BANGIYA GRAMIN VIKASH BANK (PRESENTLY KNOWN AS WEST BENGAL GRAMIN BANK),MURSHIDABAD vs. ITO, WARD 42(1),, MURSHIDABAD

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ITA 2592/KOL/2025Status: DisposedITAT Kolkata26 February 2026AY 2022-20237 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal condoned the delay in filing the appeals for AYs 2021-22 and 2022-23, finding the reasons to be bonafide and genuine, and the Revenue did not object. Regarding the EPF payment for AY 2022-23, the Tribunal noted that the payment was made on 19.10.2021, within a 5-day grace period after the due date of 15.10.2021. Citing the decision in 'Strides Pharma Science Ltd. Vs. Dy. CIT', the Tribunal held that the 5-day grace period, as per the Manual of Accounting Procedure, applies to both employer and employee contributions. Therefore, the disallowance made by the AO and the restoration order by the CIT(A) were set aside, and the AO was directed to delete the addition. For AY 2021-22, concerning the penalty for belated SFT filing, the Tribunal found that the delay was due to the bank's reorganization and migration to a new core banking solution, causing technical glitches. The Tribunal considered this a reasonable cause and noted that penalties were dropped in similar cases. Consequently, the order of the CIT(A) confirming the penalty was set aside, and the AO was directed to delete the penalty. The Tribunal expressly left no issue undecided.

What were the facts?

The assessee, Bangiya Gramin Vikash Bank (now West Bengal Gramin Bank), filed appeals against the orders of the National Faceless Appeal Centre, Delhi, for Assessment Years (AYs) 2021-22 and 2022-23. The appeals were filed beyond the limitation period, but the delay was condoned by the Tribunal due to bonafide and genuine reasons, with no objection from the Revenue. For AY 2022-23, the Assessing Officer (AO) disallowed an employee provident fund (EPF) payment of ₹4,05,33,558/- made on 19.10.2021, as it was beyond the due date of 15.10.2021, adding it to the assessee's income. The Commissioner of Income Tax (Appeals) [CIT(A)] restored the issue to the AO for verification, directing that the appeal be allowed if the PF was paid within a 5-day grace period. For AY 2021-22, the CIT(A) confirmed a penalty of ₹3,61,000/- imposed by the AO under Section 271FA for belated filing of Statement of Financial Transactions (SFT) for AY 2020-21.

What were the issues?

1. Whether the Tribunal has jurisdiction to condone the delay in filing the appeal, and if so, whether the delay in filing the appeals for AYs 2021-22 and 2022-23 should be condoned (Question of procedure). 2. Whether the payment of employee provident fund contribution of ₹4,05,33,558/- made on 19.10.2021, which was within a 5-day grace period after the due date of 15.10.2021, should be disallowed under Section 36(1)(va) of the Income-tax Act, 1961 (Question of law and fact). 3. Whether the penalty of ₹3,61,000/- imposed under Section 271FA for belated filing of SFT for AY 2020-21 should be sustained, considering the reasons for the delay (Question of law and fact). Assessee's contentions: - The delay in filing the appeals was due to bonafide and genuine reasons. - The EPF payment was made within the permissible grace period of 5 days, which should be considered as timely payment. - The delay in filing the SFT was due to technical glitches arising from the bank's reorganization and migration to a new core banking solution (Finacle 10), which constitutes a reasonable cause. Revenue's contentions: - The Revenue did not raise any objection regarding the condonation of delay in filing the appeals. - The Revenue did not explicitly state its contentions regarding the disallowance of EPF payment or the confirmation of the penalty, but implicitly supported the orders of the lower authorities.

Which sections of the Income-tax Act were involved?

Section 36(1)(va),Section 285BA(1),Section 271FA,Section 143(3),Section 144B,Section 254

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

For Appellant: Shri Soumitra Choudhury &, Shri Pranabesh Sarkar, ARs
For Respondent: Ms. Archana Gupta, DR
Hearing: 14.01.2026Pronounced: 26.02.2026
3.

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.

4.

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.

5.

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- 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.

9.

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.

10.

In the appellate proceedings, the ld. CIT (A) confirmed the same.

11.

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

12.

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.

13.

In the result, both the appeals of the assessee are allowed.

Order pronounced in the open court on 26.02.2026.

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