No penalty can be levied u/s 271E if assessee proves that there was a reasonable cause for failure on his part:

Assessee had huge outstanding dues to various creditors for over 20 years and also had to recover huge amount from one entity for which he had filed a petition before Hon’ble High Court in 1983. As per Hon’ble High Court’s decision, he received part payment from his debtors from which he made payments to his creditors in cash and hence, AO levied penalty u/s 271E. Assessee explained the Hon’ble ITAT that his creditors insisted on cash payments and were visiting his house every day. He was 80 years old and was unaware of the legal requirement of making such payments through cheque. The said explanation was found to be bona fide by ITAT and so, ITAT deleted the said penalty in view of provisions of S.273B. The said view was upheld by the Hon’ble High Court also.

[MAHESH HARIKRISHANDAS AMIN HUF - TAX APPEAL NO.190 & 191 of 2012 - GHC]