Income Tax Provisions in Respect of Filing of Annual Information Return (AIR)

Jul 18, 2010 Income Tax

1. Section 285BA:- Section 285BA has been substituted by the Finance Act, 2004 w.e.f. 1-4-2005. It is applicable in respect of transactions registered or recorded during any financial year commencing on or after 1-4-2004. Sub-section (1) of section 285BA requires certain specified persons to furnish Annual Information Return (AIR) in respect of specified financial transactions registered or recorded by them during the financial year.

Under sub-section (2) of section 285BA AIR 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 AIR. It also provides that the Board may prescribe different values for different transactions in respect of different persons having regard to the nature of the transaction. It further provides that the value of the transaction to be reported in the AIR shall not be less than Rs. 50,000/-.

The requisite prescription has been made by Rule 114E.

2. Rule 114E

The nature of the transactions and the threshold value on or above which information has to submitted in the AIR are prescribed in Rule 114E.

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

Tabular Summary of AIR

Sr. No.	Person responsible to file AIR	Nature of Financial transaction	Value	Transaction Code
1	Banking company/institution	Total cash depositsin a savings bank account in a year	Rs. 10 lakhs or more	001
2	Banking company/ institution or any other company / institution issuing credit card	Payments received in the year in respect of a credit card issued.	Rs. 2 lakhs or more	002
3	Trustee or authorized person of a Mutual Fund	Receipt from any person for acquiring units of that Fund	Rs. 2 lakhs or more	003
4	Company or institution issuing bonds or debentures	Receipt from any person for acquiring bonds or debentures issued by the company or institution.	Rs. 5 lakhs or more	004
5	Company issuing shares through a public or rights issue	Receipt from any person for acquiring shares issued by the company.	Rs. 1 lakh or more	005
6	Registrar or Sub-Registrar	Purchase or sale by any person of immovable property	Rs. 30 lakhs or more	006/007
7	Authorised Officer ofReserve Bank of India	Aggregate receipts from any person for bonds issued by RBI	Rs. 5 lakhs or more	008

3. TIME LIMIT OF FILING AIR

Rule 114E (5) prescribes that 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 AIR

Under rule 114E (1) and rule 114E (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 AIR

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 AIR per person

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

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

5.3 Signing and Verification of AIR

The AIR should be signed and verified by the following persons as specified in rule 114E(6):

(a) In the case of an assessee, by a person authorised to sign a return under section 140 and

(b) In other cases, by a person specified in table below rule 114(E)(2).

5.4 Authority for accepting AIR

The AIR is required to be furnished to the Commissioner of Income Tax (Central Information Branch) under Rule 114 E (3). It is also provided under the rule that 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 authorized 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 facilitition centres are available on the website 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.

6. PENALTY FOR NON FILING/LATE FILING OF AIR

Section 271FA provides that if the specified person fails to furnish the AIR within the time prescribed, then the prescribed Income Tax Authority may impose a penalty of Rs. 100/- for every day during which the default continues. The penalty shall, however, not be levied if there is reasonable cause for the failure.

7. ANALYSIS OF SPECIFIED FINANCIAL TRANSACTIONS

7.1. 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 Rs. 10 lakhs or more. It is to be noted that the provision applies to a bank and not the branch thereof.

7.2. 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 Rs. 2 lakhs or more in afinancial year made by a credit card holder against bills raised in respect of a credit card issued to that person.

7.3 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 Rs. 2 lakhs or more for acquiring units of that fund. It has been clarified that the amount actually received from a transacting party, and not the amount relating to the allotment, is to be reported in the AIR.

7.4 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 Rs. 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.

7.5 Issue of shares in a public or rights issue

If a company has received Rs. 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. Here also the amount actually received from a transacting party, and not the amount relating to the allotment, is to be reported in the AIR.

7.6 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 Rs. 30 lakhs or more. CBDT Circular has clarified that where the transaction in respect of a property valued at more than Rs. 30 lakhs involves joint parties and the value for one or more party is less than Rs. 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 Rs. 30 lakhs.

7.7 Issue of RBI Bonds

If a person acquires bonds issued by the Reserve Bank of India, the aggregate value of which is Rs. 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.

8. DEFECTIVE RETURN, NOTICE, COMPLIANCES

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

Where the prescribed Income Tax Authority considers that the Annual Information Return 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): Compliance 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.