Our bank could not upload the statement of financial transactions on time because the core banking system was being migrated during a merger, and the I&CI wing has levied a per-day penalty under section 271FA. Is a technical failure a defence?
Yes, on these facts. The Kolkata Bench held that an inability to generate the data required for Form 61/61A because the bank was migrating from one version of its core banking solution to another, in the course of a reorganisation and merger, is a reasonable cause, and directed deletion of a penalty of Rs 3,61,000 levied under section 271FA for the belated statement of financial transactions.
Decided by the ITAT (Shri Rajesh Kumar, Accountant Member and Shri Pradip Kumar Choubey, Judicial Member) on 2026-02-26, reported as ITA Nos. 2591 and 2592/KOL/2025 (ITAT Kolkata 'A' Bench); no law-report citation traced. It bears on section 271FA, section 285BA, section 285BA(1), section 36(1)(va) of the Income Tax Act 1961, in Penalty and Evidence & Burden of Proof matters.
Section 271FA runs per day of default and the figure grows quietly until it is large; Rs 3,61,000 here was for a single year's statement. The order confirms two useful things. First, the reasonable-cause enquiry applies to section 271FA and is decided on the practical facts of why the data could not be generated, not on whether the reporting entity was diligent in the abstract. Second — and this is the point most likely to win a similar case — the Tribunal recorded that penalty proceedings had been DROPPED in similar cases arising from the same reorganisation and migration, and treated that as decisive. Where the department has dropped the same default for a sister entity or a sister period, put those orders on record. The limit is that this is a reasonable-cause finding on particular facts and gives no protection where the statement was simply not attended to.
Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere.
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The bank did not file the statement of financial transactions mandated by section 285BA(1) for assessment year 2020-21 within the due date recorded by the Tribunal as 30-06-2021. The DDIT (I&C) issued a notice on 07-12-2021 asking for it to be filed by 06-01-2022. By email dated 09-12-2021 the bank said that the statement could not be filed because of technical issues and undertook to file it once they were resolved. Penalty proceedings were initiated on 10-03-2022 and a penalty of Rs 3,61,000 was imposed according to the period of delay. The CIT(A) confirmed it. Before the Tribunal the bank explained that it was undergoing reorganisation, that United Bank of India had merged with Punjab National Bank, and that because of technical glitches on migration from Finacle 7 to Finacle 10 of the core banking solution it could not generate the requisite data in the different parameters required for uploading Form 61/61A, which caused the delay in filing the SFT. It placed on record similar matters in which the penalty had been dropped.
The appeal was allowed and the Assessing Officer was directed to delete the penalty under section 271FA. The lapse having arisen out of the reorganisation process and the migration to a higher version of Finacle, and penalty proceedings having been dropped in similar cases of the same lapse, this was a reasonable cause for the assessee's inability to file the SFT return (paragraph 12).
The Tribunal accepted the factual explanation that the bank was in the process of reorganisation with United Bank of India and merger with Punjab National Bank, and that the migration of the core banking solution prevented it from generating the data in the parameters required for Form 61/61A. It attached weight to the fact that in similar instances of the same lapse the penalty proceedings had been dropped, and concluded that this amounted to a reasonable cause. It therefore set aside the order of the CIT(A) and directed deletion.
In our opinion this is a reasonable cause due to which the assessee could not file the SFT return.
