What the courts have decided on section 271FA, in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.
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The Sub Registrar, Muktsar v Director of Income Tax (CIB)
High CourtHelps departmentNo later treatment found
Is there any High Court authority the department can use against me on a s.271FA penalty for filing Form 61A late?
Yes, and it should be known before the appeal is filed. The Punjab and Haryana High Court dismissed a sub-registrar's appeal against a daily s.271FA penalty for late annual information returns, holding that no substantial question of law arose — including on the question, expressly raised, whether penalty is exigible in the absence of mens rea. But the judgment gives no reasoning of its own: it dismisses by following an earlier decision of the same Court in connected appeals decided on 21 July 2014.
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Bangiya Gramin Vikash Bank v ITO, Ward 42(1), Berhampore
ITATHelps taxpayerNo later treatment found
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.
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Meet Forex Private Limited v Addl./JDIT (I&CI), New Delhi
ITATHelps taxpayerNo later treatment found
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?
On these facts, yes. The Delhi Bench deleted the whole penalty, holding that the explanation of not filing the statement of financial transactions for lack of knowledge was bona fide, given that the assessee had only one transaction to report, and following two Kolkata decisions treating such a default as a technical or venial breach flowing from bona fide ignorance. The relief was outright deletion, not a remand.
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Guntur District Co-operative Central Bank Ltd v DIT
ITATCuts both ways
We had no reportable transactions and filed no SFT. Can they still levy penalty under 271FA?
No, not for a year in which there was nothing to report. Section 285BA casts the filing obligation on a person who has registered or recorded a specified financial transaction during the financial year, so where no such transaction exists the duty to furnish the statement never arises and s.271FA has nothing to bite on. The burden is on the department to show that reportable transactions were in fact recorded before it can allege a failure.
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Statutory position — section 285BA, rule 114E and Form 61A: who must file the statement of financial transactions, and the section 271FA and 271FAA penalties
CBDT Circulars & InstructionsCuts both ways
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?
The statement of financial transactions is furnished under section 285BA(1) in Form No. 61A, and rule 114E(2) fixes both the reporting persons and the transactions in a table: for most reporters the threshold is ten lakh rupees in a financial year, for immovable property registered by a Registrar or Sub-Registrar it is thirty lakh rupees, and for a person liable to audit under section 44AB it is receipt of cash exceeding two lakh rupees for a sale of goods or services. The due date under rule 114E(5) is 31 May following the financial year. The penalty under section 271FA is five hundred rupees for every day of default, rising to one thousand rupees a day from the day after the time given in a notice under section 285BA(5) expires; section 271FAA adds fifty thousand rupees for an inaccurate statement, and, for a reporting financial institution, a further five thousand rupees for every inaccurate reportable account.
Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.
