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HC held that the assessee's cash repayment of loan to the finance corporation, made on lender's instruction to arrest interest escalation, constitutes reasonable cause under Section 273B. The court found that all three tax authorities erroneously imposed penalty under Section 271E without considering Section 273B, which provides exemption when genuine reasonable cause exists. The transaction was deemed bona fide, and no revenue loss occurred. The penalty orders by AO, CIT(Appeals), and ITAT were consequently set aside, with the ruling decisively favoring the assessee's interpretation of reasonable cause in tax compliance.
HC held that the assessee's cash repayment of loan to the finance corporation, made on lender's instruction to arrest interest escalation, constitutes reasonable cause under Section 273B. The court found that all three tax authorities erroneously imposed penalty under Section 271E without considering Section 273B, which provides exemption when genuine reasonable cause exists. The transaction was deemed bona fide, and no revenue loss occurred. The penalty orders by AO, CIT(Appeals), and ITAT were consequently set aside, with the ruling decisively favoring the assessee's interpretation of reasonable cause in tax compliance.
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