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TMI Blog2000 (6) TMI 158X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessee from 21-8-1995 to 22-8-1995. Various incriminating documents and records were seized by the department during the course of search and, accordingly, the Assessing Officer passed the assessment order on 24-8-1996 for the Block period 1-4-1985 to 21-8-1995 under section 158BC read with section 143(3) of the Act. While scrutinising the seized documents in the course of assessment proceedings for the Block period, the Assessing Officer observed that the assessee had repaid loans/deposits in excess of Rs. 20,000 by otherwise than account-payee cheques/demand draft. According to the Assessing Officer, the assessee had contravened the provisions of section 269T read with 271E. He accordingly initiated penalty proceedings under secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt in the case of Baidya Nath Plastic Industries (P.) Ltd v. K.L. Anand, ITO [1998] 230 ITR 522 deleted the impugned penalties. 4. Shri Adhir Jha, the learned D.R. strongly supported the orders of the Assessing Officer. He submitted that both in loans and deposits, there is an act of borrowing. For example, in case of companies when the company borrows money by way of deposits, there is borrowing only and, in that sense, in the present case also, the assessee had not borrowed money, but the persons who had advanced money to the assessee were depositing the same with the assessee. He, therefore, submitted that the provisions of section 271E are clearly attracted and the CIT(A) is not justified in deleting the impugned penalties. 5. Shr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or instituting suits for recovery of loan and deposit. The Chambers 20th Century Dictionary, New Edition 1983, defines a 'deposit' as "that which is deposited or put down; a sum of money paid to secure an article, service etc.", while it defines 'loan' as "anything lent, especially money at interest; the act of lending; the condition of being lent; an arrangement for lending." Thus, there is a marked distinction between a loan and a deposit. This distinction between the two expressions has been brought out in a Commentary by Chaturvedi Pithisaria on page 5735 (Vol. V, 4th Edn.) in following words: "'Deposit' and 'Loan'--these two are not identical in meaning--It is true that both in the case of a loan and in the case of a deposit there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deposit are not always considered identical. 'Loan' and 'deposit' are not identical in meaning and cannot always be interchanged. Some loans may be deposits and some deposits may be loans. But all loans are not deposits or vice versa The dividing line between a loan or deposit is undoubtedly thin : the two, however, are not synonymous Pennwalt India Ltd v. Registrar of Companies [1987] 62 Comp. Cas. 112 (Bom.); also see, Durga Prasad Mandelia v. Registrar of Companies [1987] 61 Comp. Cas. 479 (Bom.)." 7. The Hon'ble Delhi High Court in the case of Baidya Nath Plastic Industries (P.) Ltd, has distinguished the expression "deposit" in contra-distinction to the term "loan". The Hon'ble High Court further held that when two interpretations ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anced money to the assessee were depositing the same with the assessee. This example is fallacious because when the company solicits deposits, it does so to the public at large without identifying the individual depositors. In response to this general appeal, a person who wants to deposit his money by way of investment does so to earn income by way of interest. Thus, the initiative in depositing money comes usually from the depositor. This is not the case with the assessee, because he has made specific borrowings from different persons and these constitute loans in his hands. The Revenue's approach has also been always that the assessee had borrowed loans. This would be evident from the fact that in the concluding portion of the penalty ord ..... X X X X Extracts X X X X X X X X Extracts X X X X
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