BANGIYA GRAMIN VIKASH BANK (PRESENTLY KNOWN AS WEST BENGAL GRAMIN BANK),MURSHIDABAD vs. JCIT(I & CI) - 1, , KOLKATA
Facts
In AY 2022-23, the assessee deposited provident fund (PF) on 19.10.2021 against a due date of 15.10.2021. The AO disallowed this u/s 36(1)(va), but the CIT(A) remanded it for verification of a 5-day grace period. For AY 2021-22, the assessee faced a penalty u/s 271FA for belated filing of Statement of Financial Transactions (SFT) due to technical issues arising from a bank reorganization and migration to a new core banking system.
Held
For the PF contribution, the tribunal ruled that payment made within the 5-day grace period (considering public holidays) should not be disallowed, setting aside the CIT(A)'s order and directing the AO to delete the addition. For the SFT penalty, the tribunal found a reasonable cause for the delay due to technical glitches from bank reorganization and core banking migration, thus setting aside the CIT(A)'s order and directing the AO to delete the penalty.
Key Issues
1. Whether employee's provident fund contribution paid within a 5-day grace period, despite the original due date, should be disallowed under section 36(1)(va). 2. Whether a penalty under section 271FA for belated SFT filing is justified when the delay is attributable to technical issues from bank reorganization.
Sections Cited
36(1)(va), 143(3), 144B, 285BA(1), 271FA
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “A” BENCH, KOLKATA
Before: SHRI RAJESH KUMAR, AM & SHRI PRADIP KUMAR CHOUBEY, JM
Per Rajesh Kumar, AM:
These are appeals preferred by the assessee against the orders of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 15.10.2025 & 07.08.2025 for the AYs 2021-22 & 2022-23.
The only issue raised by the assessee in the various grounds of appeal is against the order of ld. CIT (A) not allowing the employees provident fund payment made u/s 36(1)(va) of the Income-tax Act, 1961 (the Act) within a grace period of 5 days to the EPF Trust maintained by the assessee and restored the issue to the file of the ld. AO.
The facts in brief are that the assessee filed the return of income on 18.10.2022, declaring income at ₹nil. The case of the assessee was selected for scrutiny for various reasons. During the course of assessment proceedings, the ld. AO observed that the provident fund amounting to ₹4,05,33,558/-, was paid on 19.10.2021, whereas the due date was 15.10.2021. The ld. AO noted that the same was not suo motto disallowed by the assessee while filing the return of income and in terms of section 36(1)(va) of the Act disallowed the same and added to the income of the assessee in the assessment framed u/s 143(3) read with section 144B of the Income-tax Act, 1961 dated 24.03.2024.
In the appellate proceedings, the ld. CIT (A) restored the issue to the file of the ld. AO for verification and deciding the issue accordingly. The ld. CIT (A) directed the ld. AO to allow the appeal if the PF was paid within grace period of 5 days.
“9. We have heard the submissions made by rival sides. The assessee has placed on record communication dated 08/01/2016 from Employees Provident Fund Organization regarding removing of grace period of five days. The relevant extract of the letter is reproduced herein below: “ Sub: Payment of contribution by the employers by 15th of the following month Removing of grace period of 5 days. Sir/Madam, As per paragraph 38(1) of the EPF Scheme, 1952, paragraph 3 of EPS, 1995 and paragraph 8(1) of EDLI Scheme, 1976, the employers are required to pay the contributions and administrative charges within fifteen days of close of every month. The employer, as per para 5.1.3 of Manual of Accounting Procedure (Part-I General), is also allowed a grace period of 5 days to remit the contribution. 2. The grace period of five days have been allowed for the employers to remit the contributions as the system of calculation of wages of the employees and their corresponding dues under the three schemes (Employees' Provident Fund Scheme 1952,
A.Y. 2021-22 ITA No. 2591/KOL/2025 8. The only issue raised by the assessee is against the order of ld. CIT (A) confirming the penalty of ₹3,61,000/- as imposed by the ld. AO u/s 271FA for belated filing of SFT returns.
The facts in brief are that the assessee did not file the statement of financial transactions as mandated u/s 285BA(1) for A.Y. 2020-21, within the due date i.e. 30.06.2021. Consequently, the DDIT (I&C) issued notice on 07.12.2021, requesting the assessee to file the said SFT by 06.01.2022. The assessee stated vide mail dated 09.12.2021, that due to technical issues the SFT could not be filed and assured that the same would be filed once the technical issues are resolved. Thereafter, the penalty proceedings were initiated u/s 271FA read with section 254 of the Act on 10.03.2022, asking the assessee as to why the penalty should not be imposed. Finally, the penalty was imposed of ₹3,61,000/- depending on the period of delay which was calculated by the ld. AO at page no.3 of the assessment order.
In the appellate proceedings, the ld. CIT (A) confirmed the same.
After hearing the rival contentions and perusing the materials available on record, we find that the assessee was in the process of reorganization with another bank united bank of India and merged with Punjab National bank, therefore, to due to technical glitches faced by the bank on account of migration to upgrade version of core banking solution from Finacle 7 to Finacle 10 of core banking solution. Therefore, assessee was not able to generate the requisite data in
Set SFT Description Criteria Remarks Pg. No. Code 001 Purchase of bank drafts or pay orders in cash Eligible Penalty dropped by PB-16 order dated 17.01.2023 002 Purchase of pre-paid instruments in cash Not eligible N.A. to bank 003 Cash deposit or withdrawals in current Eligible Penalty dropped by PB-18 & account order dated 17.01.2023 19 (Din difference) 004 Cash deposit in account other than current Eligible Penalty dropped by PB-17 account order dated 17.01.2023 005 Time deposit Eligible Now in Present appeal
We note that the penalty proceedings were dropped in the similar type of lapse on the part of the assessee which has happened due to re- organization process and migration to higher version of Finacle. In our opinion this is a reasonable cause due to which the assessee could not file the SFT return. Consequently, we set aside the order of ld. CIT (A) and direct the ld. AO to delete the penalty.
In the result, both the appeals of the assessee are allowed.
Order pronounced in the open court on 26.02.2026.
Sd/- Sd/- (PRADIP KUMAR CHOUBEY) (RAJESH KUMAR) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Kolkata, Dated: 26.02.2026 Sudip Sarkar, Sr.PS
Copy of the Order forwarded to: 1. The Appellant 2. The Respondent 3. CIT DR, ITAT, 4. 5. Guard file. BY ORDER, True Copy//
Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Kolkata
