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Facts
Anand Rathi Share and Stock Brokers Ltd. faced penalties under Section 271FA of the Income-tax Act for delayed filing of Form 61B (statement of reportable foreign bank account transactions) for assessment years 2018-19 to 2021-22. The assessee argued for 'reasonable cause' under Section 273B, citing the newness of the compliance requirement, lack of awareness, challenges in data gathering, Covid-19 disruptions, and frequent regulatory changes. The Assessing Officer and CIT(A) upheld the penalties.
Held
The Income Tax Appellate Tribunal (ITAT) found that the delay was a technical/venial breach due to bona fide reasons, without any intention to evade compliance. Considering the newly introduced compliance, frequent regulatory modifications, and the assessee's consistent compliance record, the ITAT concluded that there was a 'reasonable cause' under Section 273B. Consequently, the penalty levied under Section 271FA was deemed unsustainable and directed to be deleted.
Key Issues
Whether the delay in filing Form No. 61B for reportable foreign bank account transactions was due to a "reasonable cause" under Section 273B of the Income Tax Act, 1961, warranting the deletion of penalty levied under Section 271FA.
Sections Cited
271FA, 273B, 285BA
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Income Tax Appellate Tribunal, MUMBAI BENCH “A” MUMBAI
Before: SHRI OM PRAKASH KANT & SHRI RAJ KUMAR CHAUHAN
ORDER PER OM PRAKASH KANT, AM
These appeals by the assessee are directed against a common order dated 30.05.2025 passed by the Ld. Commissioner of Income- tax (Appeals) – 53, Mumbai [in short ‘the Ld. CIT(A)’] for assessment year 2018-19, 2019-20, 2020-21 and 2021-22 respectively in relation to penalty for delayed filing of statement of reportable foreign bank account transactions. As common issue-in- dispute is involved in these appeals, therefore, same were heard together and Anand Rathi Sahre and Stock Brokers Ltd. Anand Rathi Sahre and Stock Brokers Ltd. 2 4412, 4413 & 4412, 4413 & 4414/MUM/2025 disposed off by way of this consolidated order for sake of disposed off by way of this consolidated order for disposed off by way of this consolidated order for convenience.
The Ld. CIT(A) in the common order has taken assessment The Ld. CIT(A) in the common order has taken assessment The Ld. CIT(A) in the common order has taken assessment year 2018-19 as the lead year and decision of the same has been the lead year and decision of the same has been the lead year and decision of the same has been followed mutatis mutandis mutatis mutandis. Accordingly, parties agreed before us to . Accordingly, parties agreed before us to take assessment year 2018 take assessment year 2018-19 as a lead year and to f 19 as a lead year and to follow the decision of the same for other years decision of the same for other years mutatis mutandis mutatis mutandis.
The grounds raised by the assessee in assessment year 2018 The grounds raised by the assessee in assessment year 2018 The grounds raised by the assessee in assessment year 2018- 19 are reproduced as under: 19 are reproduced as under:
On the Facts and circumstances of the case, the learned 1. On the Facts and circumstances of the case, the learned 1. On the Facts and circumstances of the case, the learned CIT(A) erred in confirming the penalty of CIT(A) erred in confirming the penalty of Rs. 10,37,000/ Rs. 10,37,000/- under section 271FA of the Income tax Act, 1961, for the alleged delay section 271FA of the Income tax Act, 1961, for the alleged delay section 271FA of the Income tax Act, 1961, for the alleged delay in filing Form 61B for the AY 2018 in filing Form 61B for the AY 2018-19.
2. On the Facts and circumstances of the case, the learned 2. On the Facts and circumstances of the case, the learned 2. On the Facts and circumstances of the case, the learned CIT(A) erred in not considering that the delay is neither CIT(A) erred in not considering that the delay is neither CIT(A) erred in not considering that the delay is neither deliberate nor intentional but occurred solely due to bona fide or intentional but occurred solely due to bona fide or intentional but occurred solely due to bona fide oversight.
3. On the Facts and circumstances of the case, the learned 3. On the Facts and circumstances of the case, the learned 3. On the Facts and circumstances of the case, the learned CIT(A) erred in not considering the provision of section 273B of CIT(A) erred in not considering the provision of section 273B of CIT(A) erred in not considering the provision of section 273B of Income Tax Act, 1961, which explicitly provided that no penalty Income Tax Act, 1961, which explicitly provided that no penalty Income Tax Act, 1961, which explicitly provided that no penalty shall be levied if there was a reasonable cause for be levied if there was a reasonable cause for the the failure. 4. Briefly stated, the assessee Briefly stated, the assessee–company is a registered member of company is a registered member of the Bombay Stock Exchange (BSE), the National Stock Exchange the Bombay Stock Exchange (BSE), the National Stock Exchange the Bombay Stock Exchange (BSE), the National Stock Exchange (NSE) (including its F&O and Currency segments), and MCX (NSE) (including its F&O and Currency segments), and MCX (NSE) (including its F&O and Currency segments), and MCX Currency, and is one of the leading stock market brokers in India. and is one of the leading stock market brokers in India. and is one of the leading stock market brokers in India.
