Section 285BA of the Income Tax Act, 1961 read with Rule 114E requires certain specified reporting persons to furnish statement of financial transaction (SFT return) for certain transaction entered in the financial year
Statutory background
From
Assessment year 2015-16, with a view to facilitate effective exchange of
information in respect of residents and non-residents, section 285BA has been
substituted by the Finance (No. 2) Act, 2014, with effect from 01.04.2015 to
provide for furnishing of statement by a prescribed reporting financial
institution in respect of a specified financial transaction or reportable
account to the prescribed income-tax authority.
Up
to Assessment year 2014-15, the provisions of section 285BA provided for filing
of an annual information return (AIR) by specified persons in respect of
specified financial transactions (SFTs) which are registered or recorded by
them and which are relevant and required for the purposes of the 1961 Act to
the prescribed income-tax authority.
Text
of Section 285BA
[1][285BA.
Obligation to furnish statement of financial transaction or reportable account.
(1) Any person, being -
(a) an assessee; or
(b) the prescribed person in the case of an
office of Government; or
(c) a local authority or other public body or
association; or
(d) the Registrar or Sub-Registrar appointed
under section 6 of the Registration Act, 1908 (16 of 1908); or
(e) the registering authority empowered to
register motor vehicles under Chapter IV of the Motor Vehicles Act, 1988 (59 of
1988); or
(f) the Post Master General as referred to in
clause (j) of section 2 of the Indian Post Office Act, 1898 (6 of 1898); or
(g) the Collector referred to in clause (g) of
section 3 of the Right to Fair Compensation and Transparency in Land
Acquisition, Rehabilitation and Resettlement Act, 2013 (30 of 2013); or
(h) the recognised stock exchange18 referred to
in clause (f) of section 2 of the Securities Contracts (Regulation) Act, 1956
(42 of 1956); or
(i) an officer of the Reserve Bank of India,
constituted under section 3 of the Reserve Bank of India Act, 1934 (2 of 1934);
or
(j) a depository referred to in clause (e) of
sub-section (1) of section 2 of the Depositories Act, 1996 (22 of 1996); or
[2][(k) a prescribed reporting financial
institution20; or
(l) a person, other than those referred to in
clauses (a) to (k), as may be prescribed,]
who is responsible for registering,
or, maintaining books of account or other document containing a record of any
specified financial transaction or any reportable account as may be prescribed,
under any law for the time being in force, shall furnish a statement in respect
of such specified financial transaction or such reportable account which is
registered or recorded or maintained by him and information relating to which
is relevant and required for the purposes of this Act, to the income-tax
authority or such other authority or agency as may be prescribed.
(2) The statement referred to in
sub-section (1) shall be furnished for such period, within such time and in the
form and manner, as may be prescribed20.
(3) For the purposes of sub-section
(1), “specified financial transaction” means any -
(a) transaction of purchase, sale or exchange of
goods or property or right or interest in a property; or
(b) transaction for rendering any service; or
(c) transaction under a works contract; or
(d) transaction by way of an investment made or
an expenditure incurred; or
(e) transaction for taking or accepting any loan
or deposit,
which
may be prescribed:
PROVIDED that the Board may
prescribe different values for different transactions in respect of different
persons having regard to the nature of such transaction.
[3][***]
(4) Where the
prescribed income-tax authority considers that the statement furnished under
sub-section (1) is defective, he may intimate the defect to the person who has
furnished such statement and give him an opportunity of rectifying the defect
within a period of thirty days from the date of such intimation or within such
further period which, on an application made in this behalf, the said
income-tax authority may, in his discretion, allow; and if the defect is not
rectified within the said period of thirty days or, as the case may be, the
further period so allowed, then, notwithstanding anything contained in any
other provision of this Act, [4][the provisions of this Act shall
apply as if such person had furnished inaccurate information in the statement].
(5) Where a person who is required
to furnish a statement under sub-section (1) has not furnished the same within
the specified time, the prescribed income-tax authority may serve upon such
person a notice requiring him to furnish such statement within a period not
exceeding thirty days from the date of service of such notice and he shall
furnish the statement within the time specified in the notice.
(6) If any person, having furnished
a statement under sub-section (1), or in pursuance of a notice issued under
sub-section (5), comes to know or discovers any inaccuracy in the information
provided in the statement, he shall within a period of ten days inform the
income-tax authority or other authority or agency referred to in sub-section
(1), the inaccuracy in such statement and furnish the correct information in
such manner as may be prescribed.
(7) The Central Government may, by
rules made under this section, specify -
(a) the persons referred to in sub-section (1) to
be registered with the prescribed income-tax authority;
(b) the nature of information and the manner in
which such information shall be maintained by the persons referred to in clause
(a); and
(c) the due diligence to be carried out by the
persons for the purpose of identification of any reportable account referred to
in sub-section (1).]
KEY
NOTE
1. Substituted by the Finance (No. 2) Act,
2014, with effect from 01.04.2015. Prior to its substitution, section 285BA, as
inserted by the Finance Act, 2003, with effect from 01.04.2004 and later on
amended by the Finance (No. 2) Act, 2004, with effect from 01.04.2005
2. Clauses (k) and (l) substituted for clause
(k) by the Finance (No. 2) Act, 2019, with effect from 01.09.2019. Prior to its
substitution, clause (k) read as under:
“(k) a prescribed reporting financial
institution,”
3. Omitted by the Finance (No. 2) Act,
2019, with effect from
01.09.2019. Prior to its omission, second proviso read as
under:
“PROVIDED FURTHER that the value
or, as the case may be, the aggregate value of such transactions during a
financial year so prescribed shall not be less than fifty thousand rupees.”
4. Substituted for “such statement shall be
treated as an invalid statement and the provisions of this Act shall apply as
if such person had failed to furnish the statement” by the Finance (No. 2) Act,
2019, with effect from 01.09.2019.
Texto of Rule 114E of the Income Tax
Rules, 1962
[1][114E. Furnishing
of statement of financial transaction.
(1) The statement of financial transaction required to be furnished under sub-section (1) of section 285BA of the Act shall be furnished in respect of a financial year in Form No. 61A and shall be verified in the manner indicated therein.
(2) The statement referred to in sub-rule (1) shall be furnished by every person mentioned in column (3) of the Table below in respect of all the transactions of the nature and value specified in the corresponding entry in column (2) of the said Table in accordance with the provisions of sub-rule (3), which are registered or recorded by him on or after the 1st day of April, 2016, namely: -
TABLE
|
S.