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Handle my notice → Ask a CA on WhatsAppYes, on these facts. The Kolkata Bench held that an inability to generate the data required for Form 61/61A because the bank was migrating from one version of its core banking solution to another, in the course of a reorganisation and merger, is a reasonable cause, and directed deletion of a penalty of Rs 3,61,000 levied under section 271FA for the belated statement of financial transactions. This was decided by the ITAT (Shri Rajesh Kumar, Accountant Member and Shri Pradip Kumar Choubey, Judicial Member) and bears on section 271FA, section 285BA, section 285BA(1), section 36(1)(va) of the Income Tax Act 1961. It is reported as ITA Nos. 2591 and 2592/KOL/2025 (ITAT Kolkata 'A' Bench); no law-report citation traced. Section 271FA runs per day of default and the figure grows quietly until it is large; Rs 3,61,000 here was for a single year's statement. The order confirms two useful things. First, the reasonable-cause enquiry applies to section 271FA and is decided on the practical facts of why the data could not be generated, not on whether the reporting entity was diligent in the abstract. Second — and this is the point most likely to win a similar case — the Tribunal recorded that penalty proceedings had been DROPPED in similar cases arising from the same reorganisation and migration, and treated that as decisive. Where the department has dropped the same default for a sister entity or a sister period, put those orders on record. The limit is that this is a reasonable-cause finding on particular facts and gives no protection where the statement was simply not attended to. If it applies to you, the first step is this: Document the technical cause precisely: which system, which version, which migration, over which period, and why the specific data fields for Form 61A could not be generated — the Tribunal named the move from Finacle 7 to Finacle 10.
The bank did not file the statement of financial transactions mandated by section 285BA(1) for assessment year 2020-21 within the due date recorded by the Tribunal as 30-06-2021. The DDIT (I&C) issued a notice on 07-12-2021 asking for it to be filed by 06-01-2022. By email dated 09-12-2021 the bank said that the statement could not be filed because of technical issues and undertook to file it once they were resolved. Penalty proceedings were initiated on 10-03-2022 and a penalty of Rs 3,61,000 was imposed according to the period of delay. The CIT(A) confirmed it. Before the Tribunal the bank explained that it was undergoing reorganisation, that United Bank of India had merged with Punjab National Bank, and that because of technical glitches on migration from Finacle 7 to Finacle 10 of the core banking solution it could not generate the requisite data in the different parameters required for uploading Form 61/61A, which caused the delay in filing the SFT. It placed on record similar matters in which the penalty had been dropped. The matter was decided on 2026-02-26 by the ITAT (Shri Rajesh Kumar, Accountant Member and Shri Pradip Kumar Choubey, Judicial Member). On those facts the ITAT held as follows. The appeal was allowed and the Assessing Officer was directed to delete the penalty under section 271FA. The lapse having arisen out of the reorganisation process and the migration to a higher version of Finacle, and penalty proceedings having been dropped in similar cases of the same lapse, this was a reasonable cause for the assessee's inability to file the SFT return (paragraph 12).
The Tribunal accepted the factual explanation that the bank was in the process of reorganisation with United Bank of India and merger with Punjab National Bank, and that the migration of the core banking solution prevented it from generating the data in the parameters required for Form 61/61A. It attached weight to the fact that in similar instances of the same lapse the penalty proceedings had been dropped, and concluded that this amounted to a reasonable cause. It therefore set aside the order of the CIT(A) and directed deletion. In the words reproduced by the source cited on this page: "In our opinion this is a reasonable cause due to which the assessee could not file the SFT return."
It was decided by the ITAT on 2026-02-26 and is reported as ITA Nos. 2591 and 2592/KOL/2025 (ITAT Kolkata 'A' Bench); no law-report citation traced. Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere. A Tribunal decision binds the assessing officer and the Commissioner (Appeals) within that Tribunal's jurisdiction, and is persuasive before other benches. It is not binding on a High Court, and a contrary co-ordinate bench decision will be argued against you, so check whether the point has been taken the other way before you build a reply around it. On section 271FA, section 285BA, section 285BA(1), section 36(1)(va), the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. The appeal was allowed and the Assessing Officer was directed to delete the penalty under section 271FA. The lapse having arisen out of the reorganisation process and the migration to a higher version of Finacle, and penalty proceedings having been dropped in similar cases of the same lapse, this was a reasonable cause for the assessee's inability to file the SFT return (paragraph 12). It arises in Penalty and Evidence & Burden of Proof matters, on section 271FA, section 285BA, section 285BA(1), section 36(1)(va) of the Income Tax Act 1961, and was decided by Shri Rajesh Kumar, Accountant Member and Shri Pradip Kumar Choubey, Judicial Member. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Obtain and file copies of orders in which the same department dropped penalty proceedings for the same kind of lapse; the Tribunal recorded that the assessee had placed such material before it and relied on it. Reply to the I&CI notice when it arrives rather than after the penalty order — here the bank replied by email within two days of the notice explaining the technical issues, and that contemporaneous explanation was part of the narrative the Tribunal accepted. If the reporting entity is in the middle of a merger or amalgamation, say so on the face of the reply; the reorganisation was treated as part of the same cause.