4.1 As per the mandate of Rule 114E of the Income As per the mandate of Rule 114E of the Income As per the mandate of Rule 114E of the Income–tax Rules, 1962 (hereinafter “the Rules”), the assessee was required to furnish 1962 (hereinafter “the Rules”), the assessee was required to furnish 1962 (hereinafter “the Rules”), the assessee was required to furnish
Anand Rathi Sahre and Stock Brokers Ltd. Anand Rathi Sahre and Stock Brokers Ltd. 3 4412, 4413 & 4412, 4413 & 4414/MUM/2025 a statement of reportable foreign account transactions, for the a statement of reportable foreign account transactions, for the a statement of reportable foreign account transactions, for the calendar year 2017, in the prescribed Form No. 61B, on or before dar year 2017, in the prescribed Form No. 61B, on or before dar year 2017, in the prescribed Form No. 61B, on or before 31.05.2018. The assessee failed to file such statement within the 31.05.2018. The assessee failed to file such statement within the 31.05.2018. The assessee failed to file such statement within the stipulated time. Consequently, a notice dated 21.12.2023 under stipulated time. Consequently, a notice dated 21.12.2023 under stipulated time. Consequently, a notice dated 21.12.2023 under Section 285BA(5) of the Income Section 285BA(5) of the Income–tax Act, 1961 (hereinafter “the Act” tax Act, 1961 (hereinafter “the Act”) was issued, requiring compliance on or before 27.12.2023. was issued, requiring compliance on or before 27.12.2023. was issued, requiring compliance on or before 27.12.2023.
4.2 The assessee, in response, submitted that Form No. 61B for The assessee, in response, submitted that Form No. 61B for The assessee, in response, submitted that Form No. 61B for the calendar year 2017 was eventually filed on 16.01.2024 in the calendar year 2017 was eventually filed on 16.01.2024 in the calendar year 2017 was eventually filed on 16.01.2024 in respect of U.S.–based clients under the Foreign Account Tax based clients under the Foreign Account Tax based clients under the Foreign Account Tax Compliance Act (FATCA) category, and on 09.01.2024 in respect of ct (FATCA) category, and on 09.01.2024 in respect of ct (FATCA) category, and on 09.01.2024 in respect of non–U.S.–based clients under the Common Reporting Standards based clients under the Common Reporting Standards based clients under the Common Reporting Standards (CRS) category. Taking note of the delay, the Assessing Officer (CRS) category. Taking note of the delay, the Assessing Officer (CRS) category. Taking note of the delay, the Assessing Officer initiated penalty proceedings under Section 271FA of the Act on initiated penalty proceedings under Section 271FA of the Act on initiated penalty proceedings under Section 271FA of the Act on 29.04.2024 4.3 The assessee, invoking Section 273B of the Act, pleaded The assessee, invoking Section 273B of the Act, pleaded The assessee, invoking Section 273B of the Act, pleaded “reasonable cause” for such delay, contending inter alia “reasonable cause” for such delay, contending inter alia “reasonable cause” for such delay, contending inter alia
The filing requirement was a newly introduced compliance in The filing requirement was a newly introduced compliance in The filing requirement was a newly introduced compliance in the inception period (2017–2018); the inception period (2017
There was a bona fide lack of awareness There was a bona fide lack of awareness regarding the There was a bona fide lack of awareness applicability of the provision, coupled with challenges in applicability of the provision, coupled with challenges in applicability of the provision, coupled with challenges in gathering requisite data; and gathering requisite data; and Anand Rathi Sahre and Stock Brokers Ltd. Anand Rathi Sahre and Stock Brokers Ltd. 4 4412, 4413 & 4412, 4413 & 4414/MUM/2025
The delay was further compounded by disruptions caused by The delay was further compounded by disruptions caused by The delay was further compounded by disruptions caused by the Covid–19 pandemic. 19 pandemic.
4.4 The Assessing Officer rejected the explanation, holding that no The Assessing Officer rejected the explanation, holding that no The Assessing Officer rejected the explanation, holding that no reasonable cause was made out, and computed penalty as follows: easonable cause was made out, and computed penalty as follows: easonable cause was made out, and computed penalty as follows::
“Accordingly, for the period from 01.06.2018 to 16.01.2024 the Accordingly, for the period from 01.06.2018 to 16.01.2024 the Accordingly, for the period from 01.06.2018 to 16.01.2024 the penalty for 2056 days is worked out as under: penalty for 2056 days is worked out as under: Period Days Penalty per day (in Rs.) Total Penalty (in Days Total Penalty (in Rs.) from 01.06.2018 to 2034 2034 500 10,17,000 10,17,000 27.12.2023 From 28.12.2023 to 20 20 1000 20,000 20,000 16.01.2024 Total 10,37,000 10,37,000
Total penalty of Rs.10,37,000/ Rs.10,37,000/-(Rupees Ten Lakh Thirty Seven (Rupees Ten Lakh Thirty Seven Thousands only) is hereby levied on is hereby levied on R.E. M/s. Anand Rathi And Stock R.E. M/s. Anand Rathi And Stock under section 271 FA of the I.T. Act.” Brokers Ltd. under 5. In appeal, the assessee reiterated that the delay was not wilful, In appeal, the assessee reiterated that the delay was not wilful, In appeal, the assessee reiterated that the delay was not wilful, but the result of genuine oversight in the context of newly but the result of genuine oversight in the context of newly but the result of genuine oversight in the context of newly introduced regulations, constituting a “reasonable cause” within the introduced regulations, constituting a “reasonable cause” within the introduced regulations, constituting a “reasonable cause” within the meaning of Section 273B meaning of Section 273B of the Act. The Ld. CIT(A), however, The Ld. CIT(A), however, rejected the plea, relying inter alia on the decision of the ITAT, rejected the plea, relying inter alia on the decision of the ITAT, rejected the plea, relying inter alia on the decision of the ITAT, Ahmedabad Bench, in Ahmedabad Bench, in The Waghodia Urban Co–operative Bank Ltd. operative Bank Ltd. (ITA No. 813/Ahd/2023, order dated 17.04.2024). It v. DIT (I&CI) (ITA No. 813/Ahd/2023, order dated 17.04.2024). It (ITA No. 813/Ahd/2023, order dated 17.04.2024). It was held that the assesse was held that the assessee had not demonstrated any reasonable e had not demonstrated any reasonable cause for delay, even after issuance of the statutory notice, and the cause for delay, even after issuance of the statutory notice, and the cause for delay, even after issuance of the statutory notice, and the Anand Rathi Sahre and Stock Brokers Ltd. Anand Rathi Sahre and Stock Brokers Ltd. 5 4412, 4413 & 4412, 4413 & 4414/MUM/2025 penalty was upheld penalty was upheld. The relevant finding of the Ld. CIT(A) is . The relevant finding of the Ld. CIT(A) is reproduced as under: reproduced as under:
