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2025:KER:54510 Such an act is not treated to be statutorily void is the findings .

The Bombay High Court also relied, Corpus Juris Secundum, Volume 85 page 580, paragraph 1023: wherein it is stated that, "A penalty imposed for a tax delinquency is a civil obligation, remedial and coercive in its nature, and is far different from the penalty for a crime or a fine or forfeiture provided as punishment for the violation of criminal penal laws." With great respect, I cannot agree with the above finding of the Division Bench of the Bombay High Court. A penalty is imposed for discouraging individuals from violating laws or regulations. It is not to enrich the revenue. If the criminal court legalises such violations relying on Section 139 NI Act presumptions, stating that the revenue will get the penalty amount, revenue will be treated like a "shylock" who is a Shakespeare's character. Penalty is imposed on a citizen for the violation of a provision and to prevent him from repeating the same in future, and it is not a mechanism to get money to the revenue. In other words, if the criminal court indirectly 2025:KER:54510 legalises such illegal transactions in violation of Act 1961, the same will be against the aim of our country to discourage cash transactions above twenty thousand rupees, which is also a part of the "digital India" dream of our country, which is propounded by our Prime Minister to save our economy and to curb a parallel economy in our country. The matter reached the Division Bench of the Bombay High Court based on a reference by another learned Single Judge of the Bombay High Court in Prakash Madhukarrao Desai v Dattatraya Sheshrao Desai (2023 KHC Online 3165). It will be beneficial to extract the relevant portion of the above reference order:

8.1. Then the provision of S.269 SS of the Income - tax Act prohibits the acceptance or taking of loans / deposits exceeding an amount of Rs.20,000/- by cash. The provisions of S.271 D of the IT Act makes an action in contravention to the provisions of S.269 SS liable for penalty equivalent to the amount of loan or deposit taken or accepted by cash. Though the provisions of S.273 B of the IT Act mandates, that in case the assessee or the recipient proves that there was a reasonable cause for acceptance of the amount in cash in excess of the sum prohibited by S.269 SS of the IT Act the penalty may not be imposed, the fact remains that the acceptance of an amount in cash in excess of Rs.20,000/- would carry penalty as contemplated by S.271 D of the IT Act and therefore would be an act, which is not permissible in law. Though S.269 SS of the IT Act imposes a prohibition upon 2025:KER:54510 the recipient, the prohibition in fact touches the transaction itself. In Assistant Director of Inspection Investigation v. A.B. Shanthi (2002) 6 SCC 259 : (AIR 2002 SC 2188), the Hon'ble Apex Court while considering the legality of S.269 SS of the IT Act has held that the object of introducing S.269 SS was to ensure that the taxpayer should not be allowed to give false explanation for his unaccounted money or if he has given some false entries in his accounts, he should not escape by giving false explanation for the same and the main object of the provision was to curb this menace. The constitutional validity of the said provision was thus upheld. Thus, the very purpose, of introducing S.269 SS of the IT Act was to curb the parallel economy which was rampant on account of cash transactions which were unaccounted for. Thus, what has been prohibited by S.269 SS of the IT Act and violation of the same and has been made liable for a penalty, could it be said that an action done contrary thereto, would be legal, within the expression "legally enforceable debt or other liability", as occurring in the explanation to S.138 of the NI Act. Holding that infraction of provisions of the Income - tax Act would be a matter between revenue and the defaulter and the advantage cannot be taken by the borrower [as held in Bipin Madhurdas Thakkar and Krishna Morajkar, 2015 (3) ABR (Cri) 463 (supra)], in my considered opinion, would tend to defeat the very purpose of the Income - tax Act and would bolster the parallel economy of transactions in cash. "