Income Tax Appellate Tribunal - Mumbai
Anand Rathi Share And Stock Brokers ... vs Dy. Commissioner Of Income Tax Central ... on 14 August, 2025
IN THE INCOME TAX APPELLATE TRIBUNAL
MUMBAI BENCH "A" MUMBAI
BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER)
AND
SHRI RAJ KUMAR CHAUHAN (JUDICIAL MEMBER)
ITA No. 4155, 4412, 4413 & 4414/MUM/2025
Assessment Year: 2018-19, 2019-2020, 2020-21 & 2021-22
Anand Rathi Share and Stock Addl./JDIT (I&CI) Unit 2,
Brokers Ltd., Mumbai,
A-Wing, 10th floor, Express Zone, Vs. Dy. Commissioner of Income-tax
Goregaon East, C.C. 5(1),
Mumbai-400063. Earnest House, Mumbai-400021.
PAN NO. AAACN 3405 F
Appellant Respondent
Assessee by : Mr. Bharat Kumar
Revenue by : Mr. Surendra Mohan, Sr. DR
Date of He aring : 05/08/2025
Date of pronouncement : 14/08/2025
ORDER
PER OM PRAKASH KANT, AM
These appeals by the assessee are directed against a common order dated 30.05.2025 passed by the Ld. Commissioner of Income- tax (Appeals) - 53, Mumbai [in short 'the Ld. CIT(A)'] for assessment year 2018-19, 2019-20, 2020-21 and 2021-22 respectively in relation to penalty for delayed filing of statement of reportable foreign bank account transactions. As common issue-in- dispute is involved in these appeals, therefore, same were heard together and Anand Rathi Sahre and Stock Brokers Ltd. 2 ITA No. 4155, 4412, 4413 & 4414/MUM/2025 disposed off by way of this consolidated order for sake of convenience.
2. The Ld. CIT(A) in the common order has taken assessment year 2018-19 as the lead year and decision of the same has been mutandis. Accordingly, parties agreed before us to followed mutatis mutandis.
take assessment year 2018 2018-19 19 as a lead year and to follow f the decision of the same for other years mutatis mutandis mutandis.
3. The grounds raised by the assessee in assessment year 2018- 2018 19 are reproduced as under:
1. On the Facts and circumstances of the case, the learned CIT(A) erred in confirming the penalty of Rs. 10,37,000/-
10,37,000/ under section 271FA of the Income tax Act, 1961, for the alleged delay in filing Form 61B for the AY 2018-19.
20182. On the Facts and circumstances of the case, the learned CIT(A) erred in not considering that the delay is neither or intentional but occurred solely due to bona fide deliberate nor oversight.
3. On the Facts and circumstances of the case, the learned CIT(A) erred in not considering the provision of section 273B of Income Tax Act, 1961, which explicitly provided that no penalty shall be levied if there was a reasonable cause for the failure.
4. Briefly stated, the assessee company is a registered member of assessee-company the Bombay Stock Exchange (BSE), the National Stock Exchange (NSE) (including its F&O and Currency segments), and MCX Currency, and is one of the leading stock market brokers in India.
4.1 As per the mandate of Rule 114E of the Income-tax Income Rules, 1962 (hereinafter "the Rules"), the assessee was required to furnish Anand Rathi Sahre and Stock Brokers Ltd. 3 ITA No. 4155, 4412, 4413 & 4414/MUM/2025 a statement of reportable foreign account transactions, for the calendar dar year 2017, in the prescribed Form No. 61B, on or before 31.05.2018. The assessee failed to file such statement within the stipulated time. Consequently, a notice dated 21.12.2023 under Section 285BA(5) of the Income Income-tax Act"
tax Act, 1961 (hereinafter "the Act") was issued, requiring compliance on or before 27.12.2023.
