2007 (11) TMI 606 - HC - Income Tax

Summary

Issues involved: Violation of provisions of section 269SS of the Income Tax Act in accepting a loan exceeding Rs. 20,000 otherwise than by account payee cheque or account payee draft, penalty under section 271D of the Income Tax Act.

Summary:
The appeal was filed against the order of the Tribunal, Madras 'B' Bench for the assessment year 2001-02 regarding the violation of provisions under section 269SS of the Income Tax Act and the penalty imposed under section 271D. The assessing officer initiated penal proceedings due to the receipt of cash loan exceeding Rs. 20,000 without account payee cheque or draft. The Commissioner (Appeals) deleted the penalty, which was confirmed by the Tribunal.

The Tribunal found that the cash received was on account of sale and shown as trade credit, not a loan or deposit within the meaning of section 269SS. Referring to a previous court decision, it was established that transactions like deposit and withdrawal from a current account do not constitute a loan or advance. The Tribunal concluded that there was no violation of section 269SS in the present case.

Based on the above findings, the appeal was dismissed as no substantial question of law was involved. The judgment highlighted that the cash received was not considered a loan or advance, and the transaction was in the nature of a current account, not violating section 269SS of the Income Tax Act.