Law:

Section:

Section 273B, read with sections 271D and 271E, of the Income-tax Act, 1961 - Penalty - Not to be imposed in certain cases - Assessment year 1991-92 - Whether a family transaction between two independent assessees based on an act of casualness, specially in a case where disclosure thereof is contained in compilation of accounts and which has no tax effect, establishes 'reasonable cause' under section 273B - Held, yes - Assessing Officer imposed penalty under sections 271D and 271E upon assessee for accepting or returning cash loans in violation of provisions of sections 269SS and 269T - On appeal, Tribunal, taking note of facts that cash transactions of assessee were with sister concern and due to business exigency; that assessee had produced his cash books depicting loans taken by him unilaterally before revenue; and that no prejudice was caused to revenue inasmuch as assessee did not attempt by impugned act to avoid any tax liability, held that assessee had shown reasonable cause for not abiding by provisions of sections 269SS and 269T - It, therefore, deleted penalty imposed upon assessee - Whether on facts, Tribunal had taken correct decision - Held, yes FACTS The Assessing Officer imposed the penalty under sections 271D and 271E upon the assessee for accepting and returning cash loans in violation of sections 269SS and 269T. On appeal, the Commissioner (Appeals) upheld the order of the Assessing Officer. On second appeal, the Tribunal set aside the penalty holding that the assessee had shown 'reasonable cause' for not abiding by provisions of sections 269SS and 269T. On the revenue's appeal to the High Court : HELD Section 273B envisages a non obstante clause as against sections 271D and 271E which had been sought to be invoked for penalizing the assessee. In the exceptional situation envisaged in section 273B, it is permissible for an assessee to substantiate 'reasonable cause' for his failure to comply with the provisions on the basis whereof penalty is sought to be imposed upon him. Taken to the logical conclusion insofar as the instant controversy was concerned, it was open to the assessee to establish a reasonable cause for having not complied with…

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