The Income Tax Appellate Tribunal (ITAT) in Delhi reviewed the case between Rewari Central Cooperative Bank and the Directorate of Income Tax (I & CI), Rewari, for the assessment year 2017-18. This case revolves around a penalty imposed on the bank for the late filing of the Statement of Financial Transaction (SFT).
The Rewari Central Cooperative Bank, a district cooperative bank governed by the Haryana government, faced a penalty for the late submission of the SFT for the period from November 8, 2016, to December 30, 2016. The penalty, amounting to INR 1,05,000, was initially imposed by the Directorate of Income Tax due to the bank’s 210-day delay in filing the SFT return.
The bank argued that the delay was not deliberate but was due to an inadvertent change in the email address, which led to a failure to receive prior notices. Additionally, the bank stressed its limited infrastructure capabilities and lack of intent to disregard the Income Tax Department’s regulations.
The ITAT, led by Shri Yogesh Kumar US, Judicial Member, and Shri Shamim Yahya, Accountant Member, delved into the merits of the case. They highlighted that the penalty should not solely serve as a punitive measure but should also consider the taxpayer’s intent and circumstances leading to the non-compliance. By referencing landmark decisions such as Dilip N Shroff vs. Joint CIT and Hindustan Steel Ltd. vs. State of Orissa, the tribunal emphasized that penalties are generally not applicable if there is no deliberate defiance or dishonest conduct.
The ITAT decided to overturn the penalty, taking into account the cooperative bank’s prompt action to comply upon receiving the show cause notice and its genuine reasons for the delay. This decision underscores the importance of considering the context and circumstances in penalty proceedings.
This case sets a precedent for how penalties for procedural non-compliances should be approached, particularly when the taxpayer shows no intent of willful non-compliance. The tribunal’s decision reflects a balanced approach to enforcement actions, recognizing the challenges faced by smaller entities like district cooperative banks.
Manage the increasing number of hearings effortlessly by leveraging the legal AI revolution We are India's Leading revolutionary AI-powered legal platform where you can get enough insights into top cases and judgements.
Research Platform