Penalty for violeting S.269SS of ITA,1961

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Hiten (Querist)
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11 January 2010 If a loan is accepted or repaid otherwise than by account payee cheque (i.e. shown by passing journal voucher, who can impose such penalty?, can assessee do anything to escape from the levy of penalty U/s. 269SS? HOW?

Plz solve as far as possible...

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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11 January 2010 Any undue hardship is very much mitigated by the inclusion of section 273B. If there was a genuine and bona fide transaction and if for any reason the taxpayer could not get a loan or deposit by account-payee cheque or demand draft for some bona fide reasons, the authority vested with the power to impose penalty has got discretionary power - Asstt. Director of Inspection (Investigation) v. Kum. A.B. Shanthi/Chamundi Granotes (P.) Ltd. v. Dy. CIT [2002] 255 ITR 258/122 Taxman 574 (SC).

The above decisions may help to escape from the penalty proceedings initiated by AO..