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APRIL 11, 2011 Section 271D of the Income-tax Act, 1961 - Penalty - For failure to comply with section 269SS - Assessment year 1994-95 - Where there was no material to show that in fact there was a real exigency that compelled assessee to go for cash loan, penalty under section 271D was rightly levied [In favour of revenue] The assessee was doing the business of purchase and sale of yarn. For the assessment year 1994-95, the assessee had cheque discounting loan facilities with the financiers. The Assessing Officer found that 72 items of cash loans on various dates from various parties were in contravention of section 269SS and after eliminating short accommodation imposed penalty under section 271D in respect of 16 items of cash loans. Held that except for mere statement that the receipt of amount in cash was on account of the business exigency and to meet the liquidity, there was hardly any material to show that in fact there was a real exigency that compelled the assessee to go for cash loan. Accordingly, impugned order of penalty was to be confirmed. CASES REFERRED TO CIT v. Balaji Traders [2008] 303 ITR 312 (Mad), CIT v. Ratna Agencies [2006] 284 ITR 609 (Mad), Asstt. Director of Inspection (Investigation) v. Kum. A. B. Shanthi [2002] 255 ITR 258 (SC) and A.B. Shanthi (Kum. ) v. Asstt. Director of Inspection [1992] 197 ITR 330 (Mad.). N. Quadir Hoseyn for the Appellant. K. Subramaniam for the Respondent. JUDGMENT Mrs. Chitra Venkataraman, J. - The assessee has come up on appeal as against the order of the Income-tax Appellate Tribunal, Chennai "A", Bench dated January 14, 2004, in I. T. A. No. 787/Mds/1996 raising the following substantial questions of law : "1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in confirming the levy of penalty under section 271D of the Act especially in the context of the finding that there was no reasonable cause was not based on any material before it ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in not deleting the penalty in the light of the Supreme Court's decision reported in Asstt. Director of Inspection (Investigation) v. Kum.…

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