Section 271FA — Failure to Furnish Statement of Financial Transaction or Reportable Account (Section 285BA)
Case Laws & Commentary — Income-tax Act, 1961 (as amended by the Finance Act, 2026) — bharattax.co Treatise
Status: Live. Penalty for failure to furnish the statement of financial transaction (SFT) or reportable account required under section 285BA(1): Rs. 500 per day of default, rising to Rs. 1,000 per day for continued default after a section 285BA(5) notice. Levied on reporting persons such as banks, sub-registrars, companies and others.
Finance Act, 2026: No amendment by the Finance Act, 2026.
Mechanism: Failure to furnish the SFT/reportable account by the due date → Rs. 500 per day; if the failure continues beyond the period in a section 285BA(5) notice → Rs. 1,000 per day from the day after the notice period; subject to reasonable cause under section 273B.
Litigation profile: Litigated mainly by reporting entities on the reasonable-cause defence and on the quantum/period computation, particularly where a nil/late SFT was eventually filed.
A. COMMENTARY
A reporting-entity compliance penalty
Section 271FA enforces the third-party information regime of section 285BA, under which specified persons (banks, post offices, registrars, companies issuing shares/bonds, etc.) must report high-value financial transactions in the SFT. The penalty is a per-day levy designed to compel timely and complete reporting; it can be heavy where the default runs for months.
Reasonable cause and the two-tier rate
Being within section 273B, the penalty yields to reasonable cause — technical/portal difficulties, genuine doubt over reportability, or first-year transition issues, where bona fide. The rate steps up from Rs. 500 to Rs. 1,000 per day only after a section 285BA(5) notice fixing a compliance period; the higher rate runs from the expiry of that notice period, a distinction important to quantum.
B. STATUTORY TEXT (verbatim)
Reproduced from the Income-tax Act, 1961 as amended up to the Finance Act, 2025; Finance Act, 2026 changes are noted above.
Penalty for failure to furnish statement of financial transaction or reportable account.
271FA. If a person who is required to furnish a statement of financial transaction or reportable account
under sub-section (1) of section 285BA, fails to furnish such statement within the time prescribed under
sub-section (2) thereof, the income-tax authority prescribed under said sub-section (1) may direct that such
person shall pay, by way of penalty, a sum of five hundred rupees for every day during which such failure
continues:
Provided that where such person fails to furnish the statement within the period specified in the notice
issued under sub-section (5) of section 285BA, he shall pay, by way of penalty, a sum of 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 statement expires.
C. AUTHORITIES
Direct authority is limited and at the Tribunal level; the candour rule applies. The governing safeguard is section 273B reasonable cause; the period computation follows the statutory two-tier structure.
1. Reasonable cause and quantum
Principle — bona fide/technical default
Proposition A bona fide or technical default — portal failure, genuine doubt on reportability, transition difficulty — is reasonable cause under section 273B and defeats or mitigates the section 271FA penalty.
Use The principal defence for reporting entities.
Principle — higher rate runs only after the section 285BA(5) notice
Proposition The Rs. 1,000-per-day rate applies only to the continued default after the period specified in a section 285BA(5) notice; absent such a notice, the levy is confined to Rs. 500 per day.
Use Quantum defence against an inflated per-day computation.
Prepared for the bharattax.co Treatise on the Income-tax Act, 1961 (as amended by the Finance Act, 2026). Statutory text reproduced from the official Act; case-law holdings are the author’s summaries for professional use.
CHAPTER XXI — PENALTIES IMPOSABLE
Section 271FA — Failure to Furnish Statement of Financial Transaction or Reportable Account (Section 285BA)
Case Laws & Commentary — Income-tax Act, 1961 (as amended by the Finance Act, 2026) — bharattax.co Treatise
Status: Live. Penalty for failure to furnish the statement of financial transaction (SFT) or reportable account required under section 285BA(1): Rs. 500 per day of default, rising to Rs. 1,000 per day for continued default after a section 285BA(5) notice. Levied on reporting persons such as banks, sub-registrars, companies and others.
Finance Act, 2026: No amendment by the Finance Act, 2026.
Mechanism: Failure to furnish the SFT/reportable account by the due date → Rs. 500 per day; if the failure continues beyond the period in a section 285BA(5) notice → Rs. 1,000 per day from the day after the notice period; subject to reasonable cause under section 273B.
Litigation profile: Litigated mainly by reporting entities on the reasonable-cause defence and on the quantum/period computation, particularly where a nil/late SFT was eventually filed.
A. COMMENTARY
A reporting-entity compliance penalty
Section 271FA enforces the third-party information regime of section 285BA, under which specified persons (banks, post offices, registrars, companies issuing shares/bonds, etc.) must report high-value financial transactions in the SFT. The penalty is a per-day levy designed to compel timely and complete reporting; it can be heavy where the default runs for months.
Reasonable cause and the two-tier rate
Being within section 273B, the penalty yields to reasonable cause — technical/portal difficulties, genuine doubt over reportability, or first-year transition issues, where bona fide. The rate steps up from Rs. 500 to Rs. 1,000 per day only after a section 285BA(5) notice fixing a compliance period; the higher rate runs from the expiry of that notice period, a distinction important to quantum.
B. STATUTORY TEXT (verbatim)
Reproduced from the Income-tax Act, 1961 as amended up to the Finance Act, 2025; Finance Act, 2026 changes are noted above.
Penalty for failure to furnish statement of financial transaction or reportable account.
271FA. If a person who is required to furnish a statement of financial transaction or reportable account
under sub-section (1) of section 285BA, fails to furnish such statement within the time prescribed under
sub-section (2) thereof, the income-tax authority prescribed under said sub-section (1) may direct that such
person shall pay, by way of penalty, a sum of five hundred rupees for every day during which such failure
continues:
Provided that where such person fails to furnish the statement within the period specified in the notice
issued under sub-section (5) of section 285BA, he shall pay, by way of penalty, a sum of 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 statement expires.
C. AUTHORITIES
Direct authority is limited and at the Tribunal level; the candour rule applies. The governing safeguard is section 273B reasonable cause; the period computation follows the statutory two-tier structure.
1. Reasonable cause and quantum
Principle — bona fide/technical default
Proposition A bona fide or technical default — portal failure, genuine doubt on reportability, transition difficulty — is reasonable cause under section 273B and defeats or mitigates the section 271FA penalty.
Use The principal defence for reporting entities.
Principle — higher rate runs only after the section 285BA(5) notice
Proposition The Rs. 1,000-per-day rate applies only to the continued default after the period specified in a section 285BA(5) notice; absent such a notice, the levy is confined to Rs. 500 per day.
Use Quantum defence against an inflated per-day computation.
Prepared for the bharattax.co Treatise on the Income-tax Act, 1961 (as amended by the Finance Act, 2026). Statutory text reproduced from the official Act; case-law holdings are the author’s summaries for professional use.