No. |
Nature and value of transaction |
Class of person (reporting person) |
|
(1) |
(2) |
(3) |
|
1. |
(a) Payment made in cash for purchase of bank drafts or pay
orders or banker's cheque of an amount aggregating to ten lakh rupees or more
in a financial year. (b) Payments made in cash aggregating to ten lakh rupees or
more during the financial year for purchase of pre-paid instruments issued by
Reserve Bank of India under section 18 of the Payment and Settlement Systems
Act, 2007 (51 of 2007). (c) Cash deposits or cash withdrawals (including through
bearer's cheque) aggregating to fifty lakh rupees or more in a financial
year, in or from one or more current account of a person. |
A banking company or a co-operative bank to which the
Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or
banking institution referred to in section 51 of that Act). |
|
2. |
Cash deposits aggregating to ten lakh rupees or more in a
financial year, in one or more accounts (other than a current account and
time deposit) of a person. |
(i) A banking company or a co-operative bank to which the
Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or
banking institution referred to in section 51 of that Act); (ii) Post Master General10 as referred to in clause (j) of
section 2 of the Indian Post Office Act, 1898 (6 of 1898). |
|
3. |
One or more time deposits (other than a time deposit made
through renewal of another time deposit) of a person aggregating to ten lakh
rupees or more in a financial year of a person. |
(i) A banking company or a co-operative bank to which the
Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or
banking institution referred to in section 51 of that Act); (ii) Post Master General as referred to in clause (j) of
section 2 of the Indian Post Office Act, 1898 (6 of 1898); (iii) Nidhi referred to in section 406 of the Companies
Act, 2013 (18 of 2013); (iv) Non-banking financial company which holds a
certificate of registration under section 45-IA of the Reserve Bank of India
Act, 1934 1[(2 of 1934)], to hold or accept deposit from public. |
|
4. |
Payments made by any person of an amount aggregating to - (i) one lakh rupees or more in cash; or (ii) ten lakh rupees or more by any other mode, against bills raised in respect of one or more credit cards
issued to that person, in a financial year. |
A banking company or a co-operative bank to which the
Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or
banking institution referred to in section 51 of that Act) or any other
company or institution issuing credit card. |
|
5. |
Receipt from any person of an amount aggregating to ten
lakh rupees or more in a financial year for acquiring bonds or debentures
issued by the company or institution (other than the amount received on
account of renewal of the bond or debenture issued by that company). |
A company or institution issuing bonds or debentures. |
|
6. |
Receipt from any person of an amount aggregating to ten
lakh rupees or more in a financial year for acquiring shares (including share
application money) issued by the company. |
A company issuing shares. |
|
7. |
Buy back of shares from any person (other than the shares
bought in the open market) for an amount or value aggregating to ten lakh
rupees or more in a financial year. |
A company listed on a recognised stock exchange purchasing
its own securities under section 68 of the Companies Act, 2013 (18 of 2013). |
|
8. |
Receipt from any person of an amount aggregating to ten
lakh rupees or more in a financial year for acquiring units of one or more
schemes of a Mutual Fund (other than the amount received on account of
transfer from one scheme to another scheme of that Mutual Fund). |
A trustee of a Mutual Fund or such other person managing
the affairs of the Mutual Fund as may be duly authorised by the trustee in this
behalf. |
|
9. |
Receipt from any person for sale of foreign currency
including any credit of such currency to foreign exchange card or expense in
such currency through a debit or credit card or through issue of travellers
cheque or draft or any other instrument of an amount aggregating to ten lakh
rupees or more during a financial year. |
Authorised person as referred to in clause (c) of section 2
of the Foreign Exchange Management Act, 1999 (42 of 1999). |
|
10. |
Purchase or sale by any person of immovable property for an
amount of thirty lakh rupees or more or valued by the stamp valuation
authority referred to in section 50C of the Act at thirty lakh rupees or
more. |
Inspector-General appointed under section 3 of the
Registration Act, 1908 or Registrar or Sub-Registrar appointed under section
6 of that Act. |
|
11. |
Receipt of cash payment exceeding two lakh rupees for sale,
by any person, of goods or services of any nature (other than those specified
at Sl. Nos. 1 to 10 of this rule, if any.) |
Any person who is liable for audit under section 44AB of
the Act. |
|
[2][ 12. |
Cash deposits during the period 09th November, 2016 to 30th
December, 2016 aggregating to - (i) twelve lakh fifty
thousand rupees or more, in one or more current account of a person; or (ii) two lakh fifty
thousand rupees or more, in one or more accounts (other than a current
account) of a person. |
(i) A banking company or a co-operative bank to
which the Banking Regulation Act, 1949 (10 of 1949) applies (including any
bank or banking institution referred to in section 51 of that Act); (ii) Post Master General as referred to in clause
(j) of section 2 of the Indian Post Office Act, 1898 (6 of 1898).] |
|
[3][ 13. |
Cash deposits during the period 1st of April, 2016 to 9th
November, 2016 in respect of accounts that are reportable under S.No.12. |
(i) A banking company
or a co-operative bank to which the Banking Regulation Act, 1949 (10 of 1949)
applies (including any bank or banking institution referred to in section 51
of that Act); (ii) Post Master
General as referred to in clause (j) of section 2 of the Indian Post Office
Act, 1898 (6 of 1898).] |
(3) The reporting person mentioned in column (3) of the Table under sub-rule (2) [4][(other than the persons at Sl. No. 10 and Sl. No. 11)] shall, while aggregating the amounts for determining the threshold amount for reporting in respect of any person as specified in column (2) of the said Table, -
(a) take into account all the accounts of the same
nature as specified in column (2) of the said Table maintained in respect of
that person during the financial year;
(b) aggregate all the transactions of the same
nature as specified in column (2) of the said Table recorded in respect of that
person during the financial year;
(c) attribute the entire value of the transaction
or the aggregated value of all the transactions to all the persons, in a case
where the account is maintained or transaction is recorded in the name of more
than one person;
(d) apply the threshold limit separately to
deposits and withdrawals in respect of transaction specified in item (c) under
column (2), against Sl. No. 1 of the said Table.
(4)(a)
The return in Form No. 61A referred to in sub-rule (1) shall be furnished to
the Director of Income-tax (Intelligence and Criminal Investigation) or the
Joint Director of Income-tax (Intelligence and Criminal Investigation) through
online transmission of electronic data to a server designated for this purpose
under the digital signature of the person specified in sub-rule (7) and in
accordance with the data structure specified in this regard by the Principal
Director General of Income-tax (Systems):
Explanation.
- For the purposes of this sub-rule, “digital signature” means a digital
signature issued by any Certifying Authority authorised to issue such
certificates by the Controller of Certifying Authorities.
(b)
Principal Director General of Income-tax (Systems) shall specify the
procedures, data structures and standards for ensuring secure capture and transmission
of data, evolving and implementing appropriate security, archival and retrieval
policies.
(c)
The Board may designate an officer as Information Statement Administrator, not
below the rank of a Joint Director of Income-tax for the purposes of day to day
administration in relation to the furnishing of returns or statements.
(5) The statement of financial transactions referred to in sub-rule (1) shall be furnished on or before the 31st May, immediately following the financial year in which the transaction is registered or recorded:
[5][PROVIDED the statement of financial transaction in respect of the transactions listed at serial number (12) [and serial number (13)] in the Table under sub-rule (2), shall be furnished on or before the 31st day of January, 2017.]
[6][(5A) For the purposes of pre-filling the return of income, a statement of financial transaction under subsection (1) of section 285BA of the Act containing information relating to capital gains on transfer of listed securities or units of Mutual Funds, dividend income, and interest income mentioned in column (2) of Table below shall be furnished by the persons mentioned in column (3) of the said Table in such form, at such frequency, and in such manner, as may be specified by the Principal Director General of Income Tax (Systems) or the Director General of Income Tax (Systems), as the case may be, with the approval of the Board, namely:-
TABLE
|
S.
