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Showing contexts for: 269t in Muthoot M. George Bankers vs Asstt. Commissioner Of Income-Tax on 16 April, 1993Matching Fragments
G. Santhanam, Accountant Member
1. These appeals are by the assessee against the levy of penalty respectively under Sections 271D and 271E of the Income-tax Act, 1961.
2. The appellant is a registered firm of nine partners engaged in money-lending business. The previous year relevant to the assessment year 1989-90 is the financial year ending on 31-3-1989. According to the learned Dy. CIT, Central Range, Ernakulam, the appellant had, during the relevant previous year, accepted in cash deposits or loans on various dates from different firms such as, Muthoot M. George Chits, Bangalore, Muthoot Bankers, New Delhi, Muthoot Bankers, Bangalore and Muthoot M. George Chitty, Faridabad, amounting in all Rs. 57,95,000 in violation of the provisions of Section 269SS of the Income-tax Act and, therefore, levied penalty under Section 271D of the Act in a sum equal to the amount of such loans or deposits. Similarly, the learned Dy. CIT, noticed that the appellant had, during the relevant previous year, made repayments in cash of deposits amounting to Rs. 58,50,000 on various dates between 17-2-1989 and 31-3-1989 to different parties such as Mithoot M. George Chitty, Bangalore, Muthoot Bankers, Bangalore, Muthoot Bankers, New Delhi and Muthoot M. George Chitty, Faridabad, in violation of the provisions of Section 269T of the Income-tax Act, 1961 and therefore levied penalty under Section 271E of the said Act in a sum equal to the amount of Rs. 58,50,000. The appellant carried the matter in appeal against the levy of penalty respectively under Sections 271D and 271E of the Act. It was contended before the learned CIT (Appeals) that the transactions involved transfer of funds from one sister concern to another sister concern and such transactions could not be termed as loans or deposits within the meaning of Section 269SS or as deposits within the meaning of Section 269T. Further, it was contended that the interest paid to the sister concerns was all accounted for and offered for income-tax assessment and no concealment of income was involved. Reliance was placed by the appellant on the Circular of the Board of Direct Taxes No. 387 dated 6-7-1984 (paras 32.1 to 32.7) explaining the provisions of Sections 269SS and 269T inserted by the Finance Act, 1984 for the proposition that the impugned provisions were intended only to curb black money transactions and on this basis it was contended that once the transactions are found to be genuine and no charge of concealment was levelled in respect of such transactions, levy of penalty under Section 271D or under Section 271E for venial violation, if any, of Section 269SS or 269T would be draconian in nature and effect and was not justified. It was also contended before the first appellate authority that the Madras High Court in the case of Kumari A.B. Shanthi v. A.D.I. [1992] 197 ITR 330 had struck down the provisions of Section 269SS as ultra vires the Constitution of India and as the provisions of Sections 269T and 271E are parallel provisions and represent the other side of the same coin, they should be also construed as ultra vires the Constitution. Further it was contended that the expression "loan or deposit" found in Section 269SS or the expression "deposit" found in Section 269T would not apply to transaction of funds inter se among the firms managed by the same group of individuals with a slight alteration in the respective constitution. More so, when the same individual is the managing partner of all such firms and the central office is located under the same roof. Lastly it was contended that several transactions comprised in the sum of Rs. 57,95,000 which were considered by the learned Dy. CIT as coming under the purview of Section 269SS are outside the provisions of Section 269SS. Likewise, it was also contended that several transactions comprised in a sum of Rs. 58,50,000 which were considered by the learned Dy. CIT as coming within the purview of Section 269T are outside the provisions of the said Section. Thus the appellant questioned the quantum of penalty also levied in this case under Sections 271D and 271E respectively of the IT Act, 1961.
3. The learned CIT (Appeals) accepted the contention of the appellant that the many transactions considered by the learned Dy. CIT as falling within the purview of Section 269SS or Section 269T did not really attract the provisions of either Section 269SS or Section 269T and in this view of the matter, he excluded a sum of Rs. 28,00,000 from the ambit of Section 269SS and a sum of Rs. 34,60,000 from the mischief of Section 269T and sustained penalty in respect of acceptance of deposits in cash in a sum of Rs. 29,95,000 and in a sum of Rs. 23,90,000 in respect of repayment of deposits or loans in cash. The revenue is not in appeal against the exclusions made by the learned CIT (Appeals) and the reliefs thus granted. The assessee is on appeal against the levy of penalty in a sum of Rs. 29,95,000 under the provisions of Section 271D and also the levy of penalty in a sum of Rs. 23,90,000 under the provisions of Section 271E of the IT Act.
7. We have considered rival submissions carefully. There is no indication in Section 269SS or Section 269T or any other provisions of the Income-tax Act, 1961, that the amount of deposits or loans accepted or the amount of deposits repaid otherwise than by an account payee cheque or account payee bank draft are to be treated as the income of the assessee unlike Section 269D which deals with the amount of hundi loans accepted or repaid otherwise than through account payee cheque as the income of the appellant. Further, Section 269SS and Section 269T are prohibitive in nature. The prohibition is in respect of the manner or the mode by which certain transactions are not to be done by persons mentioned therein whether such person is an assessee or not; whether such person is assessable or not; whether such person is having income or not. Thus the scope and ambit of Section 269SS and Section 269T are very wide and the infringement of the impugned provisions need not necessarily be confined to the case of an assessee or to the assessment of his income. Therefore, the usual concepts like the assessee, the previous year, the assessment year, or the law applicable to the assessment year cannot be imported into the provisions of Section 269SS or Section 269T. As a result, we are unable to accept the contention of the revenue that as the transactions have taken place in the previous year relevant to the assessment year 1989-90, the penal provisions of Sections 271D and 271E which came into force with effect from 1-4-1989 would stand attracted to the case of the assessee.
8. Clarifying the amendments made to Section 269T, the Board of Direct Taxes has issued Circular No. 522 dated 18-8-1988 which is reproduced at page 1747 of Volume 2, Fourth Edition, of Chaturvedi & Pithisaria's Income-tax Law and the same is as follows:
Amendments to Sections 40A(3), 269SS and 269T by the Direct Tax Laws (Amendment) Act, 1987 - Date of applicability - clarification regarding.- Provisions of Sections 40A(3), 269SS and 269T of the Income-tax Act, 1961, have been amended by the Direct Tax Laws (Amendment) Act, 1987 (Act No. 4 of 1988) and consequently the monetary ceilings prescribed under the aforesaid Sections have been raised from Rs. 2,500 to Rs. 10,000, Rs. 10,000 to Rs. 20,000 and Rs. 10,000 to Rs. 20,000 respectively. As per provisions of Section 1 (2) of the Direct Tax Laws (Amendment) Act, 1987, these changes have been made effective from 1-4-1989.