“7.3. Further, as per Rule 114E of the IT Rules 1962, the assesse 7.3. Further, as per Rule 114E of the IT Rules 1962, the assesse 7.3. Further, as per Rule 114E of the IT Rules 1962, the assessee has to file statement of Reportable Foreign Account by 31.05.2018 for has to file statement of Reportable Foreign Account by 31.05.2018 for has to file statement of Reportable Foreign Account by 31.05.2018 for the transactions covered in C.Y. 2017. Since, the assessee had failed the transactions covered in C.Y. 2017. Since, the assessee had failed the transactions covered in C.Y. 2017. Since, the assessee had failed to submit the same, AO had issued notice u/s 285BA of the IT Act to submit the same, AO had issued notice u/s 285BA of the IT Act to submit the same, AO had issued notice u/s 285BA of the IT Act asking the assessee to file the statement of Fore asking the assessee to file the statement of Foreign Account C.Y. ign Account C.Y. 2017 on or before 27.12.2023. However, I found that even after 2017 on or before 27.12.2023. However, I found that even after 2017 on or before 27.12.2023. However, I found that even after issuing of this notice, the assessee had filed Form 613 for CY 2017 issuing of this notice, the assessee had filed Form 613 for CY 2017 issuing of this notice, the assessee had filed Form 613 for CY 2017 on 16.01. 2024 for US based clients and on 09.01.2024 for non on 16.01. 2024 for US based clients and on 09.01.2024 for non on 16.01. 2024 for US based clients and on 09.01.2024 for non-US based clients. The assessee has failed to c based clients. The assessee has failed to comply with provisions of omply with provisions of sections 285A of the IT Act. Further, during the course of appellate sections 285A of the IT Act. Further, during the course of appellate sections 285A of the IT Act. Further, during the course of appellate proceedings, the assessee has not provided any reasonable cause for proceedings, the assessee has not provided any reasonable cause for proceedings, the assessee has not provided any reasonable cause for delay in filing of statement of Foreign Account before 31.05.2018. delay in filing of statement of Foreign Account before 31.05.2018. delay in filing of statement of Foreign Account before 31.05.2018. Therefore, case of the asse Therefore, case of the assessee is not covered as per section 273B of ssee is not covered as per section 273B of the IT Act. Further, I found that ITAT, Ahmedabad in the case of 'The the IT Act. Further, I found that ITAT, Ahmedabad in the case of 'The the IT Act. Further, I found that ITAT, Ahmedabad in the case of 'The Waghodia Urban Co. Op. Bank Limited vs. The Director of Income Tax Waghodia Urban Co. Op. Bank Limited vs. The Director of Income Tax Waghodia Urban Co. Op. Bank Limited vs. The Director of Income Tax (I & CI), Ahmedabad (ITA No. 813/Ahd/2023 A.Y. 2019 (I & CI), Ahmedabad (ITA No. 813/Ahd/2023 A.Y. 2019 (I & CI), Ahmedabad (ITA No. 813/Ahd/2023 A.Y. 2019-20)' dated 17.04.2024 ha 17.04.2024 has confirmed the penalty levied u/s. 271FA of the IT s confirmed the penalty levied u/s. 271FA of the IT Act. Relevant portion of the ITAT order is reproduced as under: Act. Relevant portion of the ITAT order is reproduced as under: Act. Relevant portion of the ITAT order is reproduced as under: "8. Heard both the parties and perused all the relevant material "8. Heard both the parties and perused all the relevant material "8. Heard both the parties and perused all the relevant material available on record. It is pertinent to note that the due date for filing available on record. It is pertinent to note that the due date for filing available on record. It is pertinent to note that the due date for filing SFT-004 return/statement was 31.05.2019 and the notice has given 004 return/statement was 31.05.2019 and the notice has given 004 return/statement was 31.05.2019 and the notice has given by the Assessing Officer under Section 285BA(5) on 26.04.2022 and by the Assessing Officer under Section 285BA(5) on 26.04.2022 and by the Assessing Officer under Section 285BA(5) on 26.04.2022 and directed the assessee to file the SFT directed the assessee to file the SFT-001 and SFT 005 on or before 001 and SFT 005 on or before 11.05.2022. Ld. AR submitted that there was server issue in 11.05.2022. Ld. AR submitted that there was server issue in 11.05.2022. Ld. AR submitted that there was server issue in the Bank and, therefore, the assessee field the belated return under SFT Bank and, therefore, the assessee field the belated return under SFT Bank and, therefore, the assessee field the belated return under SFT- 005 which is after the period prescribed under notice under 285BA(5) 005 which is after the period prescribed under notice under 285BA(5) 005 which is after the period prescribed under notice under 285BA(5) of the Act that too six months after issuing of notice. The contention of the Act that too six months after issuing of notice. The contention of the Act that too six months after issuing of notice. The contention taken by the Ld. AR if taken as it is and taken by the Ld. AR if taken as it is and for which the Ld. AR has for which the Ld. AR has relied upon the decision of the Tribunal in case of Halol Urban Co relied upon the decision of the Tribunal in case of Halol Urban Co relied upon the decision of the Tribunal in case of Halol Urban Co-op. Bank Limited vs. The Director of Income Tax (I&CI) (ITA Bank Limited