Section 271FA of ITA, 1961 : Section 271Fa: Penalty For Failure To Furnish Statement Of Financial Transaction Or Reportable Income

Explanation using Example

Imagine a bank, "XYZ Bank", which conducts a large number of high-value transactions. According to the Income-tax Act, the bank is required to submit a statement of these transactions to the income-tax authorities by May 31st each year. However, this year, XYZ Bank fails to submit this statement by the due date.

As a result, starting June 1st, the income-tax authority issues a notice to the bank, giving them an additional 15 days to comply. If XYZ Bank still does not submit the required statement by June 15th, it will incur a penalty. For the period from June 1st to June 15th, the penalty would be five hundred rupees per day. If the bank continues to delay beyond June 15th, the penalty increases to one thousand rupees for each day of ongoing non-compliance.