The specified person is required to furnish the statement of financial transactions / reportable account, in respect of the specified transactions, in terms of provisions of section 285BA of the Income Tax Act. In case the person fails to furnish the same, the defaulter would be liable to pay the penalty under provisions of section 271FA of the Income Tax Act.

The current article covers the penalty provisions of section 271FA. The article also explains the relevant provisions of section 285BA and amount of penalty payable under section 271FA.

Understanding the provisions of section 271FA of the Income Tax Act

First of all, let us understand the basic provisions of section 271FA, which states as under –

The penalty provisions of section 271FA are applicable only in case of the following failures –

a. Failure in furnishing the statement of financial transaction / reportable account as required under section 285BA (1) within the time limit prescribed under section 285BA (2); or

b. Failure in furnishing the statement of financial transaction / reportable account within the period specified in the notice issued under section 285BA (5).

In order to understand the coverage / applicability of the penalty section 271FA, it is important to understand the related provisions of section 285BA.

Understanding the relevant provisions of section 285BA of the Income Tax Act

  • List of persons who are required to furnish the statement of financial transactions –

As per rule 114E of the Income Tax Rules, following is the list of persons who are required to file the statement of financial transactions –

    • A Banking Company.
    • An assessee liable to audit as per section 44AB of the Income Tax Act.
    • A Co-operative Bank.
    • A Nidhi Company (referred under section 406 of companies act).
    • The institution issuing Credit Card.
    • Company / institution issuing bonds / debentures.
    • Post master general of a post office.
    • NBFC (i.e. A Non-Banking Financial Company).
    • A company listed on the recognized stock exchange which is purchasing its own securities.
    • A company issuing shares.
    • A trustee or authorized person of a Mutual Fund.
    • Inspector-General / Sub-registrar appointed under the Registration Act, 1908.
    • Authorized Dealer / Money Changer / Off-shore Banking unit or any other person as defined in FEMA, 1999.
  • Nature of transaction to be reported in the statement of financial transactions are –
    • The transaction of purchase, sale or exchange of goods / property / right / interest in a property.
    • The transaction under a works contract.
    • The transaction for rendering any service.
    • The transaction for accepting / taking any loan or deposit.
    • The transaction by way of an investment made / expenditure incurred.

Please note here one needs to refer to Rule 114E of the Income Tax Rules which provides a listing of different values for the different transaction with respect to a different class of person required to submit the statement of the financial transaction.

  • Relevant form –

The statement of financial transactions is to be filed in Form No. 61A.

  • Relevant due date –

The statement of financial transactions should be furnished on or before 31st May subsequent to the Financial Year in which the transaction is registered / recorded.

  • Provisions of section 285BA (5) –

Section 285BA (5) states that in case the specified person fails to submit the statement of the financial transaction within the prescribed time limit, then, the income tax authority may serve the notice. The notice requires the person to submit the statement of a financial transaction within the period specified therein.

Amount of penalty payable under section 271FA

In case of default, the defaulter would be liable to pay the penalty as tabulated hereunder –

Type of failure Amount of penalty
Failure in furnishing the statement of financial transaction / reportable account as required under section 285BA (1) within the time limit prescribed under section 285BA (2). INR 500 per day till the failure continues
Failure in furnishing the statement of financial transaction / reportable account within the period specified in the notice issued under section 285BA (5). INR 1000 per day till the failure continues

Read Also:-

S. No. Title
1 Section 272BB Penalty for failure to comply section 203A provisions
2 Section 272B Penalty for failure to comply with provisions of PAN
3 Section 272AA Penalty for failure in complying with provisions of section 133B
4 Section 272A Penalty for failure to answer questions or furnish information / returns/ statements or allow inspections etc
5 Section 271J Penalty on professionals for furnishing incorrect information in reports / certificates
6 Section 271I Penalty for failure in furnishing Form 15CA & Form 15CB
7 Section 271H Penalty for late filing/non-filing of TDS or TCS return
8 Penalty for failure in furnishing report or furnishing inaccurate report under section 286 – Section 271GB
9 Section 271GA Penalty for failure in furnishing the information / document in Form 49D as required under section 285A
10 Section 271G Penalty for failure to furnish information / document as per provisions of section 92D
11 Section 271FB Penalty for default in furnishing return of fringe benefits
12 Section 271FAB Penalty for failure to furnish statement / information / document by an eligible investment fund
13 Penalty for providing inaccurate statement of financial transaction or reportable account- Section 271FAA
14 Section 271FA Penalty for failure in furnishing statement of financial transactions or reportable account
15 Section 271E Penalty for contravening provisions of section 269T
16 Section 271DB | Penalty for contravening provisions of section 269SU
17 Section 271DA Penalty for contravening provisions of section 269ST
18 Section 271CA Penalty for failure to collect tax at source (TCS)
19 Section 271D Penalty for contravening provisions of section 269SS
20 Section 271C Penalty for failure / non-deduction / non-payment of TDS
21 TDS Rate Chart for AY 2020-21 and AY 2021-22
22 Section 271BA Penalty for failure to furnish section 92E report
23 Section 271B Penalty for failure to get accounts audited
24 Section 271AAC Penalty in respect of certain specified income
25 Section 271AA Penalty for failure to maintain Transfer Pricing documents
26 Section 271A Penalty for failure to keep / maintain or retain books of accounts, documents
27 Section 270A(1) Penalty for under-reporting & misreporting of income
28 Section 269SU Acceptance of payment through electronic modes
29 Section 234F Late fees for default in filing of income tax return
30 Section 234E Late Fee for default in filing of TDS / TCS returns
31 Section 158BFA(2) – Penalty on undisclosed income for block period
32 Section 140A(3) Penalty for non-payment of self-assessment tax

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