No. |
Nature of transaction |
Class of person (reporting person) |
|
(1) |
(2) |
(3) |
|
1. |
Capital gains on transfer of listed securities or units of
Mutual Funds |
(i) Recognised Stock Exchange; (ii) depository as defined in clause (e) of sub-section (1)
of section 2 of the Depositories Act, 1996 (22 of 1996); (iii) Recognised Clearing Corporation; (iv) Registrar to an issue and share transfer agent
registered under subsection (1) section 12 of the Securities and Exchange
Board of India Act, 1992 (15 of 1992). |
|
2. |
Dividend income |
A company |
|
3. |
Interest income |
(i) A banking company or a co-operative bank to which the
Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or
banking institution referred to in section 51 of that Act); (ii) Post Master General as referred to in clause (j) of
section 2 of the Indian Post Office Act, 1898 (6 of 1898); (iii) Non-banking financial company which holds a
certificate of registration under section 45-IA of the Reserve Bank of India
Act, 1934 (2 of 1934), to hold or accept deposit from public. |
(a)
“listed securities” means the securities which are listed on any recognised
stock exchange in India;
(b)
“Mutual Fund” means a Mutual Fund as referred to in clause (23D) of section 10
of the Act;
(c)
“recognised clearing corporation” shall have the same meaning as assigned to it
in clause (o) of sub-regulation (1) of regulation 2 of the Securities Contracts
(Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2012 made
under the Securities Contracts (Regulation) Act, 1956 (42 of 1956) and the
Securities and Exchange Board of India Act, 1992 (15 of 1992);
(d)
“recognised stock exchange” shall have the same meaning as assigned to it in
clause (f) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42
of 1956);
(e)
“securities” shall have the same meaning as assigned to it in clause (h) of
section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956);]
(6) (a)
Every reporting person mentioned in column (3) of the Table under sub-rule (2) [7][and column (3) of the Table under
sub-rule (5A)]
shall communicate to the Principal Director General of Income-tax (Systems) the
name, designation, address and telephone number of the Designated Director and
the Principal Officer and obtain a registration number.
(b)
It shall be the duty of every person specified in column (3) of the Table under
sub-rule (2) [7][and column (3) of the Table under
sub-rule (5A)] ,
its Designated Director, Principal Officer and employees to observe the
procedure and the manner of maintaining information as specified by its
regulator and ensure compliance with the obligations imposed under section
285BA of the Act and rules 114B to 114D and this rule.
Explanation
1. – “Designated Director” means a person designated by the reporting person to
ensure overall compliance with the obligations imposed under section 285BA of
the Act and the rules 114B to 114D and this rule and includes -
(i) the Managing Director or a whole-time
Director, as defined in the Companies Act, 2013 (18 of 2013), duly authorised
by the Board of Directors if the reporting person is a company;
(ii) the managing partner if the reporting person
is a partnership firm;
(iii) the proprietor if the reporting person is a
proprietorship concern;
(iv) the managing trustee if the reporting person
is a trust;
(v) a person or individual, as the case may be,
who controls and manages the affairs of the reporting entity if the reporting
person is, an unincorporated association or, a body of individuals or, any
other person.
Explanation
2. – “Principal Officer” means an officer designated by the reporting person
referred to in the Table in sub-rule (2) 2[and in sub-rule (5A)].
Explanation
3. – “Regulator” means a person or an authority or a Government which is vested
with the power to license, authorise, register, regulate or supervise the
activity of the reporting person referred to in the Table in sub-rule (2) [8][and in sub-rule (5A)].
(7)
The statement of financial transaction referred to in sub-rule (1) [8][and sub-rule (5A)] shall be signed, verified and furnished by the
Designated Director specified in sub-rule (6):
PROVIDED
that where the reporting person is a non-resident, the statement may be signed,
verified and furnished by a person who holds a valid power of attorney from
such Designated Director.]
KEY NOTE
1. Substituted by the Income Tax (Twenty-second
Amendment) Rules, 2015, with effect from 01.04.2016.
2. Inserted by the Income Tax (Thirtieth
Amendment) Rules, 2016, with effect from 15.11.2016.
3. Inserted by the Income Tax (First Amendment)
Rules, 2017, with effect from 06.01.2017.
4. Substituted for “(other than the person at
Sl. No. 9)” by the Income Tax (Twenty-sixth Amendment) Rules, 2016, with effect
from 06.10.2016.
5. Inserted by the Income Tax (Thirtieth
Amendment) Rules, 2016, with effect from 15.11.2016.
6. Inserted by the Income Tax (Fourth
Amendment) Rules, 2021, with effect from 12-3-2021.
7. Inserted by the Income Tax (Fourth
Amendment) Rules, 2021
with effect from 12.03.2021.
8. Inserted by the Income Tax (Fourth
Amendment) Rules, 2021, with effect from 12.03.2021.
Persons required to furnish a statement of financial transaction or reportable account [Section 285BA(1)&(2)]
The
following persons are required to furnish a statement of financial transaction
or reportable account:-
(a) an assessee; or
(b) the prescribed person in the case of the
Government office; or
(c) a local authority or other public body or
association; or
(d) Registrar or Sub-Registrar appointed under
section 6 of the Registration Act, 1908; or
(e) Registering authority empowered to register
motor vehicles under Chapter IV of the Motor Vehicles Act, 1988; or
(f) Post Master General as referred to in
section 2(j) of the Indian Post Office Act, 1898; or
(g) Collector referred to in section 3(g) of the
Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation
and Resettlement Act, 2013; or
(h) Recognised stock exchange referred to in
section 2(f) of the Securities Contracts (Regulation) Act, 1956; or
(i) an officer of the RBI constituted under
section 3 of the RBI Act, 1934; or
(j) Depository referred to in section 2(1)(e) of
the Depositories Act, 1996; or
(k) a prescribed reporting financial institution;
or
(l) a person (other than those referred to in
(a) to (k) above), as may be prescribed.
The
above persons who are responsible for registering, or, maintaining books of
account or other document containing a record of any specified financial
transaction or any reportable account as has been prescribed under Rule
114E(1), under any law for the time being in force, shall furnish a statement
in respect of such specified financial transaction or such reportable account
which is registered or recorded or maintained by him and information relating
to which is relevant and required for the purposes of the 1961 Act, to the
income-tax authority or such other authority or agency as has been prescribed
under Rule 114E(4)(a).
The
above statement shall be furnished for such period within such time and in the
form and manner as has been prescribed under Rule 114E(1) & (5)
“Specified financial
transaction”, defined [Section 285BA(3)]
For
the purpose of section 285BA(1), “Specified financial transaction” means:-
(a) any transaction of purchase, sale or exchange
of goods or property or right or interest in a property prescribed under Rule
114E(2); or
(b) any transaction for rendering any service
prescribed under Rule 114E(2); or
(c) any transaction under a works contract
prescribed under Rule 114E(2); or
(d) any transaction by way of an investment made
or an expenditure incurred prescribed under Rule 114E(2); or
(e) any transaction for taking or accepting any
loan or deposit prescribed under Rule 114E(2).
Defective statement
of financial transaction or reportable account [Section 285BA(4)]
Where
the prescribed income-tax authority considers that the statement furnished
under section 285BA(1) is defective, he
may intimate the defect to the person who has furnished such statement and give
him an opportunity of rectifying the defect within a period of 30 days from the
date of such intimation or within such further period which, on an application
made in this behalf, the said income-tax authority may, in his discretion,
allow; and if the defect is not rectified within the said period of 30 days or,
as the case may be, the further period so allowed, then, notwithstanding
anything contained in any other provision of the 1961 Act, the provisions of
the 1961 Act shall apply as if such person had furnished inaccurate information
in the statement.
