Case Law Details
Waghodia Urban Co. Op. Bank Limited Vs Director of Income Tax ( I & CI) (ITAT Ahmedabad)
In the case of Waghodia Urban Co. Op. Bank Limited vs. Director of Income Tax (I & CI) (ITAT Ahmedabad), the main issue at hand pertains to the penalty levied under Section 271FA of the Income Tax Act, 1961, due to a delay in filing the statement of financial transaction (SFT-005) for the Assessment Year 2019-20.
The appeal was filed by the assessee against the order passed by the Addl/JDIT (I&CI), Ahmedabad, dated 27.07.2023. The assessee contested the penalty, amounting to Rs. 7,40,000/-, with the following grounds of appeal: firstly, disputing the correctness of the penalty levied, and secondly, seeking the deletion of the penalty.
The Waghodia Urban Co-op. Bank Limited, referred to as the Reporting Entity (RE), failed to file the SFT-005 for the A.Y. 2019-20 by the due date of 31.05.2019. Subsequently, a notice under Section 285BA(5) of the Income Tax Act, 1961 was issued on 26.04.2022, directing the assessee to file the SFT-001 and SFT-005 by 11.05.2022. However, the RE only filed the statement on 29.11.2022, citing technical issues with the server as the reason for the delay.
Upon receiving the notice under Section 274 read with Section 271FA of the Act, the assessee submitted that the SFT-005 data was not generated by the system at the time of filing the return. Consequently, the Assessing Officer levied a penalty totaling Rs. 7,40,000/-.
In response to the penalty order, the assessee argued that the delay in filing the SFT-005 was solely due to technical difficulties with the server, and not due to any negligence or malintent. The assessee emphasized that the data necessary for filing the statement was not generated until November 2022, following which the statement was immediately filed. Therefore, the assessee contended that the penalty should be revoked.
The Income Tax Appellate Tribunal (ITAT) heard arguments from both parties and examined the relevant material available on record. Despite the contentions raised by the assessee, the tribunal dismissed the appeal. The tribunal noted that while the assessee claimed technical difficulties with the server, this plea was not adequately substantiated. Additionally, the tribunal emphasized the mandatory nature of complying with statutory provisions regarding filing deadlines.
The tribunal also referred to a previous decision concerning a similar case, wherein the delay was condoned by excluding the period prior to the issuance of the notice. However, in the present case, the tribunal found that the delay persisted even after the notice was issued, indicating non-compliance with statutory obligations.
In conclusion, the ITAT upheld the penalty imposed on the assessee, emphasizing the importance of adhering to statutory timelines for filing financial statements.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
This appeal is filed by the assessee against order dated 27.07.2023 passed by the Addl/JDIT (I&CI), Ahmedabad for the Assessment Year 2019-20.
2. The assessee has raised the following grounds of appeal :-
“1. The Director of Income Tax (I&CI) is not correct in levy penalty of Rs.7,40,000/- under Section 271FA of the Income Tax Act, 1961
2. Penalty levied under Section 271FA of the Act be deleted.”
2. The Waghodia Urban Co-op. Bank Limited [hereinafter referred as Reporting Entity (RE)] had not filed statement of financial transaction (i.e. SFT 005) for Assessment Year (A.Y.) 2019-20 till the due date i.e. 31.05.2019. The reporting entity is required to file SFT-005 for all reportable transactions. Subsequently, the notice under Section 285BA(5) of the Income Tax Act, 1961 was issued on 26.04.2022 requesting the assessee to file the SFT-001 and SFT-005 on or before 11.05.2022. The Assessing Officer observed that the Reporting Entity filed SFT-001 and SFT-005 on 29.11.2022 thereby showing nil transaction and specific financial transaction which was not reported within the due date i.e. 31.05.2019. Hence, a notice under Section 274 read with section 271FA of the Act was issued on 13.01.2023 to the assessee. In response to the notices, the assessee i.e. the Reporting Entity submitted that at the time of filing of SFT return, data was generated given by system but SFT-005 data was not generated, so the Reporting Entity could not file SFT-005 return. After taking cognisance of the assessee‘s submissions, the Assessing Officer levied penalty under Section 271FA amounting to Rs.5,38,000/- and Rs.2,02,000/- for this specified period totalling to Rs.7,40,000/-
4. Being aggrieved by the penalty order passed under Section 271FA of the Act, the assessee filed appeal before the us
5. The Ld. AR submitted that the assessee is a Co-op. Bank engaged in the business of banking sector. The assessee accepted and repaid the deposits from its six members as per the provisions of Reserve Bank of India. The assessee is required to file SFT return prescribed under Section 285BA of the Act but due to the Server issue, the assessee filed the SFT-005 belatedly and not within the due date. The Ld. AR prayed that though there is a delay in filing SFT-005, the reason was that the details were not generated due to the technical difficulties of server and, therefore, the data was not generated. Since the data was not available till November 2022 the assessee once recovered the data and immediately filed the SFT-004 details/return. Therefore, the Ld. AR submitted that there was no negligence or any bad intention on the part of the assessee for not filing the SFT-004 before the due date. Therefore, the levy of penalty in fact still impact adversely as it is a huge penalty of Rs.7,40,000/- for a present Bank.
6. The Ld. DR vehemently opposed the contentions of the ld. AR and submitted that ample opportunities were given to the assessee for filing the details/return of SFT-005 within the due date of 31.05.2019, but the assessee has chosen to file the same after almost three years which should not be condoned. The penalty was rightly invoked by the Assessing Officer.
7. The Ld. D/R submitted that the present appeal should not be entertained and be dismissed.
8. Heard both the parties and perused all the relevant material available on record. It is pertinent to note that the due date for filing SFT-004 return/statement was 31.05.2019 and the notice has given by the Assessing Officer under Section 285BA(5) on 26.04.2022 and directed the assessee to file the SFT-001 and SFT-005 on or before 11.05.2022. Ld. AR submitted that there was server issue in the Bank and, therefore, the assessee field the belated return under SFT-005 which is after the period prescribed under notice under 285BA(5) of the Act that too six months after issuing of notice. The contention taken by the Ld. AR if taken as it is and for which the Ld. AR has relied upon the decision of the Tribunal in case of Halol Urban Co-op. Bank Limited vs. The Director of Income Tax (I&CI) (ITA No.968/Ahd/2019, order dated 25.10.2021). The factual aspect in the present case clearly set out that the assessee despite giving one month period has failed to file the SFT return within the stipulated date given in notice under Section 285BA(5) of the Act. The Tribunal has excluded the period prior to issuance of notice but the Section clearly set out that the concerned assessee shall furnish the statement in respect of such specified financial transaction or such reportable account for the purpose of this Act. The Income Tax authority shall be furnishing the same for such period within such time and in the form and manner as may be prescribed. Thus, it is mandatory provision and, therefore, physical calculation by the Assessing Officer was rightly done and levied under Section 285BA(5) of the Act. The contention of the Ld. AR that server was not working or there was some issue with the server has not been demonstrated thoroughly before the Tribunal and merely on the plea we cannot accept the same. Thus, appeal of the assessee is dismissed.
9. In the result, appeal filed by the assessee is dismissed.
Order pronounced in the open Court on this 17th April, 2024.
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