This is assessee s appeal against order of CIT(A) dt. 19th July, 2007. Grounds raised are as under. Ground No. 6 is not pressed. In remaining grounds raised only one issue i.e. challenging levy of penalty under s. 271D of Rs. 5 lakhs (remains) for adjudication. Brief facts are during course of assessment proceedings, it was found that assessee had violated provisions of s. 269SS of IT Act, inasmuch as, deposit of Rs. 5 lakhs were accepted in cash. Show cause notice under s. 271D was issued, assessee replied that funds were urgently required for honouring cheques issued by it. Shri Gital S. Patel, one of directors, withdrew this amount from his bank account and gave Rs. 5 lakhs to company, which was deposited in bank account. It was contended that it was neither transaction of loan or deposit and was internal transaction, therefore, penalty was not imposable. Alternatively, it was contended that assessee had reasonable cause, inasmuch as, amount was received in cash to ensure that cheques given by assessee concerned were (sic-if) bounced, would have adverse effect in business interest. AO, however, levied penalty which was challenged in first appeal, where it was confirmed. Aggrieved assessee is in second appeal. Learned counsel for assessee reiterated contentions and further contends that deposit was received from director in peculiar circumstances. Assessee is finance company and has to ensure that its cheques are honoured. In instant case, cheque of Rs. 10 lakhs was already issued, however, on date assessee was short of Rs. 5 lakhs. In order that cheque of Rs. 10 lakhs issued by assessee to be cleared on 3rd April, 2004, in these circumstances, assessee requested Shri Gital S. Patel, one of its directors who is part and parcel of company to arrange for funds. He in turn arranged this amount from Srinathji Co-op. Bank in cash and deposited in assessee s account. Genuineness of availability of cash, Shri Gital S. Patel being director of company, has not been doubted. Fact that cheque of Rs. 10 lakhs was realized from bank on same date is also not disputed. It was contended that this was in interest of business necessity of assessee, penalty should not be levied. Reliance was placed on decision of Ahmedabad Tribunal in case of Shreenath Builders vs. Dy. CIT (2000) 66 TTJ (Ahd) 113 holding as under: "A harmonious construction of relevant provisions of ss. 271D, 271E and 273B clearly reveals that use of expression shall be liable to pay in ss. 271D and 271E and provisions of s. 273B providing that no penalty would be leviable if person concerned proves that there was reasonable cause for said failure clearly indicates that these provisions give discretion to authorities to impose penalty or not to impose penalty. Such discretion has to be exercised in just and fair manner having regard to entire relevant facts and materials existing on record." Reliance was also placed on decisions in cases of CIT vs. Idhayam Publications Ltd. (2006) 285 ITR 221 (Mad) and Dillu Cine Enterprises (P) Ltd. vs. Addl. CIT (2004) 87 TTJ (Hyd) 1098. Learned Departmental Representative on other hand contends that business urgency has not been proved. I have heard rival submissions and perused material available on record. Facts of assessee are not in dispute that Shri Gital S. Patel is director of assessee company, amount was raised by him from his bank account in Srinathji Co-op. Bank and cheque issued by assessee for Rs. 10 lakhs was cleared on same date. What remains to be seen is whether it constitutes reasonable cause or not. In my considered opinion, assessee being finance company, it is in paramount interest of assessee that its cheques are duly cleared, otherwise, it will lead to adverse consequence on business interest. In given circumstances, shortfall of Rs. 5 lakhs is evident, Gital S. Patel being its director, he was requested to arrange funds, which he did by withdrawing from bank account and deposited cash in company s account. In my view it constitutes reasonable cause. Respectfully following above judgments, I hold that assessee is prevented by sufficient cause, therefore, penalty under s. 271D is deleted. In result, assessee s appeal is allowed. *** MARUTI NANDAN FINANCE CAP. (P) LTD. v. ASSISTANT COMMISSIONER OF INCOME TAX