Repayment of loan received in cash

Sections 269SS and  269T are applicable only to  Borrower of a loan or acceptor of   deposit and not appliable to the lender or the depositor. In your case the penalty provisions are applicable only to the individual borrower, who has agreed to repay loan by cash. But, if he is not an assessee, said provision of Section 269T is also not applicable to him.  

Dear Mr. Sudhakar,

Thanks for your prompt response. But few questions are still in my mind i.e.

1. Where it has been mentioned that if borrower is not assessee, than provision of sec. 269T shall not be applicable. As sec. 269T includes company, firm or all other person.

2. If Assessing officer of lender makes a reference to the Assessing officer having jurisdiction over the locality where borrower resides and later one calls him for submission of return and to penalise him U/s 269T, is it possible?

Pls guide.

Thanks & regards,

CS Uma Shanker Sharda

Section 269SS prohibits acceptance of loan or deposit exceeding Rs 20,000 by any mode other than account payee cheque or draft . Section 269T prohibits repayment of loan exceeding Rs 20,000 by any mode other than account payee cheque or draft.

I dont think you are in any contravention of 269SS or 269T, Since you are advancing in cheque and receiving in cash . - 269SS/T not applicable to you according to me .

However the repayer of the loan is in contravention of 269T , so first its not yr headache . second the AO may not be well within his powers to assume jurisdiction over the repayers locality . Also since the repayer is not filing his returns , its assumed his income is below the taxable limit . It will be too much of a stretch to imagine , that your AO asking your repayer to file his return (outside his jurisdiction) , so that he can levy a penalty u/s 269T