vs. The Director Bank Limited vs. The Director of Income Tax (I&CI) (ITA of Income Tax (I&CI) (ITA No.968/Ahd/2019, order dated 25.10.2021). The factual aspect in No.968/Ahd/2019, order dated 25.10.2021). The factual aspect in No.968/Ahd/2019, order dated 25.10.2021). The factual aspect in the present case clearly set out that th the present case clearly set out that the assessee despite giving one e assessee despite giving one month period has failed to file the SFT return within the stipulated month period has failed to file the SFT return within the stipulated month period has failed to file the SFT return within the stipulated date given in notice under Section 285BA(5) of the Act. The Tribunal date given in notice under Section 285BA(5) of the Act. The Tribunal date given in notice under Section 285BA(5) of the Act. The Tribunal has excluded the period prior to issuance of notice but the Section has excluded the period prior to issuance of notice but the Section has excluded the period prior to issuance of notice but the Section clearly set out that clearly set out that the concerned assessee shall furnish the the concerned assessee shall furnish the statement in respect of such specified financial transaction or such statement in respect of such specified financial transaction or such statement in respect of such specified financial transaction or such reportable account for the purpose of this Act. The Income Tax reportable account for the purpose of this Act. The Income Tax reportable account for the purpose of this Act. The Income Tax authority shall be furnishing the same for such period within such authority shall be furnishing the same for such period within such authority shall be furnishing the same for such period within such time and in the time and in the form and manner as may be prescribed. Thus, it is form and manner as may be prescribed. Thus, it is mandatory provision and, therefore, physical calculation by the mandatory provision and, therefore, physical calculation by the mandatory provision and, therefore, physical calculation by the Anand Rathi Sahre and Stock Brokers Ltd. Anand Rathi Sahre and Stock Brokers Ltd. 6 4412, 4413 & 4412, 4413 & 4414/MUM/2025 Assessing Officer was rightly done and levied under Section Assessing Officer was rightly done and levied under Section Assessing Officer was rightly done and levied under Section 285BA(5) of the Act. The contention of the Ld. AR that server was not 285BA(5) of the Act. The contention of the Ld. AR that server was not 285BA(5) of the Act. The contention of the Ld. AR that server was not working or there was some issue with the server has not been there was some issue with the server has not been there was some issue with the server has not been demonstrated thoroughly before the Tribunal and merely on the plea demonstrated thoroughly before the Tribunal and merely on the plea demonstrated thoroughly before the Tribunal and merely on the plea we we cannot cannot accept accept the the same. same. Thus, Thus, appeal appeal of of the the assessee is dismissed. dismissed.”
Before us, the Ld. Counsel for the assessee filed a Paper Book Before us, the Ld. Counsel for the assessee filed a Paper Book Before us, the Ld. Counsel for the assessee filed a Paper Book containing pages 1 to 1 pages 1 to 147 and contested that the penalty levied by the penalty levied by the AO and upheld by the Ld. CIT(A) the AO and upheld by the Ld. CIT(A) might be deleted might be deleted.
6.1 The Ld. Counsel for the assessee submitted that assessee is The Ld. Counsel for the assessee submitted that assessee is The Ld. Counsel for the assessee submitted that assessee is not a regular defaulter and it had been regularly filing its income- not a regular defaulter and it had been regularly filing its income not a regular defaulter and it had been regularly filing its income tax return, tax audit report and TDS report within the prescribed audit report and TDS report within the prescribed audit report and TDS report within the prescribed timelines. He submitted that assessee is timelines. He submitted that assessee is a responsible and responsible and compliance taxpayer with no history pliance taxpayer with no history of deliberate non-compliance under the provisions of the Act. He submitted under the provisions of the Act. He submitted that assessee had that assessee had duly filed Form No. 61A (SFT report for assessment year 2019- duly filed Form No. 61A (SFT report for assessment year 2019 duly filed Form No. 61A (SFT report for assessment year 2019 2020) in accordance with requirement of the section 285BA of the 2020) in accordance with requirement of the section 285BA of the 2020) in accordance with requirement of the section 285BA of the Act. However, under the same provision the assessee inadvertently However, under the same provision the assessee inadvertently However, under the same provision the assessee inadvertently failed to file Form No. 61B as the obligation to furnish this failed to file Form No. 61B as the obligation to furnish this failed to file Form No. 61B as the obligation to furnish this additional form was newly introduced pursuant to Rule 114G and additional form was newly introduced pursuant to Rule 114G and additional form was newly introduced pursuant to Rule 114G and was part of a regulatory was part of a regulatory expansion aimed at implementing expansion aimed at implementing FATCA and CRS reporting norms. The fai S reporting norms. The failure to file Form No. 61B occurred re to file Form No. 61B occurred due to a bonafide misunderstanding of this new compliance due to a bonafide misunderstanding of this new compliance due to a bonafide misunderstanding of this new compliance requirement and not due to any deliberate omission or malafide requirement and not due to any deliberate omission or malafide requirement and not due to any deliberate omission or malafide intent. Further, the Ld. Counsel submitted that by way of delay in intent. Further, the Ld. Counsel submitted that by way of delay in intent. Further, the Ld. Counsel submitted that by way of delay in filing there was no revenue loss to the Income there was no revenue loss to the Income-tax Department. tax Department.
