ITAT Deletes Penalty for Non-Filing of Form 15CA as No Wilful Default on Part of Assessee

ITAT Deletes Penalty for Non-Filing of Form 15CA as No Wilful Default on Part of Assessee

The assessee made several foreign remittances for the purchase of machinery during the assessment year 2016–17. On scrutiny, the Assessing Officer (AO) noticed that Form 15CA had not been filed for these remittances and accordingly imposed a penalty of Rs. 43 lakhs under Section 271-I of the Income Tax Act for failing to provide the required information under Section 195 (6), as amended on June 1, 2015.

The assessee contended that during the relevant period, the corresponding Rule 37BB, which prescribes the format and procedure for furnishing such information, had not yet been amended to align with the new provision. The amended rule came into effect only from April 1, 2016. The assessee had not filed the said remittances, believing in good faith that such compliance was not necessary, as the remittances in question were not subject to taxation, and even the bank did not require Form 15CA earlier. Thus, aggrieved by the order of the CIT(A) confirming the penalty, the assessee filed an appeal before the Income Tax Appellate Tribunal (ITAT), Surat Bench.

Main Issue Before ITAT: Whether the assessee can be penalised under Section 271-I for failure to file Form 15CA during a period when the corresponding Rule 37BB did not mandate such filing for remittances not chargeable to tax.

ITAT Held: The Hon’ble Tribunal held that while Section 195(6) was amended from June 1, 2015, requiring information on all remittances, not just taxable ones, the form and manner of such furnishing through Form 15CA/CB were only prescribed from April 1, 2016. Therefore, the assessee’s legitimate belief that filing was not required during the intervening period was justified. The tribunal stressed that it was not justified to impose a penalty of Rs. 4,300,000/- as there was no evidence to show a wilful default on the part of the assessee. Under such circumstances, it was unwarranted to impose a penalty; thus, it was deleted, and the appeal of the assessee was allowed in full.

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