Non-furnishing of
statement of financial transaction or reportable account [Section 285BA(5)]
Where
a person who is required to furnish a statement under section 285BA(1) has not
furnished the same within the specified time, the prescribed income-tax
authority may serve upon such person a notice requiring him to furnish such
statement within a period not exceeding 30 days from the date of service of
such notice and he shall furnish the statement within the time specified in the
notice.
Correction statement
[Section 285BA(6)]
If
any person, having furnished a statement u/s. 285BA(1), or in pursuance of a
notice issued u/s. 285BA(5), comes to know or discovers any inaccuracy in the
information provided in the statement, he shall within a period of 10 days
inform the income-tax authority or other authority or agency referred to in
section 285BA(1), the inaccuracy in such statement and furnish the correct
information in such manner as may be prescribed.
Power to make rules
[Section 285BA(7)]
The
Central Government may, by rules, specify:-
(a) the persons referred to in section 285BA(1) to
be registered with the prescribed income-tax authority;
(b) the nature of information and the manner in
which such information shall be maintained by the persons referred to in (a)
above; and
(c) the due diligence to be carried out by the
persons for the purpose of identification of any reportable account referred to
in section 285BA(1).
Guidelines for authorities [Rule 114E(4)(b)]
The
PDGIT (Systems) shall specify the procedures, data structures and standards for
ensuring secure capture and transmission of data, evolving and implementing
appropriate security, archival and retrieval policies.
Information Statement
Administrator [Rule 114E(4)(c)]
The
CBDT may designate an officer as Information Statement Administrator, not below
the rank of a JDIT for the purposes of day to day administration in relation to
the furnishing of returns or statements.
Duties of reporting
person [Rule 114E(6)]
Every
reporting person under Rule 114E(2) and 114E(5A) shall communicate to the PDGIT
(Systems) the name, designation, address and telephone number of the Designated
Director and the Principal Officer [i.e., an officer designated by the
reporting person] and obtain a registration number.
It
shall be the duty of every reporting person, its Designated Director, Principal
Officer and employees to observe the procedure and the manner of maintaining
information as specified by its regulator and ensure compliance with the
obligations imposed u/s. 285BA and Rules 114B, 114C, 114D and Rule 114E.
“Designated
Director”, Defined [Explanation 1 to Rule 114E(6)]
"Designated
Director" means a person designated by the reporting person to ensure
overall compliance with the obligations imposed u/s. 285BA and Rules 114B,
114C, 114D and 114E and includes: -
(i) the Managing Director or a whole-time
director, as defined in the Companies Act, 2013, duly authorised by the Board
of Directors if the reporting person is a company;
(ii) the managing partner, if the reporting person
is a partnership firm;
(iii) the
proprietor, if the reporting person is a proprietorship concern;
(iv) the
managing trustee, if the reporting person is a trust;
(v) a person or individual, as the case may be,
who controls and manages the affairs of the reporting entity if the reporting
person is, an unincorporated association or, a body of individuals or, any
other person.
"Regulator",
Defined [Explanation 3 to Rule 114E(6)]
“Regulator”
means a person or an authority or a Government which is vested with the power to
license, authorise, register, regulate or supervise the activity of the
reporting person.
Specified Financial Transactions
|
S. No. |
Transaction |
Threshold (Rs) |
Which authority should report? |
|
1. |
(a) Payment made in cash for purchase of bank
drafts or pay orders or banker’s cheque of an amount aggregating to (b) Payments made in cash during the financial
year for purchase of pre-paid instruments issued by Reserve Bank of India
under section 18 of the Payment and Settlement Systems Act, 2007 aggregating to |
10,00,000
or more in a financial year |
Banks or co-operative society |
|
2. |
Cash
deposits in one or more accounts (other than a current account and time
deposit) of a person.
aggregating to |
10,00,000 or more in a financial
year |
- Banks - Co-operative society - Post master general |
|
3. |
Cash
deposits or cash withdrawals (including through bearer’s cheque) in or from
one or more current account of a person aggregating to |
50,00,000
or more in a financial year, |
Banks or co-operative society |
|
4. |
Purchase
or sale by any person of immovable property for an amount of Rs. 30,00,000 or
more or valued by the stamp valuation authority referred to in section 50C of
the Income Tax Act at Rs. 30,00,000 or more. |
Rs. 30,00,000 or more |
The Property Registrar or Sub-Registrar
must report a transaction exceeding the threshold via Form 61A. |
|
5. |
Investments in shares, mutual
funds, debentures and bonds in cash (If amount is transferred from
one scheme to another, then reporting is not required) |
10,00,000 or more in a
financial year |
- Company issuing Shares,
Debentures, Bonds - Mutual Fund Trustee |
|
6. |
Payment of credit card bill in
cash |
1,00,000 |
Banks or co-operative society |
|
7. |
Payment of credit card bill
other than through cash |
10,00,000 |
Banks or co-operative society |
|
8. |
Receipt
from any person for sale of foreign currency including any credit of such
currency to foreign exchange card or expense in such currency through a debit
or credit card or through issue of travellers cheque or draft or any other
instrument of an amount aggregating to |
10,00,000 or more during a
financial year. |
Authorised
person as referred to in clause (c) of section 2 of the Foreign Exchange
Management Act, 1999 |
|
9. |
One or
more time deposits (other than a time deposit made through renewal of another
time deposit) of a person aggregating to |
Rs.
10,00,000 or more in a financial year |
(i) A banking company or a co-operative bank to (ii) Post Master
General (iii) Nidhi; (iv) Non-banking
financial company |
|
10. |
Cash receipt for sale, by any
person, of goods or services of any nature (other than those specified above |
Exceeding Rs. 2,00,000 |
Any person who is liable for
audit under section 44AB of the Income Tax Act, 1961 |
|
11. |
Buy
back of shares from any person (other than the shares bought in the open
market) for an amount or value aggregating to |
Rs.
10,00,000 more in a financial year |
A company listed on a recognised
stock exchange purchasing its own securities under section 68 of the
Companies Act, 2013 |
|
12. |
Cash deposits
during the period 09.11.2016 to 30.12.2016 aggregating to - |
(i) Rs. 12,50,000 or more, in one or more
current account of a person; or (ii) Rs. 2,50,000 or more, in one or more accounts
(other than a current account) of a person. |
(i)
A banking company or a co-operative bank (ii) Post Master
General |
|
13. |
Cash
deposits during 01.04.2016 to 09.11.2016 in respect of accounts that are
reportable under S. No.12. |
|
(i) A
banking company or a co-operative bank (ii) Post
Master General |
ITDREIN
(Income Tax Department Reporting Entity Identification Number) is the Unique ID
issued by ITD which will be communicated by ITD after the registration of the
reporting entity with ITD. The ITDREIN is a 16 - character identification
number in the format XXXXXXXXXX.YZNNN where :
|
ITDREIN Component |
Description |
|
XXXXXXXXXX |
PAN or TAN of the
reporting entity |
|
Y |
Code of Form Code |
|
Z |
Code of Reporting
Entity Category for the Form Code |
|
NNN |
Code of Sequence
Number |
Due date for filing of statement of financial transaction (i.e. Form No. 61A)
The
statement of financial transaction shall be furnished electronically (under
digital signature) in Form No. 61A to the Director of Income-tax (Intelligence
and Criminal Investigation) or the Joint Director of Income-tax (Intelligence
and Criminal Investigation).