4.2 The assessee, in response, submitted that Form No. 61B for the calendar year 2017 was eventually filed on 16.01.2024 in based clients under the Foreign Account Tax respect of U.S.-based Compliance Act ct (FATCA) category, and on 09.01.2024 in respect of based clients under the Common Reporting Standards non-U.S.-based (CRS) category. Taking note of the delay, the Assessing Officer initiated penalty proceedings under Section 271FA of the Act on 29.04.2024 4.3 The assessee, invoking Section 273B of the Act, pleaded "reasonable cause" for such delay, contending inter alia The filing requirement was a newly introduced compliance in the inception period (2017 (2017-2018);
There was a bona fide lack of awareness regarding the applicability of the provision, coupled with challenges in gathering requisite data; and Anand Rathi Sahre and Stock Brokers Ltd. 4 ITA No. 4155, 4412, 4413 & 4414/MUM/2025 The delay was further compounded by disruptions caused by the Covid-19 19 pandemic.
4.4 The Assessing Officer rejected the explanation, holding that no easonable cause was made out, and computed penalty as follows::
reasonable follows:
"Accordingly,
Accordingly, for the period from 01.06.2018 to 16.01.2024 the penalty for 2056 days is worked out as under:
Period Days Penalty per day (in Rs.) Total Penalty (in Rs.) from 01.06.2018 to 2034 500 10,17,000 27.12.2023 From 28.12.2023 to 20 1000 20,000 16.01.2024 Total 10,37,000 Rs.10,37,000/ (Rupees Ten Lakh Thirty Seven Total penalty of Rs.10,37,000/-(Rupees Thousands only) is hereby levied on R.E. M/s. Anand Rathi And Stock Brokers Ltd. under section 271 FA of the I.T. Act."
5. In appeal, the assessee reiterated that the delay was not wilful, but the result of genuine oversight in the context of newly introduced regulations, constituting a "reasonable cause" within the meaning of Section 273B of the Act. The Ld. CIT(A), however, rejected the plea, relying inter alia on the decision of the ITAT, Ahmedabad Bench, in The Waghodia Urban Co-operative operative Bank Ltd.
v. DIT (I&CI) (ITA No. 813/Ahd/2023, order dated 17.04.2024). It was held that the assesse assesseee had not demonstrated any reasonable cause for delay, even after issuance of the statutory notice, and the Anand Rathi Sahre and Stock Brokers Ltd. 5 ITA No. 4155, 4412, 4413 & 4414/MUM/2025 upheld. The relevant finding of the Ld. CIT(A) is penalty was upheld.
reproduced as under:
"7.3.
7.3. Further, as per Rule 114E of the IT Rules 1962, the assesse assessee has to file statement of Reportable Foreign Account by 31.05.2018 for the transactions covered in C.Y. 2017. Since, the assessee had failed to submit the same, AO had issued notice u/s 285BA of the IT Act Foreign Account C.Y. asking the assessee to file the statement of Foreign 2017 on or before 27.12.2023. However, I found that even after issuing of this notice, the assessee had filed Form 613 for CY 2017 on 16.01. 2024 for US based clients and on 09.01.2024 for non-US non omply with provisions of based clients. The assessee has failed to ccomply sections 285A of the IT Act. Further, during the course of appellate proceedings, the assessee has not provided any reasonable cause for delay in filing of statement of Foreign Account before 31.05.2018.
assessee is not covered as per section 273B of Therefore, case of the assessee the IT Act. Further, I found that ITAT, Ahmedabad in the case of 'The Waghodia Urban Co. Op. Bank Limited vs. The Director of Income Tax (I & CI), Ahmedabad (ITA No. 813/Ahd/2023 A.Y. 2019-20)' 2019 dated 17.04.2024 ha hass confirmed the penalty levied u/s. 271FA of the IT Act. Relevant portion of the ITAT order is reproduced as under:
"8. Heard both the parties and perused all the relevant material available on record. It is pertinent to note that the due date for filing 004 return/statement was 31.05.2019 and the notice has given SFT-004 by the Assessing Officer under Section 285BA(5) on 26.04.2022 and directed the assessee to file the SFT-001 SFT 001 and SFT 005 on or before 11.05.2022. Ld. AR submitted that there was server issue in the Bank and, therefore, the assessee field the belated return under SFT-
SFT 005 which is after the period prescribed under notice under 285BA(5) of the Act that too six months after issuing of notice. The contention taken by the Ld. AR if taken as it is and for which the Ld. AR has relied upon the decision of the Tribunal in case of Halol Urban Co-op.
