Section 285BA of Income-tax Act, 1961 deals with Obligation to furnish statement of financial transaction or report able account and rule 114E of Income Tax Rules deals with Furnishing of statement of financial transaction (SFT). Due date to Furnish such statement for Financial Year 2016- 17 is 31st May 2017.
Now days a question is coming to the mind of many professional that in case of an entity who has not entered into any of the Specified or report able financial transactions in Financial Year 2016- 17 but who falls into the class of person (reporting person) under Section 285BA Read with Rule 114E of Income Tax Rules, are they required to file NIL statement of financial transactions (SFT) in Form No. 61A.
Some of the persons are of the opinion that Nil Statement is required to be filed while others are of the opinion that Nil Statement is not required to be filed in Form no. 61A.
In this regard we have studied Rule, Section, User Guide, Notifications issued by Income Tax Department and also referred related articles, news etc on the subject to come to a conclusion. Our Study finding is as follows :-
1. Statement of Financial Transaction (SFT) Report Generation Utility User Guide- Version 2.0 (May 2017)
At Page 17 of the guide in Point No. 7.4 we found that Report Utility provides the option of preparation of NIL Statement but it nowhere talks of Compulsion to file Nil statement. Extract of the same is as follows:-
“ 7.4 Preparation of NIL Statement
Utility allows user to generate SFT (XML) with no financial transactions in it. This functionality is useful when Reporting Entity has no financial transaction to report.
1. Fill required information in Statement (Part A) and select ND (No Data) from Statement Type drop down field.
2. Save XML to desired location on machine.”
2. Precedent – Annual information return (AIR) are been replaced by Statement of Financial Transactions (SFT) with effect from financial year 2016- 17. In– Annual information return filing regime return was required to be filed only if there was a report able transaction in the relevant year and Nil return was not required to be filed.
3. Relevant Extract of Section 285BA and Rule 114E
Extract of Income Tax Rule 114E
114E. (1) The statement of financial transaction required to be furnished under sub-section (1) of section 285BA of the Act shall be furnished in respect of a financial year in Form No. 61A and shall be verified in the manner indicated therein.
(2) The statement referred to in sub-rule (1) shall be furnished by every person mentioned in column (3) of the Table below in respect of all the transactions of the nature and value specified in the corresponding entry in column (2) of the said Table in accordance with the provisions of sub-rule (3), which are registered or recorded by him on or after the 1st day of April, 2016.
Relevant Extract of Section 285BA
285BA. (1) Any person, being—
(a) an assessee; or
(b) the prescribed person in the case of an office of Government; or
(c) a local authority or other public body or association; or
(d) the Registrar or Sub-Registrar appointed under section 6 of the Registration Act, 1908 (16 of 1908); or
(e) the registering authority empowered to register motor vehicles under Chapter IV of the Motor Vehicles Act, 1988 (59 of 1988) ; or
(f) the Post Master General as referred to in clause (j) of section 2 of the Indian Post Office Act, 1898 (6 of 1898) ; or
(g) the Collector referred to in clause (g) of section 3 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (30 of 2013) ; or
(h) the recognized stock exchange referred to in clause (f) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956) ; or
(i) an officer of the Reserve Bank of India, constituted under section 3 of the Reserve Bank of India Act, 1934 (2 of 1934); or
(j) a depository referred to in clause (e) of sub-section (1) of section 2 of the Depositories Act, 1996 (22 of 1996) ; or (k) a prescribed reporting financial institution,
who is responsible for registering, or, maintaining books of account or other document containing a record of any specified financial transaction or any report able account as may be prescribed, under any law for the time being in force, shall furnish a statement in respect of such specified financial transaction or such report able account which is registered or recorded or maintained by him and information relating to which is relevant and required for the purposes of this Act, to the income-tax authority or such other authority or agency as may be prescribed.
4. As per Section 285BA out of the specified persons a person responsible for registering, or, maintaining books of account or other document containing a record of any specified financial transaction or any report able account, shall furnish a statement in respect of such specified financial transaction or such report able account which is registered or recorded or maintained by him and information relating to which is relevant and required for the purposes of this Act, to the income-tax authority or such other authority or agency as may be prescribed.
Key Points emerging from Section 285BA
Report in form No. 61A in respect of specified Transaction is required to be submitted only if such books of accounts or other document contains a record of any specified financial transaction or any report able account. So in case there is no specified financial transaction or any report able account than Report in form No. 61A is not required to be submitted.
Section does not specifically mandate filing of nil statement.
5. As per Rule 114E statement in Form No 61A shall be furnished by specified persons in respect of all the specified transactions registered or recorded by such specified persons on or after the 1st day of April, 2016.
Key Points emerging from Rule 114E
Statement in Form 61A not required to be filed by such specified persons in the absence of any specified Transactions.
Rule 114E do not specifically mandate filing of nil statement.
6. In addition to above I have also gone through following notifications/ Circulars / PPT Issued by Department related to Specified financial Transactions and not found anything which suggest mandatory filing of NIL Statement in respect of Specified Financial Transaction (SFT) in form No. 61A-
|1.||Notification No. 1 of 2017 Dated: 17th January, 2017|
|2||Notification No 13 of 2016 Dated: 30th December, 2016|
|3||Notification No. 95/2015 Dated the 30th December, 2015|
|4||PPT by Directorate of Income Tax (Intelligence and Criminal Investigation), Mumbai|
|5||Notification No. 19/2016 Dated: 18th March, 2016|
|6||Communication by ROC to Companies to furnish Statement of Financial Transactions to Income Tax Department|
|7||Notification No. 2/2017 Dated: 6th January, 2017|
|8||Notification No. 104/2016-Income Tax Dated: 15th November, 2016|
|9||Email on Statement of Financial transactions (SFT) filing by IT Dept|
|10.||Notification No. 91/2016 Dated 6th October 2016|
7. We have also gone through various articles published on our website from time to time and not found anything in those articles which suggests mandatory filing of NIL Return in respect of Specified Financial Transaction (SFT) in form No. 61A-
|1.||Statement of Financial Transactions (SFT) and ITDREIN|
|2.||FAQs on Statement of Financial Transactions & Reportable Accounts|
|3.||Amendment in rules for Quoting of PAN in various transactions (Rules 114B to 114E)|
|4.||Communication by ICAI on Mandatory filing of Statement of Financial Transactions (SFT) on or before 31st May, 2017|
|5.||Statement of Financial transactions – Form 61A filing & Submitting “SFT Preliminary Response”|
|6||Comprehensive Analysis of New Requirements of furnishing PAN & AIR Information w.e.f 01-01-2016|
|7.||TCS and furnishing of Statement of Financial Transaction [SFT]|
Conclusion– In our view filing of Nil Statement in form No. 61A is not mandatory under section 285BA read with rule 114E but to be on safer side Assessee may consider filing such return. Further to maintain consistency Assessee who has filed Annual Information Return for Financial Year 2015-16 may consider filing such return for financial year 2016-17 too despite no specified transaction in Financial Year 2016-17.