Anand Rathi Sahre and Stock Brokers Ltd. Anand Rathi Sahre and Stock Brokers Ltd. 7 4412, 4413 & 4412, 4413 & 4414/MUM/2025 6.2 Further, the Ld. Counsel submitted that there was a change in Further, the Ld. Counsel submitted that there was a change in Further, the Ld. Counsel submitted that there was a change in the regulatory instruction issue the regulatory instruction issued by the Income-tax Department tax Department with reference to Form No. 61B of the Rules. The Ld. Counsel with reference to Form No. 61B of the Rules. The Ld. Counsel with reference to Form No. 61B of the Rules. The Ld. Counsel referred to the notification No. 3/2015 dated 25.08.2015 which was to the notification No. 3/2015 dated 25.08.2015 which was to the notification No. 3/2015 dated 25.08.2015 which was subsequently withdrawn by way of notification No. 4/2016 dated subsequently withdrawn by way of notification No. 4/2016 dated subsequently withdrawn by way of notification No. 4/2016 dated said notification No. 4/2015 was also withdrawn 04.09.2015. The said notification No. 4/2015 was also withdrawn said notification No. 4/2015 was also withdrawn by way of notification No. 4/2016 dated 06.04.2016. Thereafter, a by way of notification No. 4/2016 dated 06.04.2016. Thereafter, a by way of notification No. 4/2016 dated 06.04.2016. Thereafter, a was issued for implementation of clarification dated 26.05.2016 26.05.2016 was issued for implementation of FATCA CA and and CRS CRS and and Directorate of of System System (Income-tax (Income Department) issued a user manual issued a user manual for use in view of Form No. 61B in view of Form No. 61B tax Website. Subsequently, further a Circular was on the Income-tax Website. Subsequently, further tax Website. Subsequently, further issued on 29.12.2022 specifying due diligence and reporting 2022 specifying due diligence and reporting for 2022 specifying due diligence and reporting . The Ld. Counsel submitted that in view of various FATCA and CRS. The Ld. Counsel submitted that in view of various . The Ld. Counsel submitted that in view of various clarifications, the assessee could not comply the filing of said Form clarifications, the assessee could not comply the filing of said Form clarifications, the assessee could not comply the filing of said Form 61B within limitation limitation. The Ld. Counsel relied on the decision of . The Ld. Counsel relied on the decision of Bench of the Tribunal in the case of Durapur Steel Peoples’ Kolkata Bench of the Tribunal in the case of Durapur Steel Peoples’ Bench of the Tribunal in the case of Durapur Steel Peoples’ Co-operative Bank Ltd. v. Director of Income operative Bank Ltd. v. Director of Income-tax (Intelligence & tax (Intelligence & Criminal Investigation), Kolkata [2016] 74 taxmann.com 97 (Kolkata Criminal Investigation), Kolkata [2016] 74 taxmann.com 97 (Kolkata Criminal Investigation), Kolkata [2016] 74 taxmann.com 97 (Kolkata Trib.). The Ld. Counsel also relied on the decision of the Delhi – Trib.). The Ld. Counsel also relied on the decision of the Del Trib.). The Ld. Counsel also relied on the decision of the Del Bench of the Tribunal in the case of The Rewari Central Co- Bench of the Tribunal in the case of The Rewari Central Co Bench of the Tribunal in the case of The Rewari Central Co operative Bank v. Directorate of Income operative Bank v. Directorate of Income-tax (I&CI) Rewari (I&CI) Rewari ITA No. 4846/Del/2019 for assessment year 2017 4846/Del/2019 for assessment year 2017-18.
The Ld. Departmental Representative supported the orders of The Ld. Departmental Representative supported the orders of The Ld. Departmental Representative supported the orders of the lower authorities, contending that Section 285BA casts a the lower authorities, contending that Section 285BA casts a the lower authorities, contending that Section 285BA casts a Anand Rathi Sahre and Stock Brokers Ltd. Anand Rathi Sahre and Stock Brokers Ltd. 8 4412, 4413 & 4412, 4413 & 4414/MUM/2025 public–duty obligation upon reporting entities, making timely filing duty obligation upon reporting entities, making timely filing duty obligation upon reporting entities, making timely filing of such statements a mandatory requirement and that no of such statements a mandatory requirement and that no of such statements a mandatory requirement and that no reasonable cause within the ambit of Section 273B was established. cause within the ambit of Section 273B was established. cause within the ambit of Section 273B was established. The Ld. DR also relied on the decision of the Co The Ld. DR also relied on the decision of the Co-ordinate Bench of ordinate Bench of Ahmedabad Tribunal in the case of The Waghodia Urban Co. Op. Ahmedabad Tribunal in the case of The Waghodia Urban Co. Op. Ahmedabad Tribunal in the case of The Waghodia Urban Co. Op. Bank Ltd. (supra) relied upon by the Ld. CIT(A). Bank Ltd. (supra) relied upon by the Ld. CIT(A).
