(Section 285BA, Rule 114E, Circular 07/2005)

1. Section 285BA

Section 285BA has been substituted by the Finance Act, 2014 w.e.f. 1-4-2015.

Annual Information Return has been renamed as Statement of Financial Transaction or Reportable Account (the statement).

It is applicable in respect of transactions registered or recorded during any financial year commencing on or after 1-4-2014.

Sub-section (1) of section 285BA requires certain specified persons

• who is responsible for registering or maintaining books of account or other document

• containing a record of any specified financial transaction or any reportable account as may be prescribed

to furnish statement in respect such specified financial transaction or any reportable account during the financial year as may be prescribed.

One more category of specified persons viz. “a prescribed reporting financial institution” has been added to the existing ten categories of specified persons required to file the statement.

Under sub-section (2) of section 285BA the statement has to be furnished within the prescribed time, in the prescribed form and manner.

Sub-section (3) of section 285BA specifies the nature of transactions which can be prescribed by the CBDT for the purpose of reporting in the statement. Board may prescribe different values for different transactions in respect of different persons having regard to the nature of the transaction. The value of the transaction to be reported in the statement shall not be less than ₹ 50,000/-.

2. Rule 114E

Rule 114E (not yet amended) prescribes the nature of the transactions and the threshold value on or above which information has to submitted in the statement.

Presently, in terms of Rule 114E(2), the specified persons who are required to furnish the statement and the nature and value of the specified transactions to be reported in the AIR are as under:

Tabular Summary of AIR

3. Time Limit of Filing Statement – Rule 114E(5)

AIR is to be furnished on or before 31st August, immediately following the financial year in which the transaction is registered or recorded.

4. Form No. of Statement – 114(E)(1) & (4)

AIR is to be furnished in Form No. 61A on a computer readable media being a floppy (3.5 inch or 1.44 MB capacity) or CD-ROM (650 MB or higher capacity) or Digital Video Disc (DVD).

5. Manner of Filing Statement

5.1 TAN is the folio number

The person filing the AIR is required to quote his folio number in para 3 of Part A of Form 61A and para 4 of Part B of Form 61A for filing the AIR. This folio number is the unique identity of the person filing the AIR for all purposes of AIR.

In the case of Government filers the TAN of the filer and in the case of non-Government filers the TAN of the principal office of the person filing the AIR is the folio number.

5.2 One statement per person

Persons filing statement have to furnish only one statement even if they may have more than one branch.

The statement is to be filed under the TAN of the principal office of the person filing the statement.

5.3 Signing and Verification of statement – Rule 114E(6)

1. In the case of an assessee, by a person authorised to sign a return under section 140 and
2. In other cases, by a person referred to in column (2) of the table above Rule 114(E)(2).

5.4 Authority for accepting statement – 114E(3)

The statement is required to be furnished to the Commissioner of Income-tax (Central Information Branch) where the CBDT has authorised an agency to receive AIR on behalf of the Commissioner of Income Tax (Central Information Branch) the AIR shall be furnished to that agency.

The CBDT has authorised National Securities Development Corporation (NSDL) as the agency to receive AIRs on behalf of Commissioner of Income-tax (Central Information Branch).

AIR can be furnished with the facilitation centres of NSDL located in different parts of the country. The addresses of these facilitation centres are available on the website http://www.incometaxindia.gov.in and www.tin.nsdl.com.

5.5 Certificate of Virus free data

The return is to be accompanied with a certificate regarding clean and virus free data. However in practice this certificate is not insisted upon.

6. Penalty for failure to furnish Statement

Section 271FA provides that if the specified person fails to furnish the statement within the time prescribed, then the prescribed Income-tax Authority may impose a penalty of ₹ 100/- for every day during which the failure continues.

Where in pursuance of a notice issued under section (5) of section 285BA there is a failure to furnish the AIR within the period specified in the notice issued then the penalty payable shall be ₹ 500/- 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 AIR expires.

The penalty shall, however not be levied if there is a reasonable cause for the failure to furnish the AIR within the prescribed time.

7. Penalty for furnishing inaccurate information

New section 271FAA inserted by the Finance Act, 2014 w.e.f. 1-4-2015 provides that if a person referred to in clause (k) of section 285BA(1) i.e. a prescribed reporting financial institution provides inaccurate information in the statement and where:

1. the inaccuracy is due to failure to comply with the due diligence requirement prescribed u/s. 285BA(7) or is deliberate.

