269T. No branch of a banking company or a co-operative bank and no other
company or co-operative society and no firm or other person shall repay any
loan or deposit made with it otherwise than by an account payee cheque or
account payee bank draft drawn in the name of the person who has made the loan
or deposit if—
(a) the amount of the
loan or deposit together with the interest, if any, payable thereon, or
(b) the aggregate amount of
the loans or deposits held by such person with the branch of the banking company
or co-operative bank or, as the case may be, the other company or co-operative
society or the firm, or other person either in his own name or jointly with any
other person on the date of such repayment together with the interest, if any,
payable on such loans or deposits,
is twenty thousand rupees or more:
Provided that where
the repayment is by a branch of a banking company or co-operative bank, such
repayment may also be made by crediting the amount of such loan or deposit to
the savings bank account or the current account (if any) with such branch of
the person to whom such loan or deposit has to be repaid :
44[Provided
further that nothing
contained in this section shall apply to repayment of any loan or
deposit taken or accepted from—
(i) Government;
(ii) any banking
company, post office savings bank or co-operative bank;
(iii) any corporation
established by a Central, State or Provincial Act;
(iv) any Government company45 as
defined in section 617 of the Companies Act, 1956 (1 of 1956);
(v) such other institution,
association or body or class of institutions, associations or bodies which the
Central Government may, for reasons to be recorded in writing, notify in this
behalf in the Official Gazette.]
Explanation.—For the purposes of this section,—
(i) "banking company" shall have the
meaning assigned to it in clause (i) of the Explanation to section 269SS;
(ii) "co-operative
bank" shall have the meaning assigned to it in Part V of the Banking
Regulation Act, 1949 (10 of 1949);
(iii) "loan or
deposit" means any loan or deposit of money which is repayable after
notice or repayable after a period and, in the case of a person other than a
company, includes loan or deposit of any nature.]
42. Substituted by the Finance Act, 2002, w.e.f. 1-6-2002.
Prior to its substitution, section 269T was inserted by the Income-tax (Second
Amendment) Act, 1981, w.e.f. 11-7-1981 and later on amended by the Finance Act,
1984, w.e.f. 1-4-1984, Finance Act, 1985, w.e.f. 1-4-1986 and Direct Tax Laws
(Amendment) Act, 1987, w.e.f. 1-4-1989.
43. For the meaning of the term "deposit", see Taxmann's Direct Taxes Manual, Vol. 3. See also Circular No. 479, dated 16-1-1987, Circular No. 522,
dated 18-8-1988 and Circular No. 556, dated 23-2-1990. For details, see Taxmann's Master Guide to Income-tax Act.
44. Inserted by the Finance Act, 2003, w.r.e.f. 1-6-2002.
45. For definition of "Government company"
Q : Whether
the Section 269T is applicable when the partners withdrew the capital in cash
from the partnership firm ?
Answer:- Where partners of firm gives money
to firm in need of business exigencies and received it back through capital
account, both in cash; no penalty could be levied Deputy Commissioner of
Income-tax v. Chetan M. Kakaria [2014] 49 taxmann.com 490 (Mumbai -
Trib.) IN THE ITAT MUMBAI BENCH 'C'
Q: When the Cash credit loan taken in
cash is treated as unexplained and added in the income of the Assessee, whether
the penalty can also be levied for violaton of Section 269T i.e receipt and
repayment of this loan in cash ?
Answer : No, Section 68, read with sections 269SS, 269T and 271D, of the
Income-tax Act, 1961 - Cash credits (Loan) - Assessment years 2008-09 and
2009-10 - During relevant year, Assessing Officer noted that assessee, to get
over certain financial difficulties, borrowed a sum of Rs. one crore in cash -
Assessee repaid Rs. 50 lakhs during relevant years - Assessing Officer taking a
view that it was a case of unexplained cash receipt, treated amount in question
as assessee's own income - He thus added said amount to assessee's income under
section 68 - Assessing Officer also passed a penalty order under section 271D
for violating provisions of section 269SS - Whether once amount was subjected
to tax under section 68, question of treating it as transaction in violation of
section 269SS or section 269T did not arise as
it stood mutually excluded - Held, yes - Whether, therefore, impugned penalty
order was to be set aside - Held, yes [Para 7] [In favour of assessee] Director of Income-tax
(Exemptions), Chennai v. Young Men Christian Association [2014] 49
taxmann.com 72 (Madras) HIGH COURT OF MADRAS
Q : When the customers had given earnest
money (booking advance) to the Assessee for purchase of shop/office/flat in
cash/ cheque whether its repayment in cash can be condiered as violation of
Section 269 T ?
