2026 (8) TMI 542

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.... AO u/s 271D vide order dated 17.09.2021. Having heard rival submissions, the appeal is disposed-off as under. 2. From case records, it emerges that an assessment was framed by Ld. AO against the assessee u/s 143(3) r.w.s. 147 on 12.12.2018 to verify the sources of cash deposits of Rs. 17.02 Lacs. It transpired that the assessee obtained short term loans from different persons which were sourced to make the impugned deposits. The credibility of lenders stood accepted by Ld. AO. These cash loans were in the range of Rs. 60,000/- to Rs. 1,80,000/- which were taken by the assessee from seven difference individuals. Since the loans were obtained in cash which was in violation of provisions of Sec.269SS, the assessee was show-caused by approp....

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.... 271D which was equivalent to the amount of loan i.e. Rs. 7.90 Lacs. The Ld. CIT(A) confirmed the same against which the assessee is in further appeal before Tribunal. 3. Upon perusal of enumerated facts, I find that the assessee has sufficiently made out a case of reasonable cause u/s 273B. It is trite law that levy of penalty is not automatic. The Ld. AR has demonstrated that the assessee's father was confronted with an unforeseen emergency situation requiring immediate funds. It has also been demonstrated that the amounts were received in cash solely to meet the urgent financial requirement. The transactions are found to be genuine, the identity and creditworthiness of the lender has not been doubted and there is no allegation that th....

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....gency requiring immediate funds constitutes a valid and bona fide explanation when it is supported by surrounding circumstances and remains uncontroverted by the revenue. In my considered opinion, penalty provisions, being quasi-criminal in nature, could not be invoked merely because a technical violation has occurred, particularly where there is no element of contumacious conduct, deliberate disregard of law or intention to defeat the statutory provisions. Considering the totality of the facts and circumstances, I am satisfied that the assessee has furnished a plausible and bona fide explanation demonstrating reasonable cause for accepting the loan in cash. The revenue has not produced any material to show that the explanation is false or ....