271D on Contravention of section 269SS for Cash loans taken on account of sister’s marriage Short Overview : Where there existed reasonable cause for the assessee in accepting the loans in cash and particularly as the loans were repaid by way of RTGS, i.e., via banking channels, penalty levied by AO under section 271D was deleted. AO initiated the penalty proceedings under section 271D for accepting cash loans. Assessee contended that said cash loans were repaid by him by way of NEFT/RTGS to the vendors. He further contended that he took cash loan on the occasion of his sister’s marriage and this would constitute reasonable cause under section 273B. It is held that Since the assessee took cash loans on account of his sister’s marriage and as the loans were repaid through banking channels by way of RTGS, therefore, the genuineness of the loan and the identity of the creditor could not be doubted. Moreover, the penalty under section 271D is subject to the provisions of section 273B. As the assessee’s contention that the loans were taken for his sister’s marriage would constitute reasonable explanation section 273B and also as the fact that the loans have been repaid by cheques was not controverted, no penalty could be levied under section 271D.
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