Reasonable cause for cash loan contravention sustained; factual findings on bona fide conduct barred a substantial question of law.

Penalty for accepting cash loans in breach of section 269SS was deleted because the Tribunal found reasonable cause on the facts: the cash receipts were connected to timely clearing of cheques, the assessee had insufficient bank balance, and the conduct was bona fide. The High Court found no perversity or irrationality in that factual appreciation and accepted that any breach was, at most, venial. It held that these findings did not give rise to a substantial question of law under section 260A, so the Revenue's challenge failed and the penalty deletion was upheld.

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Issues: Whether the Tribunal was justified in deleting the penalty by holding that the assessee had shown reasonable cause for receiving cash loans in contravention of section 269SS of the Income-tax Act, 1961, and whether such finding gave rise to any substantial question of law.

Analysis: The Tribunal's conclusion rested on factual findings that the cash receipts were linked to timely clearing of cheques, that the assessee lacked sufficient bank balance, and that the transactions reflected bona fide conduct. The Court found no perversity or irrationality in that appreciation of facts. It further held that the Tribunal's view that the breach, if any, was of a venial nature was supported by relevant material and did not raise a substantial question of law under section 260A of the Income-tax Act, 1961.

Conclusion: The penalty deletion was upheld and the Revenue's challenge failed.

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