However
a Post Master General or a Registrar or an Inspector General may furnish Form
No. 61A in a computer readable media being a Compact Disc or Digital Video Disc
(DVD), alongwith the verification in Form-V on paper. Further, the statement
shall be furnished on or before 31st May immediately following the financial
year in which the transaction is registered or recorded.
Due date for filing
of statement of financial transaction (SFT) Reporting (i.e. Form No. 61B)
In
order to facilitate effective exchange of information in respect of resident
and non-resident, Section 285BA also provides for furnishing of statement by a
prescribed reporting financial institution in respect of specified financial
transaction or reportable account. The statement shall be furnished for each
calendar year in Form No. 61B on or before 31st May of the next year.
Forms Overview
|
Form No. |
Income Tax Rules |
Statement of |
Due Date of Furnishing Statement |
|
61A |
114E |
Statement of Specified Financial
Transactions under section 285BA(1) of the Income-tax Act, 1961 |
on or before 31st May immediately
following financial year |
|
61B |
114G(2) |
Statement of
Reportable Account under sub-section (1) section 285BA of the Income-tax Act,
1961 |
on or before 31st
May immediately following financial year |
Consequence of Violating Section 285BA of the Income Tax Act
[1]
Penalty for Failure to Furnish Statement of Financial Transaction or
Reportable Account as Required under Section 285BA(1) [Previously Called as ‘Annual
Information Return (AIR)’] [Section 271FA]
Section 271FA provides that if a
person who is required to furnish a statement of financial transaction or
reportable account under section 285BA(1), fails to furnish such statement
within the time prescribed under section 285(2) thereof, the income-tax
authority prescribed under section 285A(1) may direct that such person shall
pay, by way of penalty, a sum of five hundred rupees for every day during which
such failure continues.
Quantum of Penalty under Section 271FA
|
S. No. |
Particulars |
Quantum of penalty |
Period for penalty |
|
(i) |
Failure
to furnish Statement of financial transaction under Section 285BA(1) |
Rs. 500 for every day during
which such failure continues. |
|
|
(ii) |
Failure
to furnish Statement of financial transaction within the period specified in
notice under Section 285BA(5) (i.e. within a period of 30 days from date of
service of notice) |
Rs. 1000 for every day during
which such failure continues. |
From
the day immediately following the day on which the time specified in such
notice for furnishing the statement expires |
[2] Penalty for Furnishing Inaccurate Statement of Financial Transaction or Reportable Account [Section 271FAA]
Nature of default
(1)
Section 271FAA(1)
If a person referred to in sub-section
(1) of section 285BA, who is required to furnish a statement under that
section,
(a) provides inaccurate
information in the statement or fails to furnish correct information within the
period specified under sub-section (6) of section 285BA; or
(b) fails to comply
with the due diligence requirement prescribed under sub-section (7) of section
285BA,
(2)
Section 271FAA(2)
Penalty for inaccurate information is
reported under Statement of Financial Transaction (SFT) due to false/inaccurate
information supplied by the account holder.
Quantum of Penalty under Section 271FAA
|
If a person referred
to in sub-section (1) of section 285BA, who is required to furnish a
statement under that section, (a) provides inaccurate information
in the statement or fails to furnish correct information within the period
specified under sub-section (6) of section 285BA; or (b) fails to comply with the due
diligence requirement prescribed under sub-section (7) of section 285BA |
Section 271FAA(1) |
Rs. 50,000 |
|
For inaccurate information is
reported under Statement of Financial Transaction (SFT) due to
false/inaccurate information supplied by the account holder. |
Section 271FAA(2) |
Rs. 5,000/- for every inaccurate
reportable account. NOTE : This penalty would
be in addition to the penalty amount of Rs. 50,000 leviable under section
271FAA(1) |
CBDT Notification No.
1 - of 2023, dated 05.01.2023
Subject : Addendum to Notification 2 of 2021 :
Format, Procedure and Guidelines for submission of Statement of Financial
Transactions (SFT) for Interest income (Abolishing of limit of Rs. 5,000/-).
Section
285BA of the Income Tax Act, 1961 and Rule 114E requires specified reporting
persons to furnish statement of financial transaction (SFT). For the purposes
of prefilling the return of income, CBDT has issued Notification No. 16/2021
dated 12.03.2021 to include reporting of information relating to interest
income. The Format, Procedure and Guidelines for submission of Statement of
Financial Transactions (SFT) for Interest income was notified via Notification
2 of 2021 dated 20th April 2021.
2.
As per sub-rule (4)(b) of Rule 114E Director General of Income-tax (Systems)
shall specify the procedures, data structures and standards for ensuring secure
capture and transmission of data, evolving and implementing appropriate
security, archival and retrieval policies.
3.
The Remarks column point 1 at Annexure A - Guidelines for Preparation of
Statement of Financial Transactions (SFT) mentioned “The information is to be
reported for all account/deposit holders where cumulative interest exceeds Rs.
5,000/- per person in the financial year”.
4.
The Remarks column at Annexure A is hereby being modified and may be read as
“The information is to be reported for all account/deposit holders where any
interest exceeds zero per account in the financial year excluding Jan Dhan
Accounts”.
5.
In the view of the changes mentioned above, the limit prescribed in
Notification 2 of 2021 dated 20th April 2021 stands abolished and this addendum
will come into effect from 05/01.2023').
Sd/-
(Govind
Lal)
DGIT
(Syste )-2, CBDT
CBDT Notification No. 3 of 2021, dated 30.04.2021
[DGIT(S)/ADG(S)-2/Reporting
Portal/2021/180]
Subject : Format, Procedure and Guidelines for
submission of Statement of Financial Transactions
(SFT) for Depository
Transactions
Section
285BA of the Income Tax Act, 1961 and Rule 114E requires specified reporting
persons to furnish statement of financial transaction (SFT).
2.
For the purposes of pre-filling the return of income, CBDT has issued
Notification No. 16/2021 dated 12.03.2021 to include reporting of information
relating to Capital gains on transfer of listed securities or units of Mutual
Funds. The new sub rule 5A of rule 114E specifies that the information shall be
furnished in such form, at such frequency, and in such manner, as may be
specified by the Director General of Income Tax (Systems), with the approval of
the Board.
3.
The guidelines for preparation and submission of Statement of Financial
Transactions (SFT) information are enclosed in Annexure A and Annexure B
respectively. The format of control statement to be submitted by the Designated
Director is given in Annexure C. The data structure and validation rules are
enclosed in Annexure D and Annexure E respectively. Notification No. 3 of 2018
dated 05.04.2018 may be referred for the procedure for registration.
4.
All Depositories as defined in clause (e) of sub-section (1) of section 2 of
the Depositories Act, 1996(22 of 1996) are required to prepare the data file in
prescribed format from their internal system. Reporting entities are required
to submit the data files using SFTP Server using the login credentials (To be
communicated separately).
5.
A separate control statement (refer annexure C) is required to be signed,
verified and furnished by the Designated Director.
6.
The statement of financial transactions relating to Financial Year 2020-21
shall be furnished on or before the 31st May 2021. Thereafter, the statement of
financial transactions relating to the quarter ending 30th June, 31st
September, 31st December and 31st March shall be furnished on or before 25th of
July, October, January and April respectively.
7.
The reporting entities are also required to provide information reported to
Income Tax Department, to the account holder which will enable taxpayers to
reconcile the information displayed in the Annual Information Statement (AIS)
(Form 26AS).
8.
