1 / 10It is always mandatory to mention PAN and Aadhaar for cash transactions aggregating Rs.20 lakh in a financial year.2 / 10While this rule has been introduced recently, cash transactions have always been an area of concern for the tax department.3 / 10Under Sec 269SS of the Income Tax Act, 1961, one cannot take a loan or pay more than Rs 20,000 in cash. Any violation can invite a stiff penalty under Section 271D, which can be equal to the loan or deposit amount.4 / 10Loans from certain institutions such as banks, government departments, and Post Offices are exempted, but cash transactions with other entities must comply with the Rs.20,000 limit or invite a heavy penalty.5 / 10However, there is another source of funds that is not within the Rs.20,000 limit.6 / 10One is allowed to take cash loans from family members to meet business exigencies.7 / 10According to a Economic Times report, in a recent case of Balwan Singh vs Asstt. CIT [2022], the Delhi Tribunal stated that if the assessee can show a reasonable cause for accepting/repayment of cash to meet business requirements, then penalty under Section 271D and Section 271E cannot be levied.8 / 10For instance, an entrepreneur needs funds urgently and takes a cash loan of Rs.80,000 from his wife. If we go with plain reading of the law, the assessee has violated the provisions of Section 269SS.9 / 10However, if he can prove that there was an urgent need and there was no other means, the penalty under Section 271D can be avoided.10 / 10Of course, whether a situation can be treated as a business exigency will depend on the merits of the case. Under Section 273B, it is left to the discretion of the assessing authority to not levy a penalty if it is satisfied that there was a reasonable cause for taking the cash loan. Even if the borrowed amount is more than Rs 2 lakh, the penalty will not be levied if the assessing authority is satisfied by the proof of exigency submitted by the assessee.