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Tax Publishers Levy of penalty under section 271FAA for compliance filing under section 285BA with corrections being effected on pointing by revenue but corrected within time under section 285BA(4) *Facts:* Assessee a foreign bank was liable to file information under section 285BA which was found erroneous after 3 years post facto the filing. Certain corrections were called for by the revenue which were complied in full by the assessee bank under section 285BA(4). Despite this penalty was levied under section 271FAA by the AO citing inaccurate filing under section 285BA. CIT(A) upheld the penalty. Assessee's plea was that the Indian laws were complicated and it is not that they did not do the rectification as called for by the authority which was also met within the time as per Section 285BA(4) and they should not be penalized thus.On higher appeal by the assessee - Held in favour of the assessee that since they met with the departmental compliance within the time limit under section 285BA(4) no penalty under section 271FAA was called for. "Section 285BA(4) Where the prescribed income-tax authority considers that the annual information return furnished under sub-section (1) is defective, he may intimate the defect to the person who has furnished such return and give him an opportunity of rectifying the defect within a period of one month from the date of such intimation or within such further period which, on an application made in this behalf, the prescribed income-tax authority may, in his discretion, allow; and if the defect is not rectified within the said period of one month or, as the case may be, the further period so allowed, then notwithstanding anything containedin any other provision of this Act, such return shall be treated as an invalid return and the provisions of this Act shall apply as if such person had failed to furnish the annual information return". "4. It is an acknowledged and judicially recognized fact that the tax laws of this country are complex and complicated. It is equally well known fact that the legislation in this field undergoes so frequent changes and amendments that it is not possible for the Banks software to be updated so frequently. Also, due to the mammoth data base at the bank, it is not practical nor possible to manually gather data for this reporting. Case laws in support of our contention. [2016] 74 taxmann.com 97 (Kolkata - Trib.) : 2016 TaxPub(DT) 4549 (Kol-Trib) In the ITAT Kolkata Bench 'B' - Durgapur Steel Peoples' Cooperative Bank Ltd. v. Director of Income-tax (Intelligence & Criminal Investigation), Kolkata [2016] 72 taxmann.com 306 (Kolkata - Trib.) : 2016 TaxPub(DT) 3754 (Kol-Trib) - In the ITAT Kolkata Bench 'A'- Malda District Central Co-op Bank Ltd. v. Director of Income-tax (1 & CI), Kolkata [2023] 150 taxmann.com 366 (Jaipur - Trib.) In the ITAT Jaipur Bench 'SMC - Jhalawar Kendriya Sahakari Bank Ltd. V. Additional/Assistant Director of Incometax (1&CI) Jaipur [ASSESSMENT YEAR 2019-20] - JANUARY 11, 2023 *Case:* KEB Hana Bank v. Jt. DIT 2023 TaxPub(DT) 4830 (Chny-Trib)

Tax Publishers

Levy of penalty under section 271FAA for compliance filing under section 285BA with corrections being effected on pointing by revenue but corrected within time under section 285BA(4)

Facts:

Assessee a foreign bank was liable to file information under section 285BA which was found erroneous after 3 years post facto the filing. Certain corrections were called for by the revenue which were complied in full by the assessee bank under section 285BA(4). Despite this penalty was levied under section 271FAA by the AO citing inaccurate filing under section 285BA. CIT(A) upheld the penalty. Assessee's plea was that the Indian laws were complicated and it is not that they did not do the rectification as called for by the authority which was also met within the time as per Section 285BA(4) and they should not be penalized thus.On higher appeal by the assessee -

Held in favour of the assessee that since they met with the departmental compliance within the time limit under section 285BA(4) no penalty under section 271FAA was called for.

"Section 285BA(4) Where the prescribed income-tax authority considers that the annual information return furnished under sub-section (1) is defective, he may intimate the defect to the person who has furnished such return and give him an opportunity of rectifying the defect within a period of one month from the date of such intimation or within such further period which, on an application made in this behalf, the prescribed income-tax authority may, in his discretion, allow; and if the defect is not rectified within the said period of one month or, as the case may be, the further period so allowed, then notwithstanding anything containedin any other provision of this Act, such return shall be treated as an invalid return and the provisions of this Act shall apply as if such person had failed to furnish the annual information return".

"4. It is an acknowledged and judicially recognized fact that the tax laws of this country are complex and complicated. It is equally well known fact that the legislation in this field undergoes so frequent changes and amendments that it is not possible for the Banks software to be updated so frequently. Also, due to the mammoth data base at the bank, it is not practical nor possible to manually gather data for this reporting. Case laws in support of our contention.

[2016] 74 taxmann.com 97 (Kolkata - Trib.) : 2016 TaxPub(DT) 4549 (Kol-Trib) In the ITAT Kolkata Bench 'B' - Durgapur Steel Peoples' Cooperative Bank Ltd. v. Director of Income-tax (Intelligence & Criminal Investigation), Kolkata

[2016] 72 taxmann.com 306 (Kolkata - Trib.) : 2016 TaxPub(DT) 3754 (Kol-Trib) - In the ITAT Kolkata Bench 'A'- Malda District Central Co-op Bank Ltd. v. Director of Income-tax (1 & CI), Kolkata

[2023] 150 taxmann.com 366 (Jaipur - Trib.) In the ITAT Jaipur Bench 'SMC - Jhalawar Kendriya Sahakari Bank Ltd. V. Additional/Assistant Director of Incometax (1&CI) Jaipur [ASSESSMENT YEAR 2019-20] - JANUARY 11, 2023

Case: KEB Hana Bank v. Jt. DIT 2023 TaxPub(DT) 4830 (Chny-Trib)