The Surat Bench of Income Tax Appellate Tribunal (ITAT) deleted the penalty imposed for failure to file Form 15CA on non-taxable foreign remittances, observing that although Section 195(6) of the Income Tax Act,1961 was amended effective June 1, 2015, the rules prescribing the form and procedure were notified only from April 1, 2016.

Gopal Chandak,appellant-assessee,made outward remittances during the year under consideration for importing machinery from various foreign countries. On verification, the Assessing Officer (AO) observed that the assessee did not furnish the necessary certificate, Form No. 15CA, for all remittances made after June 1, 2015.

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The provisions of section 195(6) of the Act were amended by the Finance Act, 2015, effective June 1, 2015. Before this amendment, the assessee was not required to file Form 15CA where the payee’s income was not chargeable to tax. The amended section 195(6) mandated furnishing information related to payments to non-residents in the prescribed form and manner.

The assessee contended that the corresponding rules prescribing the form and manner for furnishing such information were not notified at the relevant time. Rule 37BB was amended effective April 1, 2016. Prior to this amendment, Rule 37BB required reporting foreign remittances in Form 15CA/15CB only where payments were chargeable to tax.

The remittances made by the assessee were not chargeable to tax at the payee’s end. The assessee therefore acted in bona fide belief that filing Form 15CA was not necessary. Additionally, bank authorities did not demand Form 15CA for these remittances, consistent with the then-prevailing Rule 37BB.

The two member bench comprising Sanjay Garg (Judicial Member) and Bijayananda Pruseth ( Accountant Member) heard both sides and reviewed the case. Section 195(6) of the Income Tax Act was amended from June 1, 2015, requiring the remitter to provide payment details in a prescribed form. However, the rules about the form and procedure were notified only from April 1, 2016.

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The assessee was therefore under the bona fide belief that filing Form 15CA was not needed since the earlier Rule 37BB did not require it for payments not taxable. Therefore, the penalty imposed by the lower authorities was not justified. The tribunal deleted the penalty.

In short,the appeal was allowed.

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