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2006 (4) TMI 236 - AT - Income TaxPenalty levied u/s 271D - undisclosed income - contravention of provisions of section 269SS - HELD THAT:- When section 271D is read with section 273B, which begins with the non obstante clause 'Notwithstanding anything contained in the provisions of inter alia section 271D', it is clear that in spite of the provisions of section 271D, the enactment following, namely, 'no penalty shall be imposable on the person or the assessee, as the case may be, for any failure referred to in the said provisions if he proves that there was reasonable cause for the said failure', will have its full operation. Under section 273B a judicial discretion is left with the assessing authority not to levy a penalty u/s 271D if the authority is satisfied that there was a reasonable cause for not complying with the provisions of section 269SS. We found that the undisclosed income as declared in the Block Return remained the assessed income. Revenue did not doubt the veracity of the creditors. Assessing Officer did accept the credits as genuine. Most of the creditors were agriculturists, residing in remote villages and many of them were not having any bank account. Assessee-firm was not professionally managed. From this it can be concluded that breach flowed from a bona fide belief. Ex facie it is a venial breach. Cash appears to be accepted because of the business exigencies. As such there exists a reasonable cause in accepting cash loans from various parties. Assessee may therefore be exonerated from the rigour of penalty. We uphold the order of CIT(A). In the result, appeal of the revenue stands dismissed.
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