Co Bank Limited vs. The Director of Income Tax (I&CI) (ITA No.968/Ahd/2019, order dated 25.10.2021). The factual aspect in the present case clearly set out that the the assessee despite giving one month period has failed to file the SFT return within the stipulated date given in notice under Section 285BA(5) of the Act. The Tribunal has excluded the period prior to issuance of notice but the Section clearly set out that the concerned assessee shall furnish the statement in respect of such specified financial transaction or such reportable account for the purpose of this Act. The Income Tax authority shall be furnishing the same for such period within such time and in the form and manner as may be prescribed. Thus, it is mandatory provision and, therefore, physical calculation by the Anand Rathi Sahre and Stock Brokers Ltd. 6 ITA No. 4155, 4412, 4413 & 4414/MUM/2025 Assessing Officer was rightly done and levied under Section 285BA(5) of the Act. The contention of the Ld. AR that server was not working or there was some issue with the server has not been demonstrated thoroughly before the Tribunal and merely on the plea we cannot accept the same. Thus, appeal of the assessee is dismissed."
dismissed.
6. Before us, the Ld. Counsel for the assessee filed a Paper Book containing pages 1 to 147 1 and contested that the penalty levied by the AO and upheld by the Ld. CIT(A) might be deleted.
deleted 6.1 The Ld. Counsel for the assessee submitted that assessee is not a regular defaulter and it had been regularly filing its income-
income tax return, tax audit report and TDS report within the prescribed timelines. He submitted that assessee is a responsible and pliance taxpayer with no history of deliberate non-compliance compliance under the provisions of the Act. He submitted that assessee had 2019 duly filed Form No. 61A (SFT report for assessment year 2019- 2020) in accordance with requirement of the section 285BA of the Act. However, under the same provision the assessee inadvertently failed to file Form No. 61B as the obligation to furnish this additional form was newly introduced pursuant to Rule 114G and was part of a regulatory expansion aimed at implementing FATCA and CRS S reporting norms. The fai re to file Form No. 61B occurred failure due to a bonafide misunderstanding of this new compliance requirement and not due to any deliberate omission or malafide intent. Further, the Ld. Counsel submitted that by way of delay in filing there was no revenue loss to the Income-tax Income tax Department.
Anand Rathi Sahre and Stock Brokers Ltd. 7 ITA No. 4155, 4412, 4413 & 4414/MUM/2025 6.2 Further, the Ld. Counsel submitted that there was a change in the regulatory instruction issue issued by the Income-tax tax Department with reference to Form No. 61B of the Rules. The Ld. Counsel referred to the notification No. 3/2015 dated 25.08.2015 which was subsequently withdrawn by way of notification No. 4/2016 dated 04.09.2015. The said notification No. 4/2015 was also withdrawn by way of notification No. 4/2016 dated 06.04.2016. Thereafter, a clarification dated 26.05.2016 was issued for implementation of FATCA CA and CRS and Directorate of System (Income-tax (Income Department) issued a user manual for use in view of Form No. 61B tax Website. Subsequently, further a Circular was on the Income-tax issued on 29.12.2022 2022 specifying due diligence and reporting for FATCA and CRS.. The Ld. Counsel submitted that in view of various clarifications, the assessee could not comply the filing of said Form 61B within limitation.
limitation. The Ld. Counsel relied on the decision of Kolkata Bench of the Tribunal in the case of Durapur Steel Peoples' Co-operative operative Bank Ltd. v. Director of Income-tax Income tax (Intelligence & Criminal Investigation), Kolkata [2016] 74 taxmann.com 97 (Kolkata
- Trib.). The Ld. Counsel also relied on the decision of the Delhi Del Bench of the Tribunal in the case of The Rewari Central Co Co-
Income tax (I&CI) Rewari ITA No. operative Bank v. Directorate of Income-tax 4846/Del/2019 for assessment year 2017-18.