We have heard rival We have heard rival submissions of the parties and perused submissions of the parties and perused the relevant materials on record the relevant materials on record. In the case, the Assessing Officer . In the case, the Assessing Officer has levied penalty u/s 271 has levied penalty u/s 271FA of the Act for delay in filing the A of the Act for delay in filing the statement of foreign accounts transaction. For ready reference, statement of foreign accounts transaction. For ready reference, statement of foreign accounts transaction. For ready reference, section 271FA of the Act is reproduced as under: e Act is reproduced as under: “[Penalty for failure to furnish Penalty for failure to furnish73[statement of financial statement of financial transaction or reportable account transaction or reportable account]. 74 271FA. If a person who is required to furnish If a person who is required to furnish 75[a statement of [a statement of financial transaction or reportable account] under sub financial transaction or reportable account] under sub-section (1) of section (1) of section 285BA, fails to furnish such , fails to furnish such 76[statement] within the time [statement] within the time prescribed under sub rescribed under sub-section (2) thereof, the income-tax authority tax authority prescribed under said sub prescribed under said sub-section (1) may direct that such person section (1) may direct that such person shall pay, by way of penalty, a sum of shall pay, by way of penalty, a sum of 77[five] hundred rupees for [five] hundred rupees for every day during which every day during which such failure continues: Provided that where such person fails to furnish the that where such person fails to furnish the 76 76[statement] within the period specified in the notice issued under sub-section within the period specified in the notice issued under sub within the period specified in the notice issued under sub (5) of section 285BA section 285BA, he shall pay, by way of penalty, a sum of pay, by way of penalty, a sum of 78[one thousand] rupees for every day during which the failure [one thousand] rupees for every day during which the failure [one thousand] rupees for every day during which the failure continues, beginning from the day immediately following the day continues, beginning from the day immediately following the day continues, beginning from the day immediately following the day on which the time specified in such notice for furnishing the on which the time specified in such notice for furnishing the on which the time specified in such notice for furnishing the 76[statement] expires.] [statement] expires.]” 8.1 The factual position regarding delay in furnishing Form No. ctual position regarding delay in furnishing Form No. ctual position regarding delay in furnishing Form No. 61B is undisputed. The sole question for adjudication is whether 61B is undisputed. The sole question for adjudication is whether 61B is undisputed. The sole question for adjudication is whether such delay was occasioned by a “reasonable cause” so as to attract such delay was occasioned by a “reasonable cause” so as to attract such delay was occasioned by a “reasonable cause” so as to attract
Anand Rathi Sahre and Stock Brokers Ltd. Anand Rathi Sahre and Stock Brokers Ltd. 9 4412, 4413 & 4412, 4413 & 4414/MUM/2025 the protection of Section 273B of the Act. the protection of Section 273B of the Act. For ready reference said For ready reference said section 273B is reproduced as under: ction 273B is reproduced as under:
“6[Penalty not to be imposed in certain cases. Penalty not to be imposed in certain cases. 7 273B. Notwithstanding anything contained in the Notwithstanding anything contained in the Notwithstanding anything contained in the provisions of provisions of 8[clause (b) of sub-section (1) of] 9 9[section 271, section 271A section 271A, 10[section 271AA,] section 271B section 271B10[, section section 271BA], 271BA 11[section 271BB,] section section 271C, 271C 12[section 271CA section 271CA,] section 271D, section 271E, 13 13[section 271F, 14[section 271FA section 271FA,] 15[section 271FAA,] 16 16[section 271FAB,] 17[ [section 271FB,] 18[section 271G,]] 19 19[section 271GA,] 20[section 271GB section 271GB,] 21[section 271GC,] 22 22[section 271H,] 23[section 271 section 271-I,] 24[section 271J,] clause (c) or ,] clause (c) or clause (d) of sub clause (d) of sub-section (1) or sub-section (2) of section (2) of section 272A, sub-section (1) of section (1) of section 272AA] or 25[section 272B section 272B or] 26[sub-section (1) section (1) 27[or sub-section (1A)] of section (1A)] of section 272BB or] 28 28[sub-section (1) of section 272BBB or] clause or] clause (b) of sub-section (1) or clause (b) or clause (c) of sub section (1) or clause (b) or clause (c) of sub- section (1) or clause (b) or clause (c) of sub section (2) of section (2) of section 273, no penalty shall be imposable , no penalty shall be imposable on the person or the assessee, as the case may be, for on the person or the assessee, as the case may be, for on the person or the assessee, as the case may be, for any failure referred to in the said pro any failure referred to in the said provisions if he proves visions if he proves that there was reasonable cause that there was reasonable cause 29 for the said failure.] for the said failure.]” 8.2 Thus the section 271FA mandates a penalty for failure to ection 271FA mandates a penalty for failure to ection 271FA mandates a penalty for failure to furnish a “statement of financial transaction or reportable account” furnish a “statement of financial transaction or reportable account” furnish a “statement of financial transaction or reportable account” within the prescribed time. However, Section 273B carves out an rescribed time. However, Section 273B carves out an rescribed time. However, Section 273B carves out an exception, stipulating that no penalty shall be imposable if the exception, stipulating that no penalty shall be imposable if the exception, stipulating that no penalty shall be imposable if the assessee proves that there was reasonable cause for such failure. assessee proves that there was reasonable cause for such failure. assessee proves that there was reasonable cause for such failure.
