Penalty under Section 271FA for non-filing of Statement of Financial Transaction deleted due to reasonable cause

ITAT Delhi held that penalty u/s 271FA for non-filing of Statement of Financial Transaction (SFT) u/s 285BA(1) was not justified. The assessee's tax audit report showed no reportable transactions requiring filing of Forms 61, 61A, or 61B. The AO and CIT(A) failed to identify any reportable transactions necessitating SFT filing within prescribed due dates. Following precedent, the tribunal found the assessee had bonafide belief that no return was required absent reportable transactions, constituting reasonable cause u/s 273B. The penalty was ordered deleted and assessee's appeal allowed.

---

---

Issues:
- Appeal against penalty u/s 271FA for non-filing of return/Statement of Financial Transaction (SFT) despite no reportable transactions.
- Interpretation of Section 285BA(1) of the Income Tax Act and Rule 114E of the Income Tax Rules.
- Applicability of penalty u/s 271FA in the absence of reportable transactions.
- Bonafide belief of the assessee regarding the requirement to file a nil return.

Analysis:
1. The appeal was filed against the penalty imposed u/s 271FA for not filing the return of SFT under Section 285BA(1) of the Act despite the absence of any reportable transactions. The assessee argued that as per the Tax Audit Report, there were no reportable transactions, and therefore, no return was required to be filed. The Counsel contended that the penalty was unjustified as the Assessing Officer did not identify any reportable transaction relating to the assessee.

2. The Counsel further argued that the assessee's primary business was leasing/renting of immovable property, as confirmed by the Tax Audit Report and other documents in the Paper Book. It was highlighted that the assessee was not required to furnish certain forms as reported in the Audit Report, indicating the absence of reportable transactions. The Counsel cited previous tribunal decisions to support the contention that penalty u/s 271FA should not be levied in the absence of reportable transactions.

3. The Tribunal examined the provisions of Section 271FA and Section 285BA, emphasizing that the obligation to furnish the AIR arises only when there are reportable transactions or specified transactions under the Act. In the absence of such transactions, there is no requirement to file the AIR. The Tribunal referred to the acknowledgment showing no reportable transactions for the relevant years, leading to the conclusion that the assessee was not obligated to file the return u/s 285BA. The Tribunal held that the penalty was unjustified in such circumstances and set aside the penalties imposed by the lower authorities.

4. The Tribunal also considered the bonafide belief of the assessee that no return was required to be filed when there were no reportable transactions. This belief was deemed reasonable under Section 273B of the Act, providing a valid cause for not levying the penalty u/s 271FA. Consequently, the Tribunal directed the Assessing Officer to delete the penalty levied u/s 271FA, allowing the appeal of the assessee.

5. The decision of the Tribunal aligned with previous judgments and established that penalties under Section 271FA should not be imposed when there are no reportable transactions, and the assessee had a bonafide belief in not filing a return in such circumstances. The Tribunal's ruling emphasized the importance of considering the specific facts and legal provisions before imposing penalties for non-compliance with reporting requirements.

6. In conclusion, the Tribunal allowed the appeal of the assessee, setting aside the penalty imposed under Section 271FA for non-filing of return/Statement of Financial Transaction due to the absence of reportable transactions and the assessee's bonafide belief in not filing a return in such circumstances.

---