Case Law Details
Durgapur Steel Peoples’ Cooperative Bank Limited Vs Director of Income Tax (Intelligence & Criminal Investigation) (ITAT Kolkata)
Introduction: The Income Tax Appellate Tribunal (ITAT) Kolkata recently adjudicated on penalties imposed under Section 271FA of the Income Tax Act, 1961 in the case of Durgapur Steel Peoples’ Cooperative Bank Limited. The controversy centered on the non-filing of Statement of Financial Transaction (SFT) returns.
Analysis: Durgapur Steel Peoples’ Cooperative Bank Limited failed to furnish the SFT return for the assessment year 2011-12, leading to penalties imposed by the Director of Income Tax (Intelligence & Criminal Investigation), Kolkata. The bank argued that the non-compliance was unintentional and due to ignorance of the legal obligation. However, the revenue authorities contended that awareness campaigns by the department made such ignorance untenable.
The tribunal, after considering both sides, cited legal precedents highlighting that penalties should not be imposed for technical or venial breaches unless deliberate defiance or misconduct is evident. It emphasized that tax laws are intricate, often requiring specialized expertise, and changes frequently. The tribunal found no malicious intent on the part of the bank and ruled in favor of setting aside the penalties.
Conclusion: The ITAT Kolkata’s ruling underscores the principle that penalties under Section 271FA should not be imposed for inadvertent or technical breaches, especially when there is no evidence of deliberate defiance or misconduct. The decision offers clarity on the application of penalties in cases of non-compliance with statutory obligations, emphasizing the importance of considering all relevant circumstances before imposing penalties.
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