2. the person knows of the inaccuracy at the time of furnishing the statement but does not inform.

3. the person discovers the inaccuracy after furnishing the statement and fails to inform and furnish correct information within the time specified u/s. 285BA(6) then the penalty payable shall be ₹ 50,000.

8. Defective return, notice, compliances

8.1 Section 285BA (4): Notice for defective return

Where the prescribed Income-tax Authority considers that the AIR 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, the authority may grant on an application in this regard. If the person fails to rectify the defect within the time allowed, the prescribed Income-tax Authority will treat the return as invalid and all the provisions of this Act shall apply as if such person has failed to furnish AIR.

8.2 Section 285BA(5): Compliances in response to notice

Where a person who is required to furnish an AIR has not furnished the same within the prescribed time, the prescribed Income-tax Authority may serve up on such person a notice requiring him to furnish such return within such period as laid down by such authority but not exceeding 60 days from the date of service of such notice.

8.3 Section 285BA(6) : Furnishing of correct information on discovery of inaccurate information

If the person after having furnished the statement comes to know or discovers any inaccuracy in the information provided in the statement, he shall inform the income-tax authority the inaccuracy and furnish the correct information in the manner as may be prescribed.

8.4 Section 285BA(7) : Registration, due diligence and record keeping

The Central Government may prescribe rules under this section specifying:

1. registration of persons required to furnish the statement with the prescribed Income-tax Authority.
2. nature and manner in which the prescribed information shall be maintained.
3. due diligence to be carried out by the persons for the purpose of identification of any reportable account.

9. Analysis of specified financial transactions

9.1 Cash deposits in a savings bank account

A banking company to which Banking Regulation Act, 1949 applies (including any bank or banking institution referred to in section 51 of that Act) is required to report the aggregate of all the cash deposits in any savings account of a person maintained in that bank if the aggregate of cash deposits in a financial year are ₹ 10 lakhs or more. It is to be noted that the provision applies to a bank and not the branch thereof.

9.2 Credit Card payments

A banking company to which Banking Regulation Act, 1949 applies (including any bank or banking institution referred to in section 51 of that Act) or any other company/institution issuing credit cards is required to furnish the aggregate of all payments of ₹ 2 lakhs or more in a financial year made by a credit card holder against bills raised in respect of a credit card issued to that person.

9.3 Investment in Units of Mutual Fund

A mutual fund is under an obligation to furnish in the AIR a receipt from any person of an amount of ₹ 2 lakhs or more for acquiring units of that fund. The amount actually received from a transacting party, and not the amount relating to the allotment, is to be reported in the AIR.

9.4 Issue of bonds or debentures

A company or institution issuing bonds or debentures is under an obligation to furnish in the AIR a receipt from any person of an amount of ₹ 5 lakhs or more for acquiring bonds or debentures issued by that company or institution. The amount actually received from a transacting party, and not the amount relating to the allotment, is to be reported in the AIR.

9.5 Issue of shares in a public or rights issue

If a company has received ₹ 1 lakh or more in respect of shares issued by that company through a public or rights issue, the company has to furnish the details of such a transaction. The amount actually received from a transacting party, and not the amount relating to the allotment, is to be reported in the AIR.

9.6 Purchase or sale of immovable property

The registering authority; i.e., Registrar or Sub-Registrar appointed u/s. 6 of the Registration Act, 1908 is required to furnish in the AIR purchase or sale of immovable property, the value of which is ₹ 30 lakhs or more. CBDT Circular has clarified that where the transaction in respect of a property valued at more than ₹ 30 lakhs involves joint parties and the value for one or more party is less than ₹ 30 lakhs, the transaction is to be reported in the AIR giving requisite details in respect of all such joint parties, even though the value of the transaction in the hands of one or more joint parties is less than ₹ 30 lakhs.

9.7 Issue of RBI Bonds

If a person acquires bonds issued by the Reserve Bank of India, the aggregate value of which is ₹ 5 lakhs or more in a year, then an officer authorised by the RBI has to provide requisite information of such transactions in respect of such a person through AIR. The monetary limit applies to the aggregate value of the investments made in a year.