Case Law Details
Kesar Alloys & Metals Pvt. Ltd. Vs Director of Income Tax (ITAT Indore)
Introduction: The case of Kesar Alloys & Metals Pvt. Ltd. vs. Director of Income Tax (ITAT Indore) revolves around a penalty dispute concerning the late submission of the Statement of Financial Transaction (SFT) under section 271FA of the Income Tax Act, 1961. The appeal challenges the penalty imposed by the Director of Income Tax, which was confirmed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi.
Detailed Analysis: The appellant, Kesar Alloys & Metals Pvt. Ltd., issued 1,00,000 equity shares during the financial year, necessitating the submission of SFT before the specified deadline. However, due to a bona fide mistake by the company’s accountant regarding the valuation of shares, the SFT was initially submitted with incorrect information. Despite efforts to rectify the error by providing a detailed explanation and submitting a revised SFT, the penalty was imposed by the Director of Income Tax.
In its appeal, the assessee argued that the penalty imposition was unjustified, emphasizing the bona fide belief underlying the initial submission and the subsequent corrective actions taken. The appellant contended that there was a reasonable cause for the delay, which should have been considered by the authorities before imposing the penalty.
The Income Tax Appellate Tribunal (ITAT Indore) examined the case meticulously, considering the discretionary nature of penalty imposition under section 271FA of the Act. It emphasized the significance of proving a reasonable cause for the failure to furnish the SFT within the prescribed timeframe. The tribunal concluded that the appellant had demonstrated a reasonable cause for the delay, warranting the deletion of the penalty.
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