Provisions Of 269SS, 269T, 271D AND 271E As Per Finance Bill 2014 And Finance Bill 2015 And Some Issues Regarding Penalty U/S 271D, 271E And Relating To Amendments.
Consequences of contravention of section 269SS: Section 271D of Income Tax Act 1961 provides that if a loan or deposit is accepted in contravention of the provisions of section 269SS then a penalty equivalent to the amount of such loan or deposit may be levied by the Joint commissioner.
Consequences of contravention of section 269T: Section 271E of Income Tax Act 1961 provides that if a loan or deposit is repaid in contravention of the provisions of section 269T then a penalty equivalent to the amount of such loan or deposit repaid may be levied by the Joint commissioner
No Penalty to be levied u/s 271D or 271E if there is reasonable cause.
Issue are as follows:-
1) Can both penalty can be levied us 271d and 271e when same amount of loan taken and repaid?
2) Which amount will attract 269ss only current year transactions or aggregate transactions (including previous years)?
3) If payment done by internet banking will it be disallowed?
4) Weather loans and advances in relation to transfer of immovable property is also covered us 269ss and 269t?
Solution of issue 1:-
This is most debatable issue, still there is no case law which can say that both can’t be levied on same amount.
Analysis of issue 1:-
If a person is taking loan amount exceeding specified limit it will be considered as transaction no. 1.
And when same person is doing repayment of same loan amount then it will be considered as transaction no. 2.
Then weather penalty will be levied on both transactions or not? as amount is same.
Solution of analysis of issue 1
As if loan is taken in cash and repaid through cash, there is violation of 2 transactions so on loan taken penalty u/s 271d will be levied on transaction no. 1 and on repayment of loan penalty u/s 271e will be levied on transaction no 2.
Let understand this by example
Question:-
If a person take loan of Rs 50,000/- by cash on 01.04.14 and same Rs 55,000/-(principal amount 50,000 and interest amount 5,000/-) is repaid by cash on 31.03.15.
What will be penalty u/s 271d and 271e?
Answer:-
Penalty u/s 271d will be Rs 50,000/- and
Penalty u/s 271e will be Rs 55,000/-
Solution of issue 2:-
Analysis of issue 2,
If a person is taking loan is 1st year below specified limit and in 2nd year loan taken is below specified limit but aggregate of loan exceeds specified limit will it attract section 269ss?
Solution of analysis of issue 2
As the provisions of section used word
or the aggregate amount of such loan
it will attract section 269ss.
Let understand this by example
Question:-
If a person is taking loan is 1st year rs 15,000/- in cheque and in 2nd year loan taken is Rs 18,000/- by cash.
Will it attract section 269ss? weather penalty will be levied us 271d?
Answer:-
It will attract section 269ss and penalty u/s 271d will be levied.
Solution of issue 3:-
Issue 3 is solved by finance bill 2014, as finance bill used words
[or use of electronic clearing system through a bank account]
The payment made by internet banking, RTGS, EFT will not be disallowed u/s 269ss and 269t.
Solution of issue 4:-
Issue 4 is solved by Finance Bill 2015, as finance bill used words
269SS
“Specified sum” means any sum of money receivable, whether as advance or otherwise, in relation to transfer of an immovable property, whether or not the transfer takes place.
269T
The aggregate amount of the specified advances received by such 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 specified advances,
“Specified advance” means any sum of money in the nature of advance, by whatever name called, in relation to transfer of an immovable property, whether or not the transfer takes place.
This amendment is applicable from 1st June 2015.
This amendment will force everyone to avoid cash transactions in order to reduce curb black money.
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PROVISIONS OF 269SS, 269T, 271D AND 271E AS PER FINANCE BILL 2014
[Mode of taking or accepting certain loans and deposits.
269SS. No person shall, after the 30th day of June, 1984, take or accept from any other person (hereafter in this section referred to as the depositor), any loan or deposit otherwise than by an account payee cheque or account payee bank draft [or use of electronic clearing system through a bank account] if,—
(a) the amount of such loan or deposit or the aggregate amount of such loan and deposit ; or
(b) on the date of taking or accepting such loan or deposit, any loan or deposit taken or accepted earlier by such person from the depositor is remaining unpaid (whether repayment has fallen due or not), the amount or the aggregate amount remaining unpaid ; or
(c) the amount or the aggregate amount referred to in clause (a) together with the amount or the aggregate amount referred to in clause (b),
is [twenty] thousand rupees or more :
Provided that the provisions of this section shall not apply to any loan or deposit taken or accepted from, or any loan or deposit taken or accepted by,—
(a) Government ;
(b) any banking company, post office savings bank or co-operative bank ;
(c) any corporation established by a Central, State or Provincial Act ;
(d) any Government company as defined in section 617 of the Companies Act, 1956 (1 of 1956) ;
(e) 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 :
[Provided further that the provisions of this section shall not apply to any loan or deposit where the person from whom the loan or deposit is taken or accepted and the person by whom the loan or deposit is taken or accepted are both having agricultural income and neither of them has any income chargeable to tax under this Act.]