20177. The Ld. Departmental Representative supported the orders of the lower authorities, contending that Section 285BA casts a Anand Rathi Sahre and Stock Brokers Ltd. 8 ITA No. 4155, 4412, 4413 & 4414/MUM/2025 duty obligation upon reporting entities, making timely filing public-duty of such statements a mandatory requirement and that no reasonable cause within the ambit of Section 273B was established. The Ld. DR also relied on the decision of the Co ordinate Bench of Co-ordinate Ahmedabad Tribunal in the case of The Waghodia Urban Co. Op. Bank Ltd. (supra) relied upon by the Ld. CIT(A).
8. We have heard rival submissions of the parties and perused the relevant materials on record record.. In the case, the Assessing Officer has levied penalty u/s 271 A of the Act for delay in filing the 271FA statement of foreign accounts transaction. For ready reference, section 271FA of the e Act is reproduced as under:
Penalty for failure to furnish73[statement "[Penalty statement of financial transaction or reportable account].
account 74 271FA. If a person who is required to furnish 75[a statement of financial transaction or reportable account] under sub section (1) of sub-section section 285BA,, fails to furnish such 76[statement] within the time prescribed rescribed under sub-section sub tax authority (2) thereof, the income-tax prescribed under said sub section (1) may direct that such person sub-section shall pay, by way of penalty, a sum of 77[five] hundred rupees for every day during which such failure continues:
Provided that where such person fails to furnish the 76[statement] within the period specified in the notice issued under sub-section sub 285BA he shall pay, by way of penalty, a sum of (5) of section 285BA, 78[one thousand] rupees for every day during which the failure continues, beginning from the day immediately following the day on which the time specified in such notice for furnishing the 76[statement] expires.]"
expires.] 8.1 ctual position regarding delay in furnishing Form No. The factual 61B is undisputed. The sole question for adjudication is whether such delay was occasioned by a "reasonable cause" so as to attract Anand Rathi Sahre and Stock Brokers Ltd. 9 ITA No. 4155, 4412, 4413 & 4414/MUM/2025 the protection of Section 273B of the Act. For ready reference said section ction 273B is reproduced as under:
Penalty not to be imposed in certain cases.
"6[Penalty 7 273B. Notwithstanding anything contained in the provisions of 8[clause (b) of sub-section (1) of] 9[section 271, section 271A271A, 10[section 271AA,] section 271B10[, section 271BA], 271BA 11[section 271BB,] section 271C, 271C 12[section 271CA,] section 271D, section 271E, 13[section section 271CA 271F, 14[section 271FA 15[section 271FAA,] 16[section section 271FA,] 271FAB,] 17[section [ 271FB,] 18[section 271G,]] 19[section 271GA,] [section 20 271GB,] 21[section 271GC,] 22[section section 271GB 271H,] [section 23 section 271-I,] 271 24[section 271J,] ,] clause (c) or clause (d) of sub-section sub section (2) of section (1) or sub-section 272A, sub-section section 272B section (1) of section 272AA] or 25[section or] 26[sub-section section (1A)] of section section (1) 27[or sub-section 272BB or] 28[sub-section (1) of section 272BBB or] clause section (1) or clause (b) or clause (c) of sub-
(b) of sub-section sub section (2) of section 273,, no penalty shall be imposable on the person or the assessee, as the case may be, for provisions if he proves any failure referred to in the said provisions that there was reasonable cause 29 for the said failure.]"
failure.] 8.2 ection 271FA mandates a penalty for failure to Thus the section furnish a "statement of financial transaction or reportable account"
rescribed time. However, Section 273B carves out an within the prescribed exception, stipulating that no penalty shall be imposable if the assessee proves that there was reasonable cause for such failure.
8.3 In view of the above factual background, the issue in dispute ore us whether there any 'reasonable cause' exists for delay in is before filing the Form No. 61B prescribed for filing statement of foreign account transactions by the assessee. The assessee has submitted that delay happened mainly due to frequent change in the Anand Rathi Sahre and Stock Brokers Ltd. 10 ITA No. 4155, 4412, 4413 & 4414/MUM/2025 instructions issued regarding filing of Form No. 61B and in view of compliance framework. The assessee has further pleaded that other form in filing statement of foreign account i.e. Form No. 61B was filed on time. However, inadvertently the Form No. 61B could c not be filed for delay in collecting the data from the clients. The assessee has further explained that it had maintained a consistent record of regulatory compliance including filing of income-
income-tax return, tax within the prescribed time audit reports and TDS statement etc. within limit.
