Cash repayment within a genuine family arrangement does not justify penalty where the spouse transaction is fully explained.

Cash repayment of money received from a spouse was treated as a genuine, fully explained family arrangement rather than a commercial transaction attracting penalty. The notes state that the relevant cash deposits were accepted without any assessment addition and that repayment served the family's benefit. Applying the principle applicable to non-commercial transactions between spouses, the penalty for cash repayment was considered unjustified and was directed to be deleted.

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Issues: Whether penalty for cash repayment of money received from a spouse was sustainable where the transaction was a fully explained family transaction undertaken for the benefit of the family.

Analysis: The cash loan received from the spouse was fully explained, no addition was made in assessment in respect of the relevant cash deposits, and the repayment was stated to be for the benefit of the whole family. Applying the principle governing non-commercial transactions between spouses, the transaction was treated as a genuine family arrangement rather than a transaction warranting penalty.

Conclusion: The penalty under Section 271E for repayment of Rs. 4,00,000 in cash was not justified and was directed to be deleted.

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