The assessee had repaid a loan in cash to a finance company, leading the Assessing Officer to levy penalty u/s 271E for violation of s. 269T. The High Court held that a combined reading of ss. 271E and 273B makes it clear that no penalty can be imposed if the assessee proves “reasonable cause” for the failure. The expression “reasonable cause” means a cause beyond the control of the assessee, preventing a reasonable man of ordinary prudence from complying, without negligence or lack of bona fides. Bona fide belief coupled with genuineness of the transaction constitutes reasonable cause. In the present case, the repayment was made under insistence of the finance company, was duly recorded in the books, and the return was accepted without any adverse finding regarding genuineness or mala fides. There was no evidence that the transaction was aimed at tax evasion or avoidance. Penalty imposed merely for a technical breach causing no loss of revenue was therefore unsustainable. Accordingly, the penalty order was quashed. (AY. 2015-16)