Reasonable cause defeated section 271D penalty where bank transfers explained the alleged cash loan and ledger entry error was plausible.

Penalty under section 271D for alleged contravention of section 269SS was held unsustainable where the record showed only a small cash receipt and the balance was received through banking channels. The assessee's explanation that the ledger narration contained a clerical error, supported by bank account details, was found plausible, and the authorities had not properly verified the source of the later transfers. On these facts, reasonable cause under section 273B was established, so the penalty was not leviable and was deleted.

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Issues: Whether the penalty imposed under section 271D of the Income-tax Act, 1961 for alleged contravention of section 269SS was sustainable when the assessee explained that only a small part of the amount was received in cash and the balance was received through banking channels, and whether the assessee was entitled to relief on the basis of reasonable cause under section 273B.

Analysis: The factual record showed a cash deposit of Rs. 95,000 on one date, but also showed subsequent bank transfers of Rs. 40,000 and Rs. 50,000. The explanation that the ledger narration contained a clerical error and that the entries were wrongly reflected as a single cash loan was found plausible. The explanation was supported by the bank account details, and the authorities below had not properly verified whether the later amounts had come through banking channels from the same source. In these circumstances, the case fell within the scope of reasonable cause contemplated by section 273B.

Conclusion: The penalty under section 271D was not leviable, and the impugned penalty was deleted. The assessee succeeded on the main issue.

Final Conclusion: The appeal was allowed by cancelling the penalty arising from the alleged cash loan violation.

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