Explanation.—For the purposes of this section,—
[(i) "banking company" means a company to which the Banking Regulation Act, 1949 (10 of 1949), applies and includes any bank or banking institution referred to in section 51 of that Act ;]
(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 loan or deposit of money.]
[Penalty for failure to comply with the provisions of section 269SS.
271D. [(1)] If a person takes or accepts any loan or deposit in contravention of the provisions of section 269SS, he shall be liable to pay, by way of penalty, a sum equal to the amount of the loan or deposit so taken or accepted.]
[(2) Any penalty imposable under sub-section (1) shall be imposed by the [Joint] Commissioner.]
[Mode of repayment of certain loans or deposits.
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 [or by use of electronic clearing system through a bank account] 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 :
[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 company 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.]]
[Penalty for failure to comply with the provisions of section 269T.
271E. [(1)] If a person repays any [loan or] deposit referred to in section 269T otherwise than in accordance with the provisions of that section, he shall be liable to pay, by way of penalty, a sum equal to the amount of the [loan or] deposit so repaid.]
[(2) Any penalty imposable under sub-section (1) shall be imposed by the [Joint] Commissioner.]
PROVISIONS OF 269SS, 269T, 271D AND 271E AS PER FINANCE BILL 2015
These amendment will take effect from 1st June, 2015.
‘269SS. No person shall take or accept from any other person (herein referred to as the depositor), any loan or deposit or any specified sum, otherwise than by an account payee cheque or account payee bank draft or use of electronic clearing system through a bank account, if,—
(a) the amount of such loan or deposit or specified sum or the aggregate amount of such loan, deposit and specified sum; or
(b) on the date of taking or accepting such loan or deposit or specified sum, any loan or deposit or specified sum taken or accepted earlier by such person from the depositor is remaining unpaid (whether repayment has fallen due or not), the amount or the aggregate amount remaining unpaid; or
(c) the amount or the aggregate amount referred to in clause (a) together with the amount or the aggregate amount referred to in clause (b), is twenty thousand rupees or more:
Provided that the provisions of this section shall not apply to any loan or deposit or specified sum taken or accepted from, or any loan or deposit or specified sum taken or accepted by,—
(a) the Government;
(b) any banking company, post office savings bank or co-operative bank;
(c) any corporation established by a Central, State or Provincial Act;
(d) any Government company as defined in clause (45) of section 2 of the Companies Act, 2013;
(e) 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:
Provided further that the provisions of this section shall not apply to any loan or deposit or specified sum, where the person from whom the loan or deposit or specified sum is taken or accepted and the person by whom the loan or deposit or specified sum is taken or accepted, are both having agricultural income and neither of them has any income chargeable to tax under this Act.
Explanation.– For the purposes of this section,—
(i) “banking company” means a company to which the provisions of the Banking Regulation Act, 1949 applies and includes any bank or banking institution referred to in section 51 of that Act;
(ii) “co-operative bank” shall have the same meaning as assigned to it in Part V of the Banking Regulation Act, 1949;
(iii) “loan or deposit” means loan or deposit of money;
(iv) “specified sum” means any sum of money receivable, whether as advance or otherwise, in relation to transfer of an immovable property, whether or not the transfer takes place.
[Mode of repayment of certain loans or deposits.
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 or any specified advance received by 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 or specified advance [or by use of electronic clearing system through a bank account] 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, or
(c) the aggregate amount of the specified advances received by such 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 specified advances, 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 :
[Provided further that nothing contained in this section shall apply to repayment of any loan or deposit or specified advance 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 company as defined in clause (45) of section 2 of the Companies Act, 2013;
(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.]]
(iv) “specified advance” means any sum of money in the nature of advance, by whatever name called, in relation to transfer of an immovable property, whether or not the transfer takes place.
[Penalty for failure to comply with the provisions of section 269SS.
271D. [(1)] If a person takes or accepts any loan or deposit or specified sum in contravention of the provisions of section 269SS, he shall be liable to pay, by way of penalty, a sum equal to the amount of the loan or deposit or specified sum so taken or accepted.]
[(2) Any penalty imposable under sub-section (1) shall be imposed by the [Joint] Commissioner.]
[Penalty for failure to comply with the provisions of section 269T.
271E. [(1)] If a person repays any [loan or] deposit or specified advance referred to in section 269T otherwise than in accordance with the provisions of that section, he shall be liable to pay, by way of penalty, a sum equal to the amount of the [loan or] deposit or specified advance so repaid.]
[(2) Any penalty imposable under sub-section (1) shall be imposed by the [Joint] Commissioner.]
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