaged in the single primary business of Leasing / Renting of immovable property and has only one reportable segment. assessee do not have any reportable transaction under Section 285BA(1) read with Rule 114E of the Income Tax Rules and therefore no return has been filed.However without considering it the AO imposed penalty under Section 271FA of the Income Tax Act, 1961

Aggrieved with the penalty order the assessee filed an appeal before the CIT(A).The CIT(A) upheld the order of assessing officer. Subsequently the assessee filed a second appeal before the tribunal.

Assessee representative, Ajay Wadhwa argued that assessee do not have any reportable transaction under Section  285BA(1) read with Rule 114E of the Income Tax Rules and therefore no return has been filed.Therfore no penalty under Section   271FA can be levied if there are no reportable transaction and no return was filed by the assessee.

Amit Katoch, the Department representative, supported the order of lower authorities.

It was noticed by the tribunal  the assessee has reported that there are no reportable transactions and there is no requirement of filing Form No. 61, Form No. 61A and Form No. – 61B.

Further the tribal observed that there are no reportable transactions and therefore the provision of Section 285BA(1) of the Act are not applicable simply because the assessee did not file return of SFT.

Accordingly  the two-member bench Of Challa Nagendra Prasad, (Judicial Member) and N.K. Billaiya, (Accountant Member)  observed that assessee had a bonafide belief that no return is required to be filed when there are no reportable transactions which is a reasonable cause under Section 273B of the Income Tax Act for not levying the penalty under Section 271FA of the Income Tax Act.

Accordingly the bench allowed  the appeal filed by the assessee.

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