A M SHAMSUDEEN Vs. UNION OF INDIA

JUDGEMENT

(1.) THIS writ petition is for a writ of certiorari to quash the order of the Commissioner of Income-tax, Tamil Nadu-II, passed in his proceedings C. No. 1241-11(9) of 1995-96, dated March 15, 1996.

(2.) THE writ petitioner is a partnership firm assessed by the Deputy Commissioner of Income-tax, Special Division, Madras. THE assessment of the petitioner for the assessment year 1992-93 under the provisions of the Income-tax Act, was completed on March 17, 1995, on a total income of Rs. 29,89,760, and the Assessing Officer noticed during the course of his assessment that the petitioner had repaid two loans in cash, on April 8, 1991, a sum of Rs. 46,690 and on April 15, 1991, another sum of Rs. 50,000. THE Deputy Commissioner of Income-tax was of the view that there was a violation of the provisions of Section 269T of the Income-tax Act, 1961, and levied penalty of Rs. 96,690 under Section 271E of the Income-tax Act, after giving the petitioner an opportunity to be heard.

(3.) HOWEVER, the submission of learned counsel for the petitioner that the provisions are not applicable to the repayment of loans is well founded. Section 269T is found in Chapter XXB "requirement as to mode of acceptance, payment or repayment in certain cases to counteract evasion of tax". Section 269SS of the Income-tax Act deals with the mode of taking or accepting certain loans and deposits. Under Section 269SS of the Act, where any loan or deposit is taken or accepted from any person and the aggregate amount of the deposit or loan exceeds Rs. 20,000 or more, Section 269SS provides that such loans or deposits should be accepted by an account payee cheque or account payee bank draft. In other words, the receipt of cash in such cases would attract the levy of penalty. We are concerned with Section 269T of the Act. Section 269T of the Act deals with the mode of repayment of certain deposits and under Section 269T of the Act, if the deposit is repaid otherwise than as permitted, i.e., otherwise than by way of account payee cheque or account payee bank draft by the company, co-operative society, etc., and the repaid deposit exceeds Rs. 10,000 or more, it shall be repaid by the account payee bank draft or account payee cheque. The expression "deposits" is defined in Section 269T to mean any deposit of money which is repayable after notice or repayable after the period and in the case of a person other than a company, includes deposit of any nature.