Reasonable Cause Excludes Operation Of Sec 271D: Bangalore ITAT Deletes Penalty

The Bangalore ITAT ruled that the Revenue Department's selective enforcement violates Article 14 of the Constitution. Consequently, it overturned the penalty imposed under Section 271D of the Income Tax Act on an individual who received excess cash from property sales, contrary to banking channel norms. Section 273B was invoked to justify no penalty due to reasonable cause, defined as actions preventing ordinary prudence under normal circumstances. The tribunal noted delayed penalty notice issuance, complexity of tax laws, and practical banking constraints faced by the taxpayer. It also criticized selective enforcement by the Revenue. Therefore, the ITAT annulled the penalty, supporting the taxpayer's appeal.