Penalty u/s 271d

Section 269SS applies to the borrower who accepts a loan of over 20,000/- in cash. 

Section 269T applies to the borrower who repays a loan of over 20,000/- in cash.

1) 'A' is liable to penalty u/s 271D for contravention of section 269SS as well as 269T (borrowing and repaying in cash)

2) 'A' is liable to penalty u/s 271D for contravention of section 269T (repaying in cash)

3) 'A' is liable to penalty u/s 271D for contravention of section 269SS (borrowing in cash)

Penalty u/s 271D for contravention of section 269SS is equal to the loan amount, and u/s 269T is equal to the repayment amount or 100% of the amount involved in the transaction, imposed by the JC. However, section 273B shall also apply wherein an opportunity shall be given to the assessee to give an explanation before recovery of penalty.

PENALTY U/S 271D and 271E

Penalty u/s 271D is invoked when there is a violation of provisions of sec 269SS of the Act i.e. any person accepts loan / deposits from other person, by a way other than an account payee Cheque /DD and where the amount of loan / deposit borrowed or the accumulated amount borrowed from the depositor / lender exceeds Rs.20,000/-

Penalty u/s 271E is invoked when there is a violation of provisions of sec 269T of the Act i.e. any person repays loan / deposits to any other person, by a way other than an account payee Cheque /DD and where the amount of loan / deposit repaid or the accumulated amount payable to the depositor / lender exceeds Rs.20,000/-

Thus, in either case, the penalty will be imposed upon the person accepting or repaying deposits and not the lender / depositor.

The penalty levied u/s 271D and 271E will be equal to the amount of loan or deposit borrowed / accepted / repaid,  in violation of provisions of sec 269SS and sec 269T.

The following table will help to understand the penalty implications:

Click here for the detailed information.
Inputs by Siddharth Galaiya, Tax Solutions Specialist, KCJM