2022 (10) TMI 822 - AT - Income Tax

Penalty appeal dismissed for delay in filing Form SFT under section 271FA. Upheld penalty due to lack of reasonable cause.

Sawai Madhopur Urban Cooperative Bank Ltd. Versus The Addl/JDIT (I&CI) Jaipur

The appeal challenging the penalty under section 271FA for delay in filing Form SFT was dismissed. The Bench upheld the penalty imposed by the AO, finding ... Penalty u/s 271FA - delay in filing of Form SFT as per Section 285 BFA - HELD THAT:- Going through the co-joint reading of Section 285BA and Section 271FA of the Income Tax Act, we are of the view that it was a statutory obligation on the part of the assessee to furnish AIR as has been specified in Section 285BA of the Act. However, the assessee bank i.e.Sawaimadhopur Urban Cooperative Bank Ltd falling within the ambit of Section 285BA of the Act failed to comply with the legal requirements for the period 2018-19. A Notice dated 20-12-2019 was issued by the AO which was received by the assessee on 30-12-2019 and the assessee complied with the requirement of Section 285BA of the Act by filing the Annual Information Return SFT-003 on 12-02-2020, SFT-004 on 18-02-2020, SFT-005 on 20-02-2020. However, while doing so, there was delay of 264 days in furnishing the AIR for the period under consideration. Since it was a statutory obligation on the part of the assessee bank to furnish AIR as a specified instruction u/s 285BA, therefore, any argument of the assessee with regard to ignorance of law or adopting casual and cavalier attitude is of no help to the assessee. CIT(A) has passed the well reasoned order by holding that the assessee bank has not given any reasonable cause of statutory non-compliance of filing of SFT within due time. Therefore, we find no reason to interfere with the order of the ld. CIT(A) which is sustained. Thus the appeal of the assessee is dismissed with no order as to costs. Issues:1. Imposition of penalty u/s 271FA for delay in filing Form SFT.2. Reasonable cause for the delay in filing Form SFT.Analysis:1. The appeal was against the order confirming the penalty under section 271FA for a delay in filing Form SFT. The assessee argued that the penalty was unjustified as they had a reasonable cause for the delay. The Bench noted the failure of compliance by the assessee falling under Section 285BA for the A.Y. 2018-19. Despite the delay of 264 days in furnishing the Statement of Financial Transaction (SFT), the assessee claimed miscommunication with their consultant and a change in management as reasons for the delay. The assessee, a small urban bank, lacked qualified staff for compliance. The Bench found that under Section 271FA, failure to furnish a statement of financial transaction attracts penalties. The assessee's arguments of ignorance of the law or casual attitude were deemed insufficient. The order of the ld. CIT(A) was upheld, dismissing the appeal.2. The assessee contended that they had a reasonable cause for the delay in filing Form SFT, citing miscommunication with their consultant and a change in management affecting awareness of compliance requirements. They argued that upon becoming aware, immediate action was taken to file the necessary reports. The assessee emphasized their lack of mala fide intent and the subsequent compliance with the income tax notice. However, the Bench found that as per Section 285BA, it was a statutory obligation for the assessee to furnish the Annual Information Return (AIR). The delay in compliance was not considered justified, and the ld. CIT(A)'s decision to uphold the penalty was supported. The appeal was ultimately dismissed with no costs awarded.3. In conclusion, the appeal filed by the assessee challenging the penalty under section 271FA for the delay in filing Form SFT was dismissed. The Bench found no reasonable cause for the delay and upheld the penalty imposed by the AO. The assessee's arguments regarding miscommunication, change in management, and lack of qualified staff were not considered sufficient justification for the delay. The order of the ld. CIT(A) was deemed well-reasoned, leading to the dismissal of the appeal.Order pronounced in the open court on 01/09/2022.