In case, the reporting person/entity comes to know or discovers any inaccuracy
in the information provided in the statement or the defects have been
communicated to the reporting person/entity, it is required to remove the
defects by submitting a correction/deletion statement.
9.
The reporting person/entity is required to document and implement appropriate
information security policies and procedures with clearly defined roles and
responsibilities to ensure security of submitted information and related
information/documents. The reporting person/entity is also required to document
and implement appropriate archival and retrieval policies and procedures with
clearly defined roles and responsibilities to ensure that submitted information
and related information/documents are available promptly to the competent
authorities.
10.
This issues with the approval of CBDT.
This
Notification shall come into effect from the date of issue.
Annexure
A
Guidelines
for Preparation of Statement of Financial Transactions (SFT)
The
guidelines for preparation of Statement of Financial Transactions (SFT) for
Depository transactions are as under:
1. The Depository
transaction summary file will be used for pre-filling the gain/income/loss from
securities transactions. The Depository Transaction Summary is required to be
prepared for user-initiated debit transactions in the demat account. For Off
Market debits, information need not be provided if transferor and transferee
are same person.
2. In case of a minor,
details of legal or natural guardian (PAN, Name etc.) may be provided.
3. The Estimated Sale
Consideration for the debit transaction should be determined on the best
possible available price of the asset with the depository (e.g. end of day
price). The taxpayer will be able to modify the sales consideration before
filing the return.
4. The securities
should be classified into specified security class for determining the type of
asset (short term/long term) and applicable rate.
5. The period of
holding (difference between date of sale and date of acquisition of any
share/security in the demat account) should be used to classify the asset as
short term or long-term asset. First in First out (FIFO) method should be used
for identification of corresponding credit in demat account and computation of
period of holding. Any capital asset held by the taxpayer for a period of more
than minimum period of holding will be treated as long-term capital asset and
remaining assets will be classified as short-term asset. The specified minimum
period of holding for different asset class is as under:
|
Security Class Code |
Security Class
Description |
Minimum Period of
Holding |
|
LES |
Listed Equity Share |
12 months |
|
LPS |
Listed Preference
Share |
12 months |
|
LDB |
Listed Debenture |
12 months |
|
ZCB |
Zero Coupon Bond |
12 months |
|
CIB |
Listed Capital
Indexed Bond |
12 months |
|
EMF |
Unit of Equity
Oriented Mutual Fund |
12 months |
|
UTI |
Unit of UTI |
12 months |
|
UBT |
Unit of Business
Trust |
36 months |
|
OTU |
Other Units |
36 months |
|
OTH |
Other Listed
Securities (Other than a unit) |
12 months |
6. For every debit transaction, the corresponding credit transaction should be identified using First in First Out (FIFO) method. The estimated cost of acquisition for the credit should be determined on the best possible available price with the depository. The cost of acquisition can be estimated as per the closing rate on the date (T-2) of transaction for market purchase. The estimated cost of acquisition is to be taken as NIL for OFF Market purchase, IPO or Corporate Action or for any transaction through other than Exchange. The taxpayer will be able to modify the cost of acquisition before filing the return.
7. In relation to a
long-term capital asset, being an equity share in a company or a unit of an
equity-oriented fund acquired before the 1st day of February, 2018, adjusted
cost of acquisition shall be higher of (i) the cost of acquisition of such
asset; and (ii) lower of (A) the fair market value of such asset as on 31st
January, 2018; and (B) the full value of consideration received or accruing as
a result of the transfer of the capital asset. In a case where the capital
asset is listed on any recognized stock exchange as on the 31st day of January,
2018, "fair market value" means the highest price of the capital
asset quoted on such exchange on the said date. If there is no trading in such
asset on such exchange on the 31st day of January, 2018, the highest price of
such asset on such exchange on a date immediately preceding the 31st day of
January, 2018 when such asset was traded on such exchange shall be the fair
market value. In case the cost of acquisition of asset acquired before the 1st
day of February, 2018 is not easily available, the adjusted cost of acquisition
may be taken as lower of (A) the fair market value of such asset; and (B) the
full value of consideration.
8. The Cost Inflation
Index should be used to determine estimated indexed cost of acquisition
wherever applicable.
9. The details of demat
account holders and summary values for the demat account for the reporting
period should be reported in Depository Account Summary (DEP_ACC_SUMM.TXT).
10. The details of
off-market transactions recorded by the depository during the year should be
reported in Depository Off-Market Transactions (DEP_OFF_TRN.TXT).
Annexure
B
Guidelines
for Submission of Statement of Financial Transactions (SFT)
1. Reporting entities are required to prepare
the data file in prescribed format from their internal system. Reporting
entities are required to submit the data files using SFTP Server using the
login credentials (To be communicated separately). A separate control statement
(refer Annexure C) is required to be signed, verified and furnished by the
Designated Director.
2. Any file which does not meet the validation
requirements will be rejected.
3. In case Reporting Entity needs to modify
uploaded data, Correction Statement is required to be filed. In the Correction
Statement, only those records should be uploaded in which correction is
required. In case Reporting Entity needs to delete uploaded data, Deletion
request is required to be filed.
Control Statement for Depository
Transactions
|
Number
of Records Values |
||
|
A.1 |
Reporting Entity Name |
|
|
A.2 |
ITDREIN |
|
|
A.3 |
Registration Number |
|
|
A.4 |
Statement Type |
|
|
A.5 |
Statement Number |
|
|
A.6 |
Original Statement Id |
|
|
A.7 |
Reason for Correction |
|
|
A.8 |
Statement Date |
|
|
A.9 |
Reporting Period
Start Date |
|
|
A.10 |
Reporting Period End
Date |
|
|
Number
of Records |
||
|
B. 1 |
Depository Batch File
(DEP_BATCH.TXT) |
|
|
B. 2 |
Depository Account
Summary (DEP_ACC_SUMM.TXT) |
|
|
B. 3 |
Depository
Transaction Summary (DEP_TRN_SUMM.TXT) |
|
|
B. 4 |
Depository Off-Market
Transaction (DEP_OFF_TRN.TXT) |
|
|
Sum
of Key Values in Rs. (Refer Depository Account Summary) |
||
|
C. 1 |
Opening Value |
|
|
C. 2 |
Market Credits |
|
|
C. 3 |
Market Debits |
|
|
C. 4 |
Off-Market Credits |
|
|
C. 5 |
Off-Market Debits |
|
|
C. 6 |
IPO Credits |
|
|
C. 7 |
Corporate Action
Credits |
|
|
C. 8 |
Corporate Action
Debits |
|
|
C. 9 |
Dematerialized
Credits |
|
|
C. 10 |
Rematerialized Debits |
|
|
C. 11 |
Pledge Invocation
Credits |
|
|
C. 12 |
Pledge Invocation
Debits |
|
|
C. 13 |
Closing Value |
|
I, declare that to the best of my knowledge and belief, the information given in the data files is correct and complete and is in accordance with the provisions of the Income-tax Act, 1961.
Name
……………….
Designation
……………
Annexure D
Data Structure
The information is required to be
uploaded in data file. The data file should be in ASCII format with one report
per line. All fields in each file should be delimited with the delimiter “|”.
The first record in the file should contain header text.
D.1.
Depository Batch File (DEP_BATCH.TXT)
This file contains details of reporting
entity, principal officer and files uploaded by the reporting entity
|
No. |
Field Name |
Mandatory Format |
Remarks |
|
|
|
|
|
D.2.
