Statement of Financial Transactions (SFT)/ Annual Information Return for Tax Audit Cases

Rule 114E of Income Tax Rules, 1962, for furnishing Statement of Financial Transactions (SFT) came into force with effect from 1st April, 2016 and it specifies additional statement/ Return to be filed by certain classes of persons before the due date.

The assessee who is covered under section 44AB in F.Y. 2017-18 and satisfy the following condition need to furnished Annual Information Return in Form 61A / 61B.

For the Financial Year 2017-18, Due date is 31^st May 2018.

Any person who is liable for audit under section 44AB of the Income-Tax Act, 1961 is also required to furnish a statement in respect of  specified financial transaction under section 285BA(1) read with Rule 114E relating to receipt of cash payment exceeding Rupees 2,00,000/- (Rupees Two Lakhs) for sale of goods or rendering of any service. Like above, the specified persons are also required to furnish the above return on timely basis. Example:

1. an assessee or
2. the prescribed person in the case of an office of Government or
3. a local authority or other public body or association or
4. the Registrar or Sub-Registrar appointed under section 6 of the Registration Act, 1908 (16 of 1908) or
5. the registering authority empowered to register motor vehicles under Chapter IV of the Motor Vehicles Act, 1988 (59 of 1988) or
6. The Post Master General as referred to in clause (j) of section 2 of the Indian Post Office Act, 1898 (6 of 1898) or
7. The Collector referred to in clause (c) of section 3 of the Land Acquisition Act, 1894 (1 of 1894) or
8. the recognized stock exchange referred to in clause (f) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956); or
9. An officer of the Reserve Bank of India, constituted under section 3 of the Reserve Bank of India Act, 1934 (2 of 1934) or
10. A depository referred to in clause (e) of sub-section (1) of section 2 of the Depositories Act, 1996 (22 of 1996).

who is responsible for registering, or, maintaining books of account or other document containing a record of any specified financial transaction, under any law for the time being in force, shall furnish an annual information return , in respect of such specified financial transaction which is registered or recorded by him during any financial year beginning on or after the 1st day of April, 2004 and information relating to which is relevant and required for the purposes of this Act, to the prescribed income-tax authority or such other authority or agency as may be prescribed.

(2) The annual information return referred to in sub-section (1) shall be furnished within the prescribed time after the end of such financial year, in such form (Form no 61A/61B) and manner as may be prescribed.

(3) For the purposes of sub-section (1), “specified financial transaction” means any—

• Transaction of purchase, sale or exchange of goods or property or right or interest in a property; or Transaction for rendering any service; or
• Transaction under a works contract; or
• Transaction by way of an investment made or an expenditure incurred; or
• Transaction for taking or accepting any loan or deposit, which may be prescribed.

Provided that the Board may prescribe different values for different transactions in respect of different persons having regard to the nature of such transaction : Provided further that the value or, as the case may be, the aggregate value of such transactions during a financial year so prescribed shall not be less than fifty thousand rupees.

For more details:

https://www.incometaxindia.gov.in/Tutorials/40.%20Understanding%20AIR.pdf

Penalty for non compliance of Section 285BA (1):

Non-furnishing of Statement of Financial Transaction or Annual Information Return will attract penalty under section 271FA. Penalty shall be levied of Rs. 100 per day of default.

However, section 285BA(5) empower the tax authorities to issue a notice to the person directing him to file the statement within a period not exceeding 30 days from the date of service of such notice and in such a case person shall furnish the statement within the time specified in the notice. If person fails to file the statement within the specified time, then a penalty of Rs. 500 per day shall be levied from the day immediately following the day on which the time specified in such notice for furnishing the statement expires.