Searched for later treatment; none was found. That is not the same as a source affirming it. The citator search (doc 67023324, confirmed as 'Bangiya Gramin Vikash Bank (Presently ... vs JCIT(I & CI)-1, Kolkata on 26 February, 2026') returns nothing. A second probe on the bank's name returned 880 decisions, almost all Calcutta High Court service matters brought by employees; the only income-tax one, Principal Commissioner of Income Tax 14 v Bangiya Gramin Vikash Bank (Calcutta High Court, 23 November 2021), pre-dates this order by more than four years. The core-banking-migration reasonable cause accepted here under s.271FA has attracted no later treatment. Nothing overruling, doubting or distinguishing it was found, and no appeal to a High Court against it is disclosed on the record searched. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The order records at paragraph 9 that 'the penalty proceedings were initiated u/s 271FA read with section 254 of the Act on 10.03.2022' — section 254 is the Tribunal's own appellate power and cannot be right; read section 274. The same paragraph refers to the calculation being at page 3 of 'the assessment order' where the penalty order is meant. The statement of financial transactions in question was for assessment year 2020-21 with a due date recorded as 30-06-2021, and the penalty appeal is numbered for assessment year 2021-22; the order does not explain that mismatch and the due date recited has not been independently verified against the governing rule or circular. This order also decides an unrelated issue in the companion appeal — the five-day grace period for provident fund contributions under section 36(1)(va) — which is not the subject of this entry. The bank is described as presently known as West Bengal Gramin Bank. The order's own header names the respondent in both appeals as the ITO, Ward 42(1), Berhampore, Murshidabad, although the penalty under section 271FA was levied by the I&CI wing and indiankanoon indexes the order against 'JCIT (I&CI)-1, Kolkata'. The header has been followed. The appeal numbers and years were verified from the header: ITA No. 2591/KOL/2025 for A.Y. 2021-22 and ITA No. 2592/KOL/2025 for A.Y. 2022-23, while the statement of financial transactions in issue was for A.Y. 2020-21 with a recited due date of 30-06-2021; the order does not explain that mismatch and the due date has not been checked against the governing rule. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The appeal was allowed and the Assessing Officer was directed to delete the penalty under section 271FA. The lapse having arisen out of the reorganisation process and the migration to a higher version of Finacle, and penalty proceedings having been dropped in similar cases of the same lapse, this was a reasonable cause for the assessee's inability to file the SFT return (paragraph 12).
TaxSphere, “Bangiya Gramin Vikash Bank v ITO, Ward 42(1), Berhampore”, https://taxnotice.vittsphere.com/caselaw/case/bangiya-gramin-vikash-bank-271fa-core-banking-migration-reasonable-cause/ (validity last checked 2026-09-08)
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Is there any High Court authority the department can use against me on a s.271FA penalty for filing Form 61A late?
We had no reportable transactions and filed no SFT. Can they still levy penalty under 271FA?
My client is a small money changer who never knew he had to file Form 61A. A penalty of eighty-one thousand rupees has been levied under s.271FA. Is ignorance of the requirement any answer?
A notice says my client should have filed Form 61A and proposes a penalty of five hundred rupees a day. Who actually has to file, for what transactions, and how is the penalty computed?
