Section 269SS not attracted where transaction was through cheque and journal entry, so penalty under section 271D failed

Penalty under section 271D was not sustainable because section 269SS was not attracted on the facts found. The transaction was carried out through an account payee cheque, with no cash payment by the assessee or on its behalf, and the amount was only debited in the books through a journal entry. On the Tribunal's factual findings, no loan or deposit was accepted in cash so as to trigger the statutory prohibition.

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Issues: Whether penalty under section 271D of the Income-tax Act, 1961 was rightly deleted on the ground that section 269SS of the Income-tax Act, 1961 was not contravened.

Analysis: The transaction was effected through an account payee cheque and no payment was made in cash either by the assessee or on its behalf. The amount was debited in the assessee's books through a journal entry, and the factual findings recorded by the Tribunal showed that no loan or deposit was accepted in cash so as to attract section 269SS.

Conclusion: Penalty under section 271D was not sustainable, as section 269SS was not attracted on the facts found.

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