No Penalty for cash loan accepted out of business exigencies

It was observed by the Tribunal that ‘in the instant case the undisclosed income as declared in the block return remained the assessed income. The Revenue did not doubt the veracity of the creditors. The AO did accept the credits as genuine. Most of the creditors were agriculturists, residing in remote villages and many of them did not have any bank account. The assessee was not professionally managed. From this it could be concluded that the breach flowered from a bona fide belief. Ex facie it was a venial breach. Cash was accepted because of business exigencies. As such, there existed reasonable cause for accepting the cash loans.’

Explore a landmark Income Tax Appellate Tribunal case from Chennai where a penalty under Section 271D of the Income-tax Act was successfully deleted. The tribunal found that the undisclosed income, as declared in the block return, remained the assessed income. Discover the rationale behind the tribunal’s decision, emphasizing the genuine nature of credits, the agricultural background of creditors, and the firm’s non-professional management. Learn how the tribunal concluded that the acceptance of cash loans was due to business exigencies, establishing a reasonable cause for the exemption from penalties. #IncomeTax #LegalCase #ChennaiTribunal

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