Depository Account Summary (DEP_ACC_SUMM.TXT)
This file contains details of demat
account holders and summary values for the demat account for the reporting
period.
|
No. |
Field Name |
Mandatory Format |
Remarks |
|
|
|
|
|
Note: Refer Guidelines for
preparation of SFT for more details
D.3.
Depository Transaction Summary (DEP_TRN_SUMM.TXT)
This file shall contain details of
security level transaction summary in respect of sales/debits during the
reporting period.
|
No. |
Field Name |
Mandatory Format |
Remarks |
|
|
|
|
|
Note: Refer Guidelines for
preparation of SFT for more details
D.4.
Depository Off-Market Transaction (DEP_OFF_TRN.TXT)
This file shall contain details of
off-market transactions recorded for a person/client by the depository during
the year.
|
No. |
Field Name |
Mandatory Format |
Remarks |
|
|
|
|
|
Note: Refer Guidelines for
preparation of SFT for more details
Permissible
Values - Statement Type
|
No. |
Code |
Description |
|
1. |
NB |
New Batch (Statement)
containing new information |
|
2. |
DB |
Deletion Batch
(Statement) |
|
3. |
CB |
Correction Batch
(Statement) containing corrections for previously submitted information |
Permissible
Values - Reason for Correction
|
No. |
Code |
Description |
|
1. |
A |
Acknowledgement of original
Statement had many errors which are being resolved |
|
2. |
B |
Errors in original
Statement are being corrected suo-motu |
|
3. |
C |
The correction report is on
account of additional information being submitted |
|
4. |
N |
Not applicable as this is a new
statement/test data/ there is no data to report |
|
5. |
Z |
Other reason |
Permissible
Values – Security Class Code
|
No. |
Security
Class Code |
Description |
|
1. |
LES |
Listed Equity Share |
|
2. |
LPS |
Listed Preference Share |
|
3. |
LDB |
Listed
Debenture |
|
4. |
ZCB |
Zero Coupon Bond |
|
5. |
CIB |
Listed Capital Indexed Bond |
|
6. |
EMF |
Unit of Equity Oriented Mutual
Fund |
|
7. |
UTI |
Unit of UTI |
|
8. |
UBT |
Unit of Business Trust |
|
9. |
OTU |
Other Units |
|
10. |
OTH |
Other Listed Securities (Other
than a unit) |
Permissible
Values – Transaction Reason
|
No. |
Reason
Code |
Reason
Description |
|
|
|
|
Permissible
Values - State code
|
No. |
State/Union
Territories |
Code |
|
|
|
|
Table
- Capital Gain Index Chart
|
Financial Year |
Cost Inflation Index
(CII) |
|
|
|
Annexure E
Validation Rules
The errors have been classified in
following categories:
|
Errors |
Schema level errors which need to
be resolved by user for successful generation of XML report. |
|
Defects |
The reporting entity needs to
correct and submit the reports again in the corrected statement. |
|
Exceptions |
The exceptions should be reviewed
by the reporting person/ entities and if any information is available, the
reporting entity may provide the information. If any defect is noticed, the
reporting entity needs to rectify the defect by submitting a correction
statement. |
The validation rules are as under:
|
S. No. |
Error Message |
Error Type |
File Rejection |
|
1. |
Control Statement Values Mismatch |
Error |
Y |
|
2. |
Sequence Number in Submitted file
is not running sequence number |
Error |
Y |
|
3. |
Account Summary Data not provided
for reported transaction |
Defect |
N |
|
4. |
Mandatory Field is blank |
Defect |
N |
|
5. |
Invalid PAN reported |
Exception |
N |
|
6. |
Excessive Value Reported |
Exception |
N |
|
7. |
Mismatch identified after
matching data with other submitted data |
Exception |
N |
PRESS
RELEASE (Dated 26.05.2017)
CBDT
Issues Clarification on furnishing Statement of Financial Transaction (SFT)
& SFT Preliminary Response
Section 285BA of the Income-tax
Act, 1961 requires furnishing of a statement of financial transaction (SFT) for
transactions prescribed under Rule 114E of the Income-tax Rules, 1962. The due
date for filing such SFT in Form 61A is 31st May 2017. In case there are
reportable transactions for the year, the reporting person/entity is required
to register with the Income Tax Department and generate Income Tax Department
Reporting Entity Identification Number (ITDREIN) The same can be generated by
logging-in to the e-filing website (https://incometaxindiaefiling.gov.in/) with
the log in ID used for the purpose of filing the Income Tax Return of the
reporting person / entity. Entity having PAN can take only PAN based ITDREIN.
Entity having TAN can generate an ITDREIN only when such TAN's Organisational
PAN is not available.
The registration of reporting
person (ITDREIN registration) is mandatory only when at least one of the
Transaction Type is reportable. A functionality "SFT Preliminary
Response" has been provided on the e-Filing portal for the reporting
persons to indicate that a specified transaction type is not reportable for the
year.
Detailed procedure of ITDREIN
registration and upload of Form 61A is available under the “Help” section and
Form 61A utility and Schema are available under the download section of
http://www.incometaxindiaefiling.gov.in and https://www.cleanmoney.gov.in.
Online filing of form 61A requires a valid class 2 or 3 digital signature
certificate of person responsible for filing the same. Please refer “DSC
Management Utility” manual under help section on how to generate the signature
file, attaching the XML with signature and uploading of XML with signature file
in e-Filing portal.
(Meenakshi
J Goswami)
Commissioner
of Income Tax
(Media and
Technical Policy)
Official
Spokesperson, CBDT.
Assessee had a bonafide belief that no return was required to be filed as there were no reportable transactions, no penalty was exigible under section 271FA upon assessee for not filing its return
The Assessing Officer levied penalty under section 271FA upon the
assessee for the reason that the assessee did not file return/statement of
financial transaction (SFT) under section 285BA(1).
On appeal, the Commissioner (Appeals) observed that even if there were no reportable transaction the assessee had to file nil return as prescribed in section 285BA(1) read with rule 114 of the Income-tax Rules and since the assessee did not file nil return penalty was sustained. On the assessee’s appeal to the Tribunal :
Held : On perusal of the Tax Audit Report it is noticed that the assessee has reported that there are no reportable transaction and there is no requirement of filing Form No. 61 Form No. 61A and Form No. 61B. On perusal of the orders of the authorities below the Assessing Officer as well as the Commissioner (Appeals) it could not be found that any reportable transactions have been identified in this case requiring the assessee to file SFT within the due date as prescribed under section 285BA(1) read with rule 114E. It is noticed that penalty were levied ignoring the submissions of the assessee that there are no reportable transaction, and therefore, the provision of section 285BA(1) are not applicable simply because the assessee did not file return of SFT.
