Tribunal deletes penalty for late filing, citing genuine belief and lack of deliberate non-compliance.

The Tribunal allowed the appellant's appeal and deleted the penalty of Rs. 1,50,000/- imposed under Section 271FA for failure to file the Statement of Financial Transaction (SFT) on time. The Tribunal found the delay in filing the SFT to be a technical breach without malicious intent, emphasizing the complexity of tax laws and the importance of judicial discretion in penalty imposition. The decision highlighted the appellant's genuine belief and absence of deliberate non-compliance with the law, leading to the deletion of the penalty.

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Issues Involved:
1. Validity of the penalty order under Section 271FA.
2. Justification for confirming the penalty of Rs. 1,50,000/- under Section 271FA.
3. Consideration of the appellant's reasons for delay in filing the Statement of Financial Transaction (SFT).

Detailed Analysis:

1. Validity of the Penalty Order under Section 271FA:
The appellant challenged the penalty order under Section 271FA dated 20.10.2020, arguing that it was bad in law, illegal, and factually incorrect due to want of jurisdiction and being barred by limitation. The Tribunal examined whether the penalty order was issued within the legal framework and found that the procedural aspects were followed correctly. The appellant's failure to file the SFT by the due date and subsequent non-compliance with notices justified the initiation of penalty proceedings.

2. Justification for Confirming the Penalty of Rs. 1,50,000/- under Section 271FA:
The appellant argued that the penalty of Rs. 1,50,000/- imposed by the Additional Director of Income Tax (I&CI) and confirmed by the CIT (A) was contrary to the provisions of law and facts. The Tribunal noted that the appellant, a cooperative society engaged in banking activities, failed to file the SFT by the due date of 31/05/2019 for the financial year 2018-19. Despite being served a notice under Section 285BA(5) and a show cause notice under Section 271FA, the appellant did not provide a satisfactory explanation for the delay. The Tribunal upheld the penalty, emphasizing the statutory duty to file the SFT correctly and timely.

3. Consideration of the Appellant's Reasons for Delay in Filing the SFT:
The appellant cited network connectivity issues in rural branches, lack of computer literacy among branch managers, and internal administrative problems as reasons for the delay in filing the SFT. The Tribunal acknowledged these reasons but noted that the revenue authorities did not accept them as valid justifications. The Tribunal referred to the case of Durgapur Steel Peoples Cooperative Bank Limited vs. Director of Income Tax, where it was held that no malafides could be attributed to the assessee in similar circumstances, and the breach was considered technical or venial. The Tribunal also cited the Supreme Court's decision in Hindustan Steels vs. State of Orissa, which stated that penalties should not be imposed for technical or venial breaches or when the breach flows from a bona fide belief.

Conclusion:
The Tribunal concluded that the appellant's delay in filing the SFT was a technical breach without malafide intention. It emphasized the complexity of tax laws and the need for judicial discretion in imposing penalties. Given the appellant's bona fide belief and the absence of deliberate defiance of the law, the Tribunal allowed the appeal and deleted the penalty of Rs. 1,50,000/-.

Order:
The appeal of the assessee was allowed, and the penalty was deleted. The order was pronounced in the open court on 11/01/2023.

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