8.4 On the facts of the present case, we note that:
The obligation to file Form No. 61B under the FATCA/CRS framework was relatively nascent for the relevant calendar year;
There was substantial and frequent modification in the t compliance procedure and instructions issued by the Department; and The assessee has an established track record of timely compliance in other statutory filings under the Ac 8.5 hese circumstances, in our considered view, bring the case These within the protective ambit of Section 273B. We find support for this conclusion in the decision of the Kolkata Bench in Durgapur operative Bank Ltd. (supra), where it was Steel Peoples' Co-operative recognised sed that frequent legislative changes may result in bona fide Anand Rathi Sahre and Stock Brokers Ltd. 11 ITA No. 4155, 4412, 4413 & 4414/MUM/2025 and technical breaches, not warranting penalty under Section 271FA in the absence of mala fides or revenue loss. The relevant finding of the Co-ordinate ordinate Bench is reproduced as under:
"9. We have heard the arguments of both the sides and also perused the relevant material available on record. On a careful consideration of the matter, we find that except the instant alleged breach, nothing more is alleged against the assessee. As a matter of fact, the Director of Income Tax (Intelligence and Criminal investigation) who passed the penalty order himself observed in his order vide para No 3 that the assessee got the accounts of all branches consolidated and audited, and also filed Income Tax/TDS return returns.
s. The order of the Director of Income Tax (Intelligence and Criminal investigation) does not speak as to how the assessee stood to gain by contravening with the provisions of Section 285BA of the Act or the act of assessee resulted in any loss to the Revenue.
Revenue. Further, it is an acknowledged and judicially recognized fact that the tax laws of this country are complex and complicated and often require for compliance, therewith the assistance of tax practitioners specialising in this field, is a well known fact, t, and it is equally well known fact that the 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. In these circumstances, no mala fides can be attributed to the assessee so as to invoke the penalty proceedings under section 271FA of the Act and the th learned Director of Income Tax (Intelligence and Criminal investigation) should have taken note that the breach is only technical or venial breach of the provisions of the Act and such a breach could have flown from a bona fide ignorance of the assessee that he is liable to act in the manner prescribed by the statute, and should not have invoked the penalty proceedings. We, therefore, by following the above decision cited supra find that the Penalty proceedings are liable to be set aside. We order accordingly."
accordi 8.6 Applying the ratio of the said decision, we hold that the delay herein was a technical/venial breach arising from bona fide reasons, without any intention to evade compliance. Accordingly, the penalty levied under Section 271FA is unsustainable and is Anand Rathi Sahre and Stock Brokers Ltd. 12 ITA No. 4155, 4412, 4413 & 4414/MUM/2025 cted to be deleted. The grounds No. 1 to 3 of the appeal of the directed assessee are accordingly allowed.
allowed
9. Since the ground raised in the appeals for assessment year 2019- 2019 21 are identical to the grounds raised in assessment 2020 to 2020-21 year 2018-19 therefore, following our finding above. The 19 and therefore, grounds raised in the appeal for assessment year 2019-2020 2019 to 2021-22 22 are also allowed.
10. In the result, all the appeals of the assessee are allowed.
Order pronounced /08/2025.
nced in the open Court on 14/08
Sd/-
Sd/ Sd/-
(RAJ KUMAR CHAUHAN)
CHAUHAN OM PRAKASH KANT)
(OM KANT
JUDICIAL MEMBER ACCOUNTANT MEMBER
Mumbai;
Dated: 14/08/2025
Rahul Sharma, Sr. P.S.
Copy of the Order forwarded to :
1. The Appellant
2. The Respondent.
3. CIT
4. DR, ITAT, Mumbai
5. Guard file.
BY ORDER,
//True Copy//
(Assistant Registrar)
ITAT, Mumbai