Chatrapati Shivaji Maharaj Sahakari Bank Niyamitha Vs Director of Income Tax (ITAT Bangalore)
Summary: The Bangalore Bench of the Income Tax Appellate Tribunal allowed the appeals filed by Shri Chatrapati Shivaji Maharaj Sahakari Bank Niyamitha against penalties imposed under Section 271FA of the Income-tax Act, 1961 for failure to furnish Annual Information Returns (AIR) in respect of Assessment Years 2006-07 to 2015-16.
The assessee was a co-operative bank carrying on banking business under the Banking Regulation Act and the Karnataka Co-operative Societies Act, 1959, with a Reserve Bank of India licence. Revenue inspection found that the bank had not filed AIRs for Financial Years 2005-06 to 2014-15. In the appeal concerning AY 2006-07, the Assessing Officer found three transactions which were required to be reported and noted that the assessee ultimately furnished the information on 11.03.2016. The assessee’s explanations for the delay and a sworn statement were considered, but the Assessing Officer was not satisfied that reasonable cause existed. Penalty under Section 271FA was consequently levied by order dated 26.04.2017. The CIT(A) upheld the penalty.
Before the Tribunal, the assessee principally contended that the relevant amendment to Rule 114E expressly brought co-operative banks within the reporting framework with effect from 01.04.2016. According to the assessee, the years involved were prior to that amendment and there was therefore a bona fide belief that the reporting requirement did not apply. The assessee also relied on its small scale of operations and limited staff strength. The Departmental Representative supported the CIT(A)’s order.