8.3 In view of the above factual background, the issue in dispute In view of the above factual background, the issue in dispute In view of the above factual background, the issue in dispute is before us whether there any ore us whether there any ‘reasonable cause’ exists for delay in exists for delay in filing the Form No. 61B prescribed for filing statement of foreign filing the Form No. 61B prescribed for filing statement of foreign filing the Form No. 61B prescribed for filing statement of foreign account transactions by the assessee. The assessee has submitted account transactions by the assessee. The assessee has submitted account transactions by the assessee. The assessee has submitted that delay happened mainly due to frequent change in the that delay happened mainly due to frequent change in the that delay happened mainly due to frequent change in the Anand Rathi Sahre and Stock Brokers Ltd. Anand Rathi Sahre and Stock Brokers Ltd. 10 4412, 4413 & 4412, 4413 & 4414/MUM/2025 instructions issued regarding filing of Form No. 61B and in view of instructions issued regarding filing of Form No. 61B and in view of instructions issued regarding filing of Form No. 61B and in view of compliance framework. The assessee has further pleaded that other compliance framework. The assessee has further pleaded that other compliance framework. The assessee has further pleaded that other form in filing statement of foreign account i.e. Form No. 61B was form in filing statement of foreign account i.e. Form No. 61B was form in filing statement of foreign account i.e. Form No. 61B was filed on time. However, inadvertently the Form No. 61B could not be filed on time. However, inadvertently the Form No. 61B c filed on time. However, inadvertently the Form No. 61B c filed for delay in collecting the data from the clients. The assessee filed for delay in collecting the data from the clients. The assessee filed for delay in collecting the data from the clients. The assessee it had maintained a consistent record of has further explained that has further explained that it had maintained a consistent record of regulatory compliance including filing of income regulatory compliance including filing of income- -tax return, tax in the prescribed time audit reports and TDS statement etc. with audit reports and TDS statement etc. within the prescribed time limit.
8.4 On the facts of the present case, we note that: On the facts of the present case, we note that:
The obligation to file Form No. 61B under the FATCA/CRS The obligation to file Form No. 61B under the FATCA/CRS The obligation to file Form No. 61B under the FATCA/CRS framework was relatively nascent for the relevant calendar framework was relatively nascent for the relevant calendar framework was relatively nascent for the relevant calendar year; There was substantial and frequent modification in t There was substantial and frequent modification in t There was substantial and frequent modification in the compliance compliance compliance procedure and procedure procedure and and instructions instructions issued instructions issued issued by by by the the the Department; and Department; and The assessee has an established track record of timely The assessee has an established track record of timely The assessee has an established track record of timely compliance in other statutory filings under the Ac compliance in other statutory filings under the Ac compliance in other statutory filings under the Ac 8.5 These circumstances, in our considered view, bring the case hese circumstances, in our considered view, bring the case hese circumstances, in our considered view, bring the case within the protective ambit of Section 273B. We find support for within the protective ambit of Section 273B. We find support for within the protective ambit of Section 273B. We find support for this conclusion in the decision of the Kolkata Bench in Durgapur this conclusion in the decision of the Kolkata Bench in this conclusion in the decision of the Kolkata Bench in operative Bank Ltd. (supra), where it was (supra), where it was Steel Peoples’ Co–operative Bank Ltd. recognised that frequent legislative changes may result in bona fide sed that frequent legislative changes may result in bona fide sed that frequent legislative changes may result in bona fide
Anand Rathi Sahre and Stock Brokers Ltd. Anand Rathi Sahre and Stock Brokers Ltd. 11 4412, 4413 & 4412, 4413 & 4414/MUM/2025 and technical breaches, not warranting penalty under Section and technical breaches, not warranting penalty under Section and technical breaches, not warranting penalty under Section 271FA in the absence of mala fides or revenue loss. The relevant 271FA in the absence of mala fides or revenue loss. 271FA in the absence of mala fides or revenue loss. finding of the Co-ordinate Bench is reproduced as under: ordinate Bench is reproduced as under: ordinate Bench is reproduced as under:
“9. We have We have heard the arguments of both the sides and also heard the arguments of both the sides and also perused the relevant material available on record. On a careful perused the relevant material available on record. On a careful perused the relevant material available on record. On a careful consideration of the matter, we find that except the instant alleged consideration of the matter, we find that except the instant alleged consideration of the matter, we find that except the instant alleged breach, nothing more is alleged against the assessee. As a matter breach, nothing more is alleged against the assessee. As a matter breach, nothing more is alleged against the assessee. As a matter of fact, the Director of Income Tax (Intelligence and Criminal the Director of Income Tax (Intelligence and Criminal the Director of Income Tax (Intelligence and Criminal investigation) who passed the penalty order himself observed in investigation) who passed the penalty order himself observed in investigation) who passed the penalty order himself observed in his order vide para No 3 that the assessee got the accounts of all his order vide para No 3 that the assessee got the accounts of all his order vide para No 3 that the assessee got the accounts of all branches consolidated and audited, and also filed Income branches consolidated and audited, and also filed Income branches consolidated