Answer: No, Section 269T, read with section 271E of the Income-tax Act, 1961 -
Deposit - Mode of repayment [Earnest money] - Assessment year 2006-07 -
Whether, where assessee-company, engaged in construction, repaid earnest
money/advances to certain parties in cash, section 269T was not
applicable as repayments were not in nature of repayment of loan or deposits -
Held, yes -Whether, therefore penalty under section 271E for violation of
section 269T, for making payments in excess of Rs. 20,000 in cash, could
not be levied - Held, yes [Para 7] [In favour of assessee]. Commissioner of Income-tax –VI v. Madhav Enterprise (P.) Ltd. [2013] 37
taxmann.com 349 (Gujarat) HIGH COURT OF GUJARAT
Q: When the sister partnership firm receive/ repay the money
in cash from/to another sister partnership firm , whether the same is violation
of section 269 SS or 269 T and hence liable for penalty u/s 271D or Section
273B ?
Answer :No. Where assessee-firm received a sum of
Rs. 4.35 lakhs in cash from its sister concern and repaid a sum of Rs. one lakh
in cash to sister concern, transfer of cash by one firm to another would
operate as a reasonable cause and, therefore, levy of penalty under sections
271D and 271E upon assessee was not justified. K.K. Enterprises v. Joint
Commissioner of Income-tax, Range-25(2) [2014] 41 taxmann.com 235 (Mumbai -
Trib.) IN THE ITAT MUMBAI BENCH 'A'
Q Whether
before levying penalty under section 271E,
Assessing Officer should record finding about availability of banking
facilities and other explanation offered by assessee for making payment by cash
instead of cheque ?
Answer Yes, Section 269T, read with section 271E, of the Income-tax Act, 1961 -
Deposits/loans, mode of taking [Reasonable cause] - Assessment year 2005-06 -
Assessee repaid loan to creditors in cash exceeding Rs. 20,000 - Assessing
Officer levied penalty under section 271E - Tribunal found that assessee should
have been given some opportunity to prove that there was reasonable cause for
non-compliance with statutory provisions of section 269T and there being
no finding about availability or otherwise of banking facilities in and around
place where payment of loan had been made, it remanded matter to assessing
authority to record a finding thereabout and then to pass appropriate orders -
Whether order of Tribunal being only an order of remand, same could not be
interfered with in appeal - Held, yes [Para 7] [In favour of assessee] Commissioner of Income-tax v. K.
Srinivasulu Reddy [2013] 38 taxmann.com 201 (Karnataka) HIGH COURT OF KARNATAKA
Q When
the Repyament of Loan / deposit is made by book entries whether penalty can be
imposed under section 271E ?
Answer :when the repayment of loan/deposit
was a bona fide transaction, adjustement
in the books of accounts can be made
through journal entries and No penalty can be imposed under Section 271E .
Section 271E, read with section 273B, of the
Income-tax Act, 1961 - Penalty - For failure to comply with section 269T -
Assessment year 2003-04 - Whether where loan/deposit has been repaid by
debiting account through journal entries, it must be held that assessee has
contravened provisions of section 269T - Held, yes - Assessee was engaged in
share trading business - It had taken loan from Investment Trust of India -
During relevant assessment year, it had transferred some shares to said trust -
Instead of repaying loan and receiving sale price of shares, both parties
agreed that said amount, i.e., loan and sale consideration be set off in their
respective books by making journal entries - Whether assessee had repaid
loan/inter-corporate deposit in contravention of provisions of section 269T -
Held, yes - Whether, however, in absence of finding to effect that repayment of
loan/deposit was not a bona fide transaction and was made with view to evade
tax, no penalty under section 271E could be imposed for contravening provisions
of section 269T - Held, yes [In favour of assessee] Commissioner of Income-tax,
Central-IV v. Triumph International Finance (I) Ltd. [2012] 22
taxmann.com 138 (Bom.) HIGH COURT OF BOMBAY
Question : when the amount is mount received by assessee in cash only for purpose of allotment of shares,
whether its repayment in cash violate the provisions of Section 269T ?
Answer No the
assessee had a reasonable cause as the assessee was under the bona fide belief
that the money received was only for the purpose of allotment of shares and
also there was no material or evidence or any compelling reason produced by the
revenue to prove that the money received was a deposit or loan; as such levy of
penalty on the assessee under section 271E was not justified, particularly
since no interest was paid by the assessee on any such advance. Commissioner
of Income-tax v Rugmini Ram Ragav Spinners (P.) Ltd. [2008] 304 ITR 417
(MAD.) HIGH COURT OF MADRAS
No comments:
Post a Comment