Section 271D penalty fails where no cash loan transaction exists and section 269SS is not attracted.

Penalty under section 271D was held not leviable because the Tribunal had already found in the quantum proceedings that the alleged dealings were not a cash loan transaction. Once no borrowing of funds by way of cash loan existed, the foundational requirement for a violation of section 269SS was absent, and the penalty deletion was consistent with that earlier factual finding.

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Issues: Whether penalty under section 271D was leviable for alleged violation of section 269SS where the Tribunal had already held that there was no cash loan transaction.

Analysis: The Tribunal noted that in the quantum proceedings it had already held that the alleged dealings were not borrowing of funds in the form of a cash loan. It further noted that, once there was no cash loan transaction, the foundational requirement for a contravention of section 269SS was absent. On that basis, the order deleting the penalty was found to be consistent with the earlier factual finding.

Conclusion: Penalty under section 271D was not leviable and the Revenue's challenge failed.

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