and audited, and also filed Income Tax/TDS return Tax/TDS returns. The order of the Director of Income Tax s. The order of the Director of Income Tax (Intelligence and Criminal investigation) does not speak as to how (Intelligence and Criminal investigation) does not speak as to how (Intelligence and Criminal investigation) does not speak as to how the assessee stood to gain by contravening with the provisions of the assessee stood to gain by contravening with the provisions of the assessee stood to gain by contravening with the provisions of Section 285BA of the Act or the act of assessee resulted in any Section 285BA of the Act or the act of assessee resulted in any Section 285BA of the Act or the act of assessee resulted in any loss to the Reve loss to the Revenue. Further, it is an acknowledged and judicially nue. Further, it is an acknowledged and judicially recognized fact that the tax laws of this country are complex and recognized fact that the tax laws of this country are complex and recognized fact that the tax laws of this country are complex and complicated and often require for compliance, therewith the complicated and often require for compliance, therewith the complicated and often require for compliance, therewith the assistance of tax practitioners specialising in this field, is a well assistance of tax practitioners specialising in this field, is a well assistance of tax practitioners specialising in this field, is a well known fact, and it is equally well known fact that the legislation in t, and it is equally well known fact that the legislation in t, and it is equally well known fact that the legislation in this field undergoes so frequent changes and amendments that it this field undergoes so frequent changes and amendments that it this field undergoes so frequent changes and amendments that it is not possible for even a person specialising in this field, including is not possible for even a person specialising in this field, including is not possible for even a person specialising in this field, including the tax administrator, to claim that he knows what exactly the tax administrator, to claim that he knows what exactly the tax administrator, to claim that he knows what exactly the law is on a particular given day or period without making references to is on a particular given day or period without making references to is on a particular given day or period without making references to the history of the enactments. In these circumstances, no mala the history of the enactments. In these circumstances, no mala the history of the enactments. In these circumstances, no mala fides can be attributed to the assessee so as to invoke the penalty fides can be attributed to the assessee so as to invoke the penalty fides can be attributed to the assessee so as to invoke the penalty proceedings under section 271FA of the Act and th proceedings under section 271FA of the Act and th proceedings under section 271FA of the Act and the learned Director of Income Tax (Intelligence and Criminal investigation) Director of Income Tax (Intelligence and Criminal investigation) Director of Income Tax (Intelligence and Criminal investigation) should have taken note that the breach is only technical or venial should have taken note that the breach is only technical or venial should have taken note that the breach is only technical or venial breach of the provisions of the Act and such a breach could have breach of the provisions of the Act and such a breach could have breach of the provisions of the Act and such a breach could have flown from a bona fide ignorance of the assessee flown from a bona fide ignorance of the assessee that he is liable that he is liable to act in the manner prescribed by the statute, and should not to act in the manner prescribed by the statute, and should not to act in the manner prescribed by the statute, and should not have invoked the penalty proceedings. We, therefore, by following have invoked the penalty proceedings. We, therefore, by following have invoked the penalty proceedings. We, therefore, by following the above decision cited supra find that the Penalty proceedings the above decision cited supra find that the Penalty proceedings the above decision cited supra find that the Penalty proceedings are liable to be set aside. We order accordi are liable to be set aside. We order accordingly.” 8.6 Applying the ratio of the said decision, we hold that the delay Applying the ratio of the said decision, we hold that the delay Applying the ratio of the said decision, we hold that the delay herein was a technical/venial breach arising from bona fide herein was a technical/venial breach arising from bona fide herein was a technical/venial breach arising from bona fide reasons, without any intention to evade compliance. Accordingly, reasons, without any intention to evade compliance. Accordingly, reasons, without any intention to evade compliance. Accordingly, the penalty levied under Section 271FA is unsustainable and is the penalty levied under Section 271FA is unsustainable and is the penalty levied under Section 271FA is unsustainable and is Anand Rathi Sahre and Stock Brokers Ltd. Anand Rathi Sahre and Stock Brokers Ltd. 12 4412, 4413 & 4412, 4413 & 4414/MUM/2025 directed to be deleted. cted to be deleted. The grounds No. 1 to 3 of the appeal of the The grounds No. 1 to 3 of the appeal of the assessee are accordingly allowed assessee are accordingly allowed.
Since the ground raised in the appeals for assessment year 2019 Since the ground raised in the appeals for assessment year 2019- Since the ground raised in the appeals for assessment year 2019 2020 to 2020-21 are identical to the grounds raised in assessment 21 are identical to the grounds raised in assessment 21 are identical to the grounds raised in assessment year 2018-19 and therefo 19 and therefore, following our finding above. The re, following our finding above. The grounds raised in the appeal for assessment year 2019-2020 to grounds raised in the appeal for assessment year 2019 grounds raised in the appeal for assessment year 2019 2021-22 are also allowed. 22 are also allowed.
In the result, all the appeals of the assessee are allowed. In the result, all the appeals of the assessee are allowed. In the result, all the appeals of the assessee are allowed.