2023 (1) TMI 944 - HC - FEMA

Non-profit granted relief on FCRA account details filing due to retrospective amendments

The court allowed the petitioners, a non-profit company under FCRA, to file annual returns without FCRA account details for specific years due to ... Filing of Form FC-4 - designated FCRA Account requirement under Section 17(1) of the FCRA - retrospective application of FCRA (Amendment) Act, 2020 - permissibility of belatedly opened FCRA account for prior annual returns - extension of time for filing annual returns - imposition of penalty and coercive steps for non-complianceFiling of Form FC-4 - designated FCRA Account requirement under Section 17(1) of the FCRA - retrospective application of FCRA (Amendment) Act, 2020 - permissibility of belatedly opened FCRA account for prior annual returns - Whether the petitioner could file Form FC-4 for FY 2019-2020 and FY 2020-21 by furnishing details of an FCRA account opened in August 2021 despite the Form requiring the FCRA account 'as on 31st March' and the FCRA amendment becoming effective on 29th September, 2020. - HELD THAT: - The Court noted that the amended Section 17 and consequent rules and Form FC-4 were notified after 29th September, 2020 and that the Form requires details of the designated SBI, Sansad Marg FCRA account 'as on 31st March of the year ending'. Given that the petitioner opened the FCRA account in August 2021 and that the amendments could not reasonably be given retrospective effect to require an account as on 31st March preceding the amendment, the Court found merit in the petitioners' contention. Balancing the narrow nature of the dispute and the practical difficulty posed by the online portal which disallowed submission without the SBI account details, the Court permitted the petitioner to fill in and submit serial no.7 of Form FC-4 with the details of the FCRA account opened in August 2021 for the relevant years. [Paras 11, 12]Petitioner permitted to fill in and submit serial no.7 of Form FC-4 for FY 2019-2020 and FY 2020-21 with details of the FCRA account opened in August 2021.Extension of time for filing annual returns - imposition of penalty and coercive steps for non-compliance - Whether coercive action or penalty should be imposed on the petitioners for belated opening of the FCRA account and delayed filing of annual returns for FY 2019-2020 and FY 2020-21. - HELD THAT: - The Court observed that the petitioner states no foreign contribution was received in the disputed years and that the account was opened belatedly due to the changed regulatory requirement and portal constraints. In view of these facts and the narrow scope of the grievance, the Court directed that no coercive steps be taken for having opened the account belatedly. Further, the Court ruled that no penalty shall be imposed provided the returns for FY 2019-2020 and FY 2020-21 are filed within one month from the order. [Paras 13, 14]No coercive steps to be taken; no penalty shall be imposed if the returns for the two years are filed within one month.Final Conclusion: The petition is disposed of: the petitioner may submit Form FC-4 for FY 2019-20 and FY 2020-21 by providing the SBI, Sansad Marg FCRA account details opened in August 2021; no coercive action will be taken and no penalty shall be imposed if the returns are filed within one month. Issues:1. Amendment of Form FC-4 for filing annual returns without FCRA account details.2. Requirement of FCRA account as per amended FCRA provisions.3. Inability to submit Form FC-4 online due to retrospective amendment.4. Delay in opening FCRA account and filling Form FC-4 details.5. Coercive steps and penalties for delayed filing of annual returns.Analysis:1. The petitioners sought directions to amend Form FC-4 to file annual returns without FCRA account details for FY 2019-2020 and FY 2020-2021. The petitioners, a non-profit company registered under FCRA, faced challenges due to amendments requiring a designated FCRA account at SBI, New Delhi Main Branch.2. The FCRA was amended in 2020, mandating foreign contributions to be received in a designated FCRA account at SBI, New Delhi. The petitioners, having complied with FCRA rules previously, faced difficulties in retrospectively providing FCRA account details as per the amended provisions.3. The petitioners highlighted the issue of inability to submit Form FC-4 online for years prior to the amendment's effective date. They argued that the online portal design made it impossible to file returns for FY 2019-2020 and FY 2020-2021 without the designated FCRA account details.4. Despite opening the FCRA account in August 2021, the petitioners hesitated to fill Form FC-4 details due to the requirement stating 'as on 31st March.' The court acknowledged the timing of the FCRA amendment and permitted the petitioners to fill the FCRA account details in the form.5. The court directed that no coercive steps or penalties be imposed on the petitioners for the delayed opening of the FCRA account, considering no foreign contributions were received in the relevant years. The petitioners were given one month to file the returns without facing penalties, and the case was disposed of along with pending applications.