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Receipt more than 50000 Revised

Saravanan (Manager Internal Audit) (97 Points)

24 October 2007

Is there any regulation which prohibits collection of cash more than 50000.

Is there any penal consequenses.

Will 269 SS attract for the situation mentioned below.

An NBFC has given loan t a customer.
Can he repay the same in cash in excess of Rs 50000/-

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4 Replies

CA.Saibaburao Nanduri (Chartered Accountant) (3847 Points)
Replied 24 October 2007

Dear Saravanan
Under incometax Act there are objections under section 269 SS which ia as under:

REQUIREMENT AS TO MODE OF 10[ACCEPTANCE, PAYMENT OR] REPAYMENT IN CERTAIN CASES TO COUNTERACT EVASION OF TAX

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 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 company13 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, notify14 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.]

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CA.Saibaburao Nanduri (Chartered Accountant) (3847 Points)
Replied 24 October 2007

Failure to comply with section 269 SS the following penal provisions shall apply:

271D. 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.]

Narendra Sarawagi (ca) (22 Points)
Replied 25 October 2007

I am of the opinion that ceiling is for Rs. 20,000/- more than the ceiling it will be added back to your income. suject to the exception as banks and financial Institutions.

Late CA Sampat Jain (Chartered Accountant) (4772 Points)
Replied 25 October 2007

269SS does not provide for addtion to income. It provides for penalty only. Logic is very clear , once AO adds back to income , he admits that it is income, where is the question of violation of loan provisions.