Even otherwise the assessee had a bona fide belief that no return is required to be filed when there are no reportable transactions which is a reasonable cause under section 273B for not levying the penalty under section 271FA. Thus, the Assessing Officer is not justified in levying penalty under section 271FA and the Assessing Officer is directed to delete the penalty levied under section 271FA. [In favour of assessee] (Related Assessment year : Assessment year 2018-19) – [The Motor & General Finance Ltd. v. ACIT (2024) 159 taxmann.com 1494 (ITAT Delhi)]
Reason stated by petitioner, Sub-Registrar, that he was under a bona fide impression that annual information return (AIR) under section 285BA(1)(b) was already filed by his predecessor was not a reasonable cause to excuse delay of 525 days in submitting AIR and, therefore, penalty under section 271FA was rightly imposed upon petitioner
Petitioner,
a Sub-Registrar at SRO, assumed charge on 12.07.2011. Due date of filing annual
information return (AIR) under section 285BA(1)(b) was 31.08.2011. Petitioner
was under bona fide impression that information would have already been
submitted by his predecessor. However, he came to know that return was not
filed only after receipt of notice on 11.01.2013. Return was subsequently filed
on 06.02.2013. Revenue imposed penalty under section 271FA upon petitioner on
premise of non-filing of a return. Reasons stated by petitioner that he was
under a bona fide impression that statement under section 285BA(1)(b) was
already filed by his predecessor was not a reasonable cause to excuse delay of
525 days in submitting return, therefore, impugned penalty under section 271FA
was rightly imposed upon petitioner. [In favour of revenue] (Related Assessment
year : 2011-12) – [Sub-Registrar, Sri. V.G. Cleetus v. Director of
Income-tax (Intelligence) [2023]
154 taxmann.com 546 (Ker.)]
No penalty under section 271FA if statement of financial transaction (SFT) was not filed in time due to network connectivity problems of branches situated in rural areas
Assessee was a co-operative society
carrying on banking business in rural areas. Assessee failed to file statement of financial transaction (SFT) under section
285BA read with rule 114E within due date. Assessee contended that it was
working with 15 bank branches at different places in a district and some
branches were situated in rural areas where due to network connectivity
problem, report which was required for filing SFT, could not be generated
within due time and, thus, said SFT return was filed after due date. Director
of Income-tax was of view that bank’s internal administrative and mechanism
issue could not partake character of reasons for such delay and, thus, imposed
penalty under section 271FA upon assessee. Since no mala fide intention could
be attributed to assessee and breach on part of assessee was only technical or
venial breach of provisions and such a breach could have flown from bona fide
ignorance of assessee, impugned penalty imposed upon assessee was to be
deleted. [In favour of assessee] (Related Assessment year
: 2019-20) – [Jhalawar Kendriya
Sahakari Bank Ltd. v. Additional/Assistant Director of Income-tax (I&CI)
Jaipur (2023) 150 taxmann.com 366 (ITAT Jaipur)]
Chennai ITAT sets aside the CIT(A) order confirming the
penalty under Section 271FAA for furnishing inaccurate statement of reportable
accounts; Finds that Section 285BA(4) mandates that the defect should be
rectified within a period of one month from the date of intimation regarding
such defects by the Revenue; Deletes the penalty of Rs. 50,000 each for
Assessment years 2018-19, 2019-20 and 2020-21, holding that the Assessee
rectified the defects pointed out by the Revenue and filed revised Form 61-B
well within the time limit prescribed under Section 285BA(4), thus the penalty
under Section 271FAA is not sustainable; Assessee, KEB Hana Bank, filed
the statement of reportable account in Form No. 61-B, for Assessment years
2018-19, 2019-20 and 2020-21; Revenue noted that the Assessee had not reported
16 accounts in the statements filed for the relevant Assessment years being one
savings account and 15 Term Deposit accounts of the same person, intimated the
Assessee regarding said discrepancies and asked the Assessee to rectify
Form 61-B and furnish the details for the same; Revenue served the Assessee
with a show cause notice under Section 274 read with Section 271FAA for
furnishing inaccurate statement of reportable accounts and imposed the penalty
of Rs. 50,000 under Section 271FAA, for each of the relevant Assessment years,
which was confirmed by the CIT(A); ITAT notes Assessee’s contention that
the the defects pointed out by the Revenue were duly rectified and
revised/rectified Form 61-B was filed within the time allowed
under Section 285BA(4); Further notes that the Assessee also furnished its
explanation and copy of the excel sheets which were uploaded for the relevant
Assessment year; Notes Revenue’s argument that the penalty was warranted since
the Assessee revised the statement of reportable account only after the
omissions were brought to the notice by the Revenue and not on its own;
Analyses Section 285BA(4) which provides that the Revenue may intimate the
Assessee regarding defect in the annual information return and provide the
Assessee an opportunity of rectifying the defect within a period of one month
from the date of such intimation; Observes that in the present case, the
discrepancies were notified by the Revenue, by letter dated 30.03.2021 and the
Assessee filed the revised/rectified Form 61-B on April 13 and 15, 2021 for the
relevant Assessment years; Concurs with the Assessee that the revised/
rectified Form 61-B was filed by the Assessee well within time allowed under
section 285BA(4); Thus, opines that the CIT(A) erred in confirming the penalty
on the ground that the Assessee did not rectify the defects within time and
sets aside the CIT(A) order. [In favour of assessee] (Related Assessment years
: 2018-19, 2019-20 & 2020-21) – [KEB Hana Bank v. Joint Director of
Income Tax (Intelligence & Criminal Investigation) [TS-447-ITAT-2023(CHNY)] – Date of Judgement : 10.08.2023 (ITAT
Chennai)]
Deletes penalty for delayed Annual
Information Return submission, accepts ‘bonafide ignorance’ plea
Malda District Central Co-operative
Society (‘assessee’) is an entity dealing with borrowing and lending business.
Assessee fell within the ambit of Section 285BA. Assessee failed to comply with
the legal requirement for the period of 2012-13. Assessing Officer issued a
notice dated 14.02.2013 and subsequently on assessee’s request, time for
furnishing the annual information return ('AIR') was extended till 18.03.2013.
Assessee filed the AIR on 15.03.2013 which was accepted and assessment was
concluded. However, subsequently DIT (Intelligence and Criminal investigation)
served penalty order and levied penalty of Rs. 56,100 under section 271FA for
delay of 561 days in furnishing AIR.
Section 285BA provides that
specified person are required to furnish an AIR, in respect of such specified
financial transaction which are registered/ recorded during any financial year
beginning on or after April 1, 2004. Aggrieved assessee filed an appeal
before Kolkata ITAT.
Kolkata ITAT allows assessee’s
(cooperative bank) appeal against levy of penalty under section 271FA for
delay in furnishing annual information return (‘AIR’) under section 285BA, accepts
assessee’s bonafide ignorance” of relevant provisions as sufficient cause
for non-compliance; ITAT observes that tax laws of this country are
complex and complicated and often require for compliance,...the assistance of
tax practitioners specialising in this field ....legislation in this field
undergoes so frequent changes and amendments that it is not possible for even a
person specialising in this field, including the tax administrator, to claim
that he knows what exactly the law is on a particular given day or period
without making references to the history of the enactments”; Further notes the
penalty order did not speak as to how assessee gained by contravening the
provisions of Section 285BA or how assessee’s contravention resulted in Revenue’s
loss; Accordingly rules that no malafides can be attributed to the assessee so
as to invoke the penalty proceedings under section 271FA of the Act’, further
states that ‘the breach is only technical or venial breach of the provisions of
the Act and such a breach could have flown from a bonafide ignorance of the
assessee that he is liable to act in the manner prescribed by the statute”;
Points out that DIT himself had noted in the penalty order that
assessee got accounts of all branches consolidated and audited, and also
filed Income Tax/TDS returns. – [Malda
District Central Co-op Bank Ltd. [TS-425-ITAT-2016(Kol)] –
Date of Judgement : 03.08.2016 (ITAT Kolkata)]
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