Transaction which was bona fide and not aimed to avoid any tax liability would constitute a reasonable cause within the meaning of Section 273B
The word ‘reasonable cause’ under Section 273B of the ITA has not been defined. Therefore, in the context of the penalty provisions, the words ‘reasonable cause’ would mean a cause which is beyond the control of the assessee. ‘Reasonable cause’ obviously means a cause which prevents a reasonable man of ordinary prudence acting under normal circumstances, without negligence or inaction or want of bona fides.
Bona fide belief coupled with the genuineness of the transactions would constitute a reasonable cause. Furthermore, the transaction which was bona fide and not aimed to avoid any tax liability would constitute a reasonable cause within the meaning of Section 273B of the Act for not invoking Section 271E of the Act.
Section 273B of the Act requires that on proof of reasonable cause, the penalty imposable under Section 271E(1) would not be imposable and further imposition of penalty merely on technical mistake committed by the assessee, which has not resulted in any loss of revenue, would not be sustainable.
Chhattisgarh High Court in the case of Kamaljeet Kaur Gill v. JCIT [TAXC No 62 of 2024], dated 24